Tenant Improvement allowances, or (“TIs”), are the dollars your landlord will give you to help build out your new space. Depending on your market, landlords will typically give a certain allowance for every year of term on a new lease, and roughly half that figure for every year of a renewal lease. E.g. $50 psf on a new 10-year lease ($5 psf/year) and $25 psf on a 10-year renewal ($2.50 psf/year).
What no one tells you: The same improvements don’t all cost the same. Getting good, general contractor quality — at fair pricing — is key. Thus, ask your broker to provide you with a construction manager (“CM”) as part of their commission. The CM will make sure the landlord bids out your tenant improvements and that you approve of their selected general contractor and subcontractors, as well as all their pricing. During construction, the CM should visit the site weekly to make sure the work is on time and being done in a quality manner. Lastly, when the work is complete, they will coordinate your furniture and IT installation.
In short, without a construction manager you are operating in the dark with regards to the entire construction process and potentially leaving a lot on the table. Why? Because you do this once every five years and do not have a staff member available to do this, nor the expertise to do it well. The CM does it every day.