Office Tenant Improvement Cost and Allowance Statistics (2026)

What landlords give: TI allowances and free rent

The most complete public multi-year series on office concessions comes from CBRE (cbre.com), which tracks new direct leases of five years or more in Atlanta, Boston, Chicago, Dallas/Fort Worth, Denver, Houston, Los Angeles, Manhattan, Philadelphia, San Francisco, Seattle and Washington, D.C. According to CBRE's 2025 concession release, the average tenant improvement allowance across those markets was $87.51 per square foot in 2024, down from $97.55 in 2023, and free rent averaged 8.9 months. Newmark (nmrk.com) reads the same trend from the other end: in its 1Q26 report, allowances in major markets were still about 75% above 2015 to 2019 levels. Contractor guides describe a wider spread for smaller deals: Bowser Construction Group (bowserconstructiongroup.com) puts typical allowances at $20 to $80 per square foot, and Terrapin Construction Group (terrapincg.com) reports retail-market allowances came down 8 to 15 percent over the first half of 2026.

What this means: Allowances are a negotiated number that tracks landlord leverage, not construction cost. They rose fastest for lower-tier buildings that needed to compete, and they fell first for the same buildings. The allowance paid on day one also sets the restoration stake on the last day: the surrender clause decides which funded improvements stay and which must be removed, which is why a dated move-in record of the suite matters as much as the letter of intent.

What the build-out costs per square foot

Two brokerage guides publish annual fit-out benchmarks, and they measure different things. Cushman & Wakefield's guide (cushmanwakefield.com) prices a construction-focused model project, with furniture, cabling and audio-visual gear left out: according to its 2026 Americas guide, office fit-out averaged $149 per square foot across 59 markets, $162 for the U.S. and $196 in gateway markets, with San Francisco at $228. JLL's guide (jll.com) prices a broader budget, with security, IT and audio-visual counted in the total: its 2026 U.S. and Canada guide puts a medium-quality corporate fit-out at $295 per square foot. Costs are still climbing: Newmark (nmrk.com) projects a further 3 to 7% rise in 2026. Medical space is its own category; according to JLL's 2026 outpatient benchmarking, moving from low to moderate intensity adds roughly 10% and high-acuity space adds another 20%, as reported by GlobeSt (globest.com). Contractor guides then add 8 to 15 percent for soft costs and a 5 to 10 percent contingency on top of hard cost, per Terrapin Construction Group.

What this means: Set the 2024 allowance ($87.51) against either 2026 cost benchmark ($149 construction-focused, $295 broader budget) and the tenant is funding a large share of the build-out out of pocket in a typical major-market deal. The shell condition at delivery moves the number nearly as much as the finish level does, which is why a photographed record of the delivered shell, dated at possession, is what fixes the as-delivered baseline the surrender clause will be measured against. For what individual repairs cost afterward, see our repair cost per square foot statistics.

Scope-level costs: the cost ladder

Brokerage guides price the whole project. Contractor and cost-guide publishers price the pieces, and their ranges show where the money goes. According to Hometown Demolition Contractors' office demolition guide (hometowndemolitioncontractors.com), interior demo runs $4 to $8 per square foot including disposal. HomeGuide's 2026 drop ceiling guide (homeguide.com) puts a suspended ceiling at $4 to $20 per square foot and commercial ductwork at $15 to $35 per linear foot; Angi's 2026 guide (angi.com) prices a standard installation at $9 to $13. National Facility Contractors (nationalfacilitycontractors.com) brackets basic commercial HVAC at $15 to $30 per square foot. Restrooms sit at the top: DGR Construction (dgrconstruction.net) says a code-compliant commercial restroom can pass $400 per square foot against roughly $150 for typical office TI, and Revolution Construction in Florida (revolutionflorida.com) quotes $150 to $350 per square foot for a commercial bathroom remodel. The federal accessibility rule then caps how much path-of-travel work an alteration can trigger.

What this means: The cheap scopes (demo, ceilings) are the ones that leave the most visible trace at move-out, and the expensive scopes (restrooms, HVAC distribution) are the ones landlords commonly negotiate to have left in place. A surrender clause that says "remove all alterations" versus "leave improvements in place" can swing the last month of a lease by a sum comparable to the allowance itself, which is why a scope-by-scope photo record at completion, not just at possession, pays for itself. Our commercial HVAC inspection statistics cover what the mechanical side costs to keep running once it is in.

Vacancy and the leverage behind allowances

Concessions follow vacancy, and vacancy is measured differently by each house. According to Cushman & Wakefield's Q2 2026 U.S. Office MarketBeat, national vacancy was 20.1%, down 10 basis points year over year, with declines in 55 of 92 tracked markets. CBRE's Q2 2026 U.S. office report, using its own market coverage, put overall vacancy at 18.3% (the same number as Cushman's direct rate, by coincidence, not the same measure) and prime vacancy at 12.3%. Moody's CRE (moodyscre.com) recorded a record-high national rate in Q2 2025, nearly four points above 2019. New supply has all but stopped: Cushman counts 15.6 million square feet of completions over four quarters, a 14-year low, and CBRE's pipeline is 87% below its 2020 peak. Local reports show how uneven it is: Avison Young (avisonyoung.us) put Dallas-Fort Worth vacancy at 25.3% in Q2 2026 while Manhattan availability fell to 14.1%, its lowest since 2020.

What this means: Vacancy near 20% with a construction pipeline near zero is a market where the good buildings are filling and the rest are not. Concessions will keep shrinking where vacancy is falling (Midtown, San Francisco, Kansas City) and stay generous where it is still rising (Seattle, Los Angeles CBD, Chicago). A tenant reading the table should expect the allowance conversation to be very different in a 15% market than in a 30% one.

Lease terms, reimbursement, accounting and the federal benchmark

Allowances are earned with term. According to CBRE's concession briefs, the average lease in its dataset runs 9.2 years, and its H1 2024 leasing brief found prime-building leases averaging 107 months against 86 in non-prime buildings, with occupiers signing longer specifically to secure TI. The same brief found renewals at 42% of leases of 10,000 square feet or more, up from 31% pre-pandemic, and the average lease 27% smaller. The cash mechanics matter: The Cauble Group (tylercauble.com) explains that landlords usually reimburse within 30 to 60 days of a clean draw package. AQUILA Commercial (aquilacommercial.com) reproduces a lease clause funding an extra $5.00 per rentable square foot at 10% interest through base rent. The Cauble Group puts the usual amortization rate at 6% to 10%. On the books, FinQuery's ASC 842 guide (finquery.com) walks through ASC 842-20-30-5, under which a lease incentive reduces the right-of-use asset. The federal government publishes its own benchmark: the U.S. General Services Administration (gsa.gov) sets a general TI allowance per usable square foot and layers customization tiers on top.

What this means: A nine-year lease with an amortized allowance is a loan repaid through rent, and the suite's condition at surrender is where the landlord recovers whatever the lease says must be restored. The same documentation discipline that settles residential deposit fights (see our security deposit statistics and the guide to photos and video as deposit dispute evidence) applies with more zeros: a dated, room-by-room record at delivery, at substantial completion, and at surrender is what turns a restoration argument into an invoice.

Permits, schedule and the design pipeline

Schedule is a cost line too, because in many leases rent commencement is a fixed date, not the certificate of occupancy. According to Terrapin Construction Group's permit timeline guide (terrapincg.com), a U.S. commercial building permit takes 3 weeks to 18 months and a tenant improvement permit takes 30 to 60 percent of the ground-up duration in the same jurisdiction. The City of Seattle (seattle.gov) publishes its own performance: a 30-day goal for commercial addition and alteration permits against a 58-day 75th percentile. Bowser Construction Group budgets 8 to 16 weeks of construction for most office build-outs. Upstream, the pipeline is thin: Cushman & Wakefield's contractor survey found 79% expecting cost increases and none expecting declines, and the American Institute of Architects (aia.org) reported a July 2026 billings index of 46.6, with commercial and industrial firms not seeing a billings increase in four years.

What this means: A four-week permit slip costs more in carried rent than most finish upgrades, and under a fixed-date lease it lands on the tenant. The same logic applies to the punch list at the end of the build: every open item is a day the space is paid for and not usable. Our construction punch list defect statistics put numbers on how many items a typical closeout carries.

Claims we could not verify

Four figures circulate widely in tenant improvement writing. We traced each one and could not confirm it against a primary source, so none appears in the cards above.