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Commercially leased area might have to be personalized to fit a tenant's needs. You and the property manager will have to reach an arrangement about these adjustments and decide:

- who'll come up with the customizations

• who is accountable for finishing or hiring the personalization work
• when the task will get done, and
• who must pay for it.
  
  What Is a Renter Improvement Allowance?
  Negotiating the Payment Method for Your TIA
  Negotiating the Size of Your TIA
  Negotiating Protections for Your TIA
  Negotiating How You Can Use Your TIA
  Alternatives to a TIA: Build-Out and Turnkey
  Talk to an Attorney
  What Is an Occupant Improvement Allowance?
  
  The most common way for proprietors and occupants to assign the cost of improving industrial area is for the property owner to give you what's referred to as a tenant enhancement allowance (TIA). The TIA represents the quantity of cash that the proprietor wants to invest on your enhancements. It's stated either as a per-foot amount or an overall dollar amount. Generally, if the enhancements cost more than the agreed-upon amount, you pay the additional.
  
  The lease clause that resolves these problems is generally titled "Improvements and Alterations."
  
  Negotiating the Payment Method for Your TIA
  
  You generally don't get the TIA straight. Instead, the landlord pays the professionals and suppliers as much as the TIA limit-after that, you pay. Or, the proprietor might decide to provide you a month or more of "free" lease, which suggests that you need to achieve all that you want to finish with the cash you have actually "saved" by not having to pay the lease.
  
  If you have an option, press for the previous arrangement. If the proprietor provides you the TIA and you pay the bills, you run the threat that the IRS will consider that earnings, and tax you accordingly. When the property owner physically keeps the cash and pays the expenses, you can possibly prevent this result.
  
  Negotiating the Size of Your TIA
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  You'll remain in a great position to anticipate a sufficient TIA if you currently understand what your enhancements are most likely to cost. You'll need to depend on your space planners or designers for their advice. If the landlord isn't happy to give you a TIA that'll fulfill the budget plan, you might still decide that it's worth your while to dish out some of your own money to get the look and configuration you desire.
  
  Because you'll be accountable for any expenses above the TIA, you'll assume the risk (and expense) of building overruns. The risk will increase if the proprietor, rather than you and your specialist, does the building. After all, the property owner has little incentive to keep costs within the TIA quantity because the landlord won't spend for any excess. For this factor, it may be more suitable for you to suggest another method to manage improvements (as explained later).
  
  Negotiating Protections for Your TIA
  
  One way to control the eventual cost of your enhancements is to insist in the lease provision that the property manager need to look for competitive quotes if the property owner does the work. Specify that the property owner should request sealed quotes and that the bids be opened in your existence. That way, the possibilities that the property owner will choose a needlessly expensive contractor-or one with whom they have a cozy relationship-are reduced.
  
  Besides controlling construction overruns, you'll wish to restrict the charges that come out of your TIA. Landlords typically charge overhead and "administrative" fees for renter enhancement work, even if the property manager does not take charge of the work.
  
  These charges (which could also be charged by the proprietor's contractor, if they're included) will come out of your TIA, which the proprietor is simply using as a profit source. The more your TIA is depleted by fees, the less you need to invest in the actual work.
  
  During lease negotiations, make sure you learn:
  
  - what these charges are going to be and
• whether they follow the leasing practice in your area.
  
  Talk to your broker or other educated company renters.
  
  Negotiating How You Can Use Your TIA
  
  Don't let your landlord tell you that your TIA is a concession or a present. Landlords are generally accountable for the expenses of capital enhancements (improving the structure in a manner that will benefit any future renter). If the work under your TIA is a capital enhancement, then the landlord must probably spend for it anyhow.
  
  But even if the work is genuinely specific-in response to your tastes or unusual business requirements-and the property owner has actually nevertheless ponied up some money, the proprietor isn't worse off. You can be sure that proprietors peg their rent demands high enough to compensate them at least in part for the TIA they're paying you.
  
  Once you comprehend that the TIA is rightfully yours (you've paid for it, one method or the other), you'll wish to have some freedom when it to investing it. Consider bargaining for the following two contracts in the enhancements stipulation:
  
  You can use the TIA for a wide variety of expenses. Especially if the landlord has actually protected the right to keep any unused TIA, make sure that you have broad discretion regarding how you can spend it. For instance, you ought to have the ability to apply your TIA to designers' and lawyers' charges, permit charges, moving costs, and even your own time invested protecting zoning variations or permits. If you do not use the entire TIA, you'll get a setoff versus lease. In the unlikely occasion that the final costs are less than the TIA, the balance must be credited against your lease. Returning it to the landlord, in essence, denies you of the benefit of all your difficult bargaining over who pays for improvements.
  
  Alternatives to a TIA: Build-Out and Turnkey
  
  While working out a tenant-friendly improvements and alterations provision may appear more effective, don't be too enamored of a TIA. It isn't "complimentary lease" or a present from the landlord, and it's not without its disadvantages. The problem with a TIA is that you, not the property manager, will be accountable for cost overruns. The following 3 alternatives don't run that risk.
  
  Building Standard Allowance, or "Build-Out"
  
  In this plan, the proprietor provides you a specified bundle of improvements and you pay for anything fancier or additional. This alternative puts the threat of overruns on the property owner unless you alter the agreed-upon enhancements. You're most likely to encounter this approach in brand-new buildings particularly, where the proprietor has a construction crew and products currently on site.
  
  The offer offered to you (the "building requirement") may include:
  
  - a certain grade of carpets or vinyl flooring covering
• a particular type of drop-ceiling
• a set number of fluorescent lights per square feet of floor space, and
• a specified variety of feet of drywall partitions with two coats of paint.
  
  Basically, it resembles a fixed-price meal in a restaurant-if you want anything fancier, you pay the difference or schedule your own specialists to come in and do the task.
  
  If the proprietor's offer matches you, the structure requirement could be the most basic and most economical way to go. Its huge advantage is that the property owner, not you, pays for any cost overruns (unless you've ordered extra items). And if the work isn't done on time, there can be no concern regarding who's accountable (as long as you've not obstructed).
  
  If you don't occur to require the entire package the property owner is providing, you can likewise negotiate for a credit for those products you don't utilize. Your property owner may refuse, however, if they've already acquired the products.
  
  You Pay a Fixed Rate, the Landlord Pays the Rest
  
  This arrangement is the opposite of the TIA, where the proprietor pays a set sum and you pay the balance.
  
  Your landlord isn't most likely to be interested in this technique unless you have strategies that are clear, company, and not subject to unforeseen boost. That method, the property manager can realistically assess what the improvements will cost them and the possibility of cost overruns.
  
  For example, suppose your plans call for the installation of countertops made from Italian marble. If the stone is in stock in your area, great