Landlord provided tenant improvement (TI) allowances spiked by nearly 10 percent in the latter half of 2017, outpacing rent growth, as a few features of the office and construction environments began to take hold in the industry. Read more about how these concepts are impacting the cost of building out in our recently released 2018 Office Fit Out Guide.
Shifting office dynamics paves the way for growing TI packages
•Nearly 70 million-square-feet of new office product was delivered across the U.S. in 2017, driving landlords of both new and existing assets to compete for tenants with large TI packages.
•As tenants begin to move to higher quality space, landlords are increasing TI packages to entice tenants and assist them in building out those sought after superior spaces.
•Construction costs grew a solid 15.5 percent over the last five years as materials and labor costs continue to mount. Consequently, tenants are increasingly expecting landlords to foot a growing part of the build budget.