How to Ask for a Tenant Improvement Allowance
A tenant improvement allowance is a lease term you can ask for, and our lease checklist writes it as TI allowance.
At Reach Commercial Real Estate, we represent tenants. We help you find locations, compare costs, investigate property questions and negotiate the lease. You bring your business plans. We help you evaluate where those plans fit.
This guide covers landlord work, the permit and plan requirements for tenant work and who can do the work.
1. Ask for a tenant improvement allowance
We negotiate rent, free rent, tenant improvement dollars, renewal options and who pays for the roof.
For each candidate property, we request the proposed landlord work, the improvement allowance, and the availability and delivery condition.
Once you select a property, we negotiate the business terms. We focus on landlord delivery and the tenant improvement allowance, among other terms.
2. Separate landlord work from tenant work
Landlord work versus tenant work and the TI allowance are both lease terms on our checklist.
Under what has to be built, our checklist lists when a licensed general contractor, an architect or an engineer is needed.
The federal ADA rule says that, as between a landlord and a tenant, allocation of responsibility for complying may be determined by lease or other contract (28 CFR 36.201(b)).
3. Match the allowance to the permits and plans
The Florida Building Code, Building, section 105.1 says any owner or owner's authorized agent who intends to construct, enlarge, alter, repair, move, demolish or change the occupancy of a building, or to install or alter an electrical, gas, mechanical or plumbing system, shall first apply to the building official and obtain the required permit.
Melbourne's Building Section lists tenant build-outs among the work that needs a building permit. The application goes through the city's online permitting system with drawings when applicable, proof of property ownership from the property owner (deed or tax statement), a description of the work and the estimated value of construction. Plans are signed and sealed for all commercial work except parking lots and work under $2,500 in value that does not affect structural or means of egress components.
In unincorporated Brevard County, the Commercial New Construction permit covers an interior build-out. Its application lists:
An Application for Building Permit.
An Owner Builder form, if applicable.
A Subcontractor Authorization.
A Notice of Commencement, required if the job value exceeds $5,000.00.
Plans signed and sealed by a Florida registered architect or engineer.
The fees listed on the page include a $210.00 flat Zoning Review, a $175.00 Concurrency Review, a Utilities Review that varies by project, and impact fees due prior to pre-power or final inspection, whichever occurs first.
4. Know who can do the work
Florida law prohibits acting in the capacity of a contractor, or advertising as available to do so, without being duly registered or certified (section 489.127(1)(f), Florida Statutes). A contractor shall subcontract all electrical, mechanical, plumbing, roofing, sheet metal, swimming pool and air-conditioning work, unless the contractor holds a state certificate or registration in that trade category (section 489.113(3)).
No person is required to qualify as an architect to make plans and specifications for, or supervise the erection, enlargement or alteration of, a building costing less than $25,000, except a school, auditorium or other building intended for public use (section 481.229(1)(c)). Section 107.1 of the Florida Building Code, Building, says the construction documents shall be prepared by a registered design professional where required by Chapter 471 or Chapter 481, Florida Statutes.
For promising spaces, bring your contractor and design professional into the review. We help gather property information. They evaluate the technical work and cost.
Our role is to help bring these findings into your property decision. Your qualified professionals and reviewing agencies determine the requirements.
5. Compare the full cost of each location
We compare more than base rent. Your occupancy review should include:
Base rent.
CAM and other additional charges.
Scheduled increases.
Utilities.
Repairs and maintenance assigned to you.
Construction and equipment installation.
Deposits.
Rent due before opening.
We also compare what the landlord offers against what your contractor expects the space to need.
Ask your team to evaluate the systems the business depends on. For a coffee shop or bakery, Type I hoods are required where cooking appliances produce grease or smoke (Florida Building Code, Mechanical, section 507.2).
For a hair salon or nail salon, Mechanical Table 403.3.1.1 lists exhaust of 0.6 cfm per square foot, and each manicure and pedicure station in a nail salon needs a source capture system that exhausts at least 50 cfm per station.
The real cost we list is base rent plus CAM, taxes, insurance, escalations and buildout.
6. Keep allowance dates aligned with the buildout
Keep track of:
Possession and delivery dates.
Landlord work.
Improvement-allowance submissions.
Construction deadlines.
Insurance requirements.
Rent commencement.
Extra items to check
Equipment a former tenant left behind. Before assigning value to a former cafe's sinks, counter and equipment, we ask who owns them, what records exist and whether your team finds them suitable for your operation.
Water service certificate. In unincorporated Brevard County, the Commercial New Construction application lists a Potable Water Service Capacity Availability Certificate or Reservation Certificate.
Your sign. For each candidate, we request the sign criteria. Signage is on the list of work that requires a permit in Melbourne's Building Section FAQ.
Schedule changes. If the project schedule changes, raise the lease implications early. Review the documents with your attorney rather than assume a delay changes your payment obligations.
Start your search with Reach
You do not need to find the property before calling us. Helping you find and evaluate the property is part of our work.
Bring your requirements, budget, preferred area, target opening date and equipment list. For each candidate, we request the proposed landlord work and the improvement allowance. We will use those details to build your search, compare locations and negotiate the lease. In most deals the landlord pays our fee.
Already found a space? Send me the address and listing. We will start with the property questions and deal terms you need to investigate.
Call Cassandra Hartford at 321-514-0876.
Related: the leasing guide and the guide to operating expenses.
Frequently Asked Questions
What does Florida's owner-builder exemption say about commercial buildings?
Section 489.103(7)(a)1 covers owners of property acting as their own contractor and providing direct, onsite supervision themselves of all work not performed by licensed contractors, when building or improving commercial buildings at a cost not to exceed $75,000 on such property for the occupancy or use of such owners and not offered for sale or lease. The owner may not delegate the responsibility to directly supervise all work to any other person unless that person is registered or certified under that part, and must personally appear and sign the building permit application (section 489.103(7)(b) and (c)).
What does Brevard County's Commercial Renovation permit cover?
Commercial Renovation permits are issued for an alteration that does not impact the footprint of the building or add height to the building, such as windows, doors, pool resurface, stucco over frame, solar roof shingles, interior demolition, or interior alteration without change of occupancy classification.
Does a business tax receipt count as a contractor license?
Section 489.127(1) says a business tax receipt issued under the authority of chapter 205 is not a license for purposes of that part.
Sources
Written by Cassandra Hartford, founder and CEO of Reach Commercial Real Estate. She has worked in Brevard County commercial real estate for 17 years, representing buyers, sellers, landlords, and tenants across Florida's Space Coast.
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