Tenant Improvement Strategies – Allowance Approach

Under the Allowance Approach, the tenant is allotted a cash allowance from the landlord for construction and related costs.  To the extent the total costs are less than the allowance, and if properly negotiated, the tenant retains the savings.  On the flip side, if the costs exceed the allowance, then the tenant bears those excess costs.  Outlined below are the pros and cons to this approach, common pitfalls and strategy to successfully implement.

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