After a decade of increases turbocharged by the pandemic, office tenant improvement allowances are flattening as costs rise and landlords grow weary of forking over cash to entice occupiers.
TI allowances for office leases have surged by 112% since 2016, peaking at $212 per SF in gateway markets earlier this year as landlords jockeyed for leases. But a recent leveling of such spending, growing by just 8% last year, underscores the difficulties facing office owners.
“Rents are going up,” CompStak Senior Director of Real Estate Intelligence Alison Baumann said. “But landlords are also spending a lot to get those tenants.”