Guide · updated September 2026
What is a tenant improvement allowance, and what is typical in Metro Vancouver?
A tenant improvement allowance is a contribution the landlord makes toward building out your space, quoted in dollars per square foot of rentable area. In Metro Vancouver it typically runs $40–$65 per square foot for suburban Class B and C office, $60–$80 for downtown Class A, $30–$70 for retail depending on format, and $15–$30 for industrial and flex. Avison Young reported the Metro Vancouver weighted average allowance at $77.49 per square foot in Q4 2025 — but that figure is Class A office and should not be applied to suburban space.
Typical ranges by asset class
Allowances vary far more by asset class than by negotiation. Quoting a single blended figure across a market is the most common error we see in tenant budgets.
| Asset class | Typical allowance / sq ft |
|---|---|
| Downtown office — Class A | $60 – $80 |
| Suburban office — Class B | $40 – $60 |
| Suburban office — Class C / older | $20 – $40 |
| Retail — street level | $30 – $50 |
| Retail — mall or CRU | $40 – $70 |
| Industrial / flex | $15 – $30 |
The allowance will not cover the build
This is the number that matters and it is rarely stated plainly. A downtown Class A allowance of roughly $77 per square foot sits against a Vancouver office fit-out cost averaging $199 per square foot in hard construction cost alone.
That means a tenant funds well over half of a standard office build-out out of pocket before furniture, IT and audio-visual are counted. Once those are added, the shortfall is larger again. Any plan that treats the allowance as covering the work is short by a factor of two or more.
How allowances are actually paid
The allowance is almost never cash up front. Common structures include reimbursement on completion against invoices and lien releases, progress draws at defined milestones, landlord-completed work to a defined scope, or rent-free periods in place of a cash contribution.
The structure affects your cash position as much as the amount does. An allowance reimbursed on completion means you finance the entire build first — which for a $400,000 fit-out is a working capital question, not a construction question.
What to establish before signing
Is it rentable or usable square feet? On a floor with a 15 percent gross-up, that difference is material.
What can it be spent on? Some allowances exclude soft costs, furniture, IT and signage — the exact items tenants assume are covered.
When is it paid, and against what? Reimbursement terms determine how much you finance.
Does unused allowance convert to free rent? Sometimes. It is worth asking before you spend it.
Who holds the risk if the base building is late? A fixturing period that starts on possession rather than on delivery of a completed shell transfers that risk to you.
Sources
- Avison Young — Vancouver office market, TI allowance data (via RENX)
- Cushman & Wakefield — Office Fit-Out Cost Guide 2026
Related guides
- What does a tenant improvement cost per square foot in Metro Vancouver?
- Reading a commercial work letter: who pays for what
- Do you need a licensed contractor for commercial work in BC?
Last reviewed September 2026. Construction costs and allowances move; check the sources before relying on a figure in a lease negotiation.
Common questions
What is a typical tenant improvement allowance in Metro Vancouver?
It depends on asset class. Suburban Class B and C office typically runs $40–$65 per square foot, downtown Class A $60–$80, retail $30–$70 by format, and industrial $15–$30. Avison Young reported a Q4 2025 Metro Vancouver weighted average of $77.49 per square foot, which reflects Class A office.
Does the tenant improvement allowance cover the whole build-out?
Almost never. A Class A allowance of roughly $77 per square foot sits against Vancouver office fit-out costs averaging $199 per square foot in hard construction cost, so a tenant typically funds more than half the work — considerably more once furniture, IT and audio-visual are included.
Can I negotiate a larger allowance?
Often, and it is usually easier than negotiating rent, because an allowance is a capital item rather than a permanent reduction in the landlord's income stream. The trade is normally term length. The time to have the conversation is before the offer is finalised, when you have a credible construction estimate to justify the figure.
What happens to allowance I don't use?
That depends entirely on the lease. In some it converts to free rent, in others it is simply forfeited. It should be settled in writing before construction starts.