Even With Growing Rents, TIs Are Eating Into Landlord Margins

3D rendering of a roofless architecture model showing an apartment interior fully furnished

Tenant Improvement allowances (TIs) are on the rise and causing operational hurdles for many landlords. Several factors such as rising materials and labor costs and increased hidden expenses, such as “whiteboxing”—the practice of gutting a space to show its potential—are impacting this type of concession on a national scale. The Vice President of Property Management for Nightingale Properties, a New York-based investment firm, indicated that the type of tenant also plays a role in the escalating rent-to-cost ratio. Read further to gain more insight as to how commercial real estate owners are coping with this challenge.

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