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Tenant Improvement Allowance: A Crash Course Guide

Offering a tenant improvement allowance can be costly for a property owner, however, there are things to avoid and strategies to implement while marketing commercial space and during the lease, negotiations to make the additional cost provide a great return on investment. A common mistake a building owner makes is to avoid leasehold improvements as a cash allowance due to misconceptions like the construction process can't be controlled, cost overruns will add logistical headaches for property management, leasing commission for a commercial broker will be calculated to include the value of these incentives, and construction management fees can't be charged. If your goal is to maximize profits or improve cash flow, then offering tenant improvements are excellent ways to do so!

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