Most tenants negotiate their improvement allowance as a round per-square-foot figure — “we’d like $50 a foot” — with no evidence behind it. The landlord counters with a lower round number, and the difference gets split. The tenants who do better bring a real estimate to the table.
Why a number beats a rule of thumb
A landlord can dismiss “$50 a foot” as a negotiating position. It is much harder to dismiss a line-item estimate that shows demolition, framing, MEP, finishes, millwork and permits for your program in your market, totaling $63 a foot. Now the conversation is about a documented cost, and the tenant is asking to be made whole rather than asking for a favor.
Building the estimate
- Start from a test fit — even a rough one — so quantities are real.
- Price it against current subcontractor pricing in the building’s market, not a national average.
- Separate hard costs (what the allowance usually covers) from soft costs and FF&E (what it usually does not).
- Carry a design contingency; the drawings are not done yet.
Using it in the negotiation
- Share the hard-cost total and ask the allowance to cover it.
- Where the landlord will not fund the full amount, negotiate the overage terms now — amortized into rent at a stated rate, rather than due in cash at closing.
- Get the allowable uses expanded in the work letter if your soft costs are significant.
The estimate costs a fraction of the swing it produces. On a 20,000 square foot lease, moving the allowance $10 a foot is $200,000 — and that is a routine result when the ask is backed by real numbers.