Increasing construction costs have prompted office building owners to offer more generous tenant improvement (TI) allowances for tenants who need to fit out their spaces. TI allowances for Class A space increased 7% year-over-year in 2024, according to Cushman & Wakefield’s Office Fit Out Cost Guide.
Four U.S markets saw TI allowances increase more than 20% last year, including San Francisco (+36%), Raleigh-Durham (+36%), Chicago (+37%) and San Mateo County (+57%).
“Despite TI increases in many markets, the allowances being provided to tenants are generally not keeping pace with fit-out cost increases,” said the guide. “Occupiers need to consider that on a net basis, out-of-pocket costs will likely exceed TIs.”
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