A tenant improvement allowance in Vancouver is a landlord contribution toward the cost of fitting out leased space, applied against the total improvement cost with the tenant paying the difference. Class A office buildings typically offer $40 to $75 per square foot and Class B buildings $20 to $45. Commercial fit-out costs $100 to $300 per square foot, which means the allowance frequently covers less than half of what the space actually costs to build.
What a TI Allowance Is
The allowance is a number in the lease, not a budget the landlord manages. It is drawn against as the work proceeds and it is capped. If construction costs less than the allowance, the excess is typically credited against rent rather than paid out. If construction costs more, the tenant funds the gap.
Allowances are usually released in stages tied to construction milestones: permit issuance, substantial completion, and final occupancy. Each draw is documented with progress reports and site photographs before the landlord releases funds. Managing that draw schedule is project management work, and it needs an owner, because a missed documentation requirement delays a draw and the trades still expect to be paid on their own schedule.
The allowance also varies by what is being fitted out. Second-generation space, meaning space refitted after a previous tenant rather than built from a shell, generally attracts a lower allowance because part of the improvement already exists. Existing partitioning, electrical, and mechanical may be reusable with modifications, which genuinely lowers cost per square foot. A pre-construction walk-through documents the real condition before a budget assigns savings that may not materialize.
How to Negotiate a TI Allowance
The negotiation that matters happens before the lease is signed, and it is won with a number rather than an argument.
Price the space you intend to build, not a generic fit-out. A priced line-item estimate against your actual layout turns "we need a bigger allowance" into "this space costs $X and the allowance covers $Y." Landlords respond to the second.
Define the base building delivery condition in writing. Warm shell and cold shell mean different things to different landlords, and the difference is worth $80 to $150 per square foot. A warm shell has HVAC, electrical panels, plumbing to the unit, and sometimes a basic lighting grid. A cold shell is bare concrete and structure with nothing beyond base building mains. Whichever is being delivered, it belongs in the lease as a described condition rather than a label.
Trade term for allowance. Allowances scale with commitment. A longer term generally buys a larger contribution, and amortized across that term the annual cost of the fit-out changes materially.
Ask what else the landlord will fund. Base building work such as upgrading service capacity, improving accessibility at the entrance, or bringing a system up to current code is frequently landlord scope rather than tenant scope, and it is worth separating from the TI conversation entirely.
Confirm what happens to unused allowance. Rent credit, cash, or forfeiture are all possible and they are not equivalent.
| Building class | Typical allowance | Against a $150 per sq ft fit-out |
|---|---|---|
| Class A | $40 to $75 per sq ft | Covers roughly a quarter to a half |
| Class B | $20 to $45 per sq ft | Covers roughly a seventh to a third |
| Second-generation space | Lower, negotiated case by case | Depends on what existing work is genuinely reusable |
Who Pulls the Permit
This is a question worth settling explicitly, because the party that holds the permit holds the obligations attached to it.
In most Vancouver tenant improvement projects the tenant, through the general contractor, applies for and holds the building permit for the fit-out scope. The contractor prepares the drawings, submits the application, manages the review, and closes the permit at final inspection.
Landlord approval is separate from and prior to the City application. The landlord reviews the design against the lease and the building standards, and in a shopping centre environment that review runs through a design criteria document process that takes 2 to 4 weeks. Submitting to the City before the landlord has approved the design invites a second round of drawings.
Base building work stays with the landlord. Where the fit-out requires an upgrade to a base building system, service capacity, sprinkler main, or an accessibility condition at the building entrance, that is landlord scope and it needs its own permit path and its own schedule.
The obligation that follows the permit is closure. An open permit at the end of a tenancy is a problem for whoever holds it, and it surfaces at the worst possible moment, which is lease end. Closing the permit at final inspection is not administrative tidiness, it is the thing that prevents an argument two or five years later.
WorkSafeBC compliance applies to every commercial jobsite regardless of who holds the permit. The prime contractor maintains the site safety plan and the compliance documentation for all subcontractors, which matters in occupied buildings where construction and staff share a floor.
Landlord and Tenant Responsibilities
The commercial relationship in BC is governed primarily by the lease itself. Commercial tenancies in this province have far less statutory protection than residential ones, which means the document does most of the work and the clauses are worth reading closely rather than skimming.
| Item | Typically tenant | Typically landlord |
|---|---|---|
| Fit-out design and construction | Yes | Contributes via allowance |
| Building permit for the fit-out | Yes | Approves design first |
| Base building systems and capacity upgrades | No | Yes |
| Maintenance of installed improvements during term | Yes | No |
| Restoration at lease end | Depends entirely on the lease | Depends entirely on the lease |
| Insurance during construction | Yes, plus naming the landlord | Building insurance |
Two clauses deserve specific attention before signing.
Ownership of improvements at lease end. In most commercial leases, fixed improvements become the landlord's property when they are installed or when the term ends. Anything you want to remove and keep, specialised equipment, demountable partitions, signage, has to be identified as tenant property in the lease. A blanket assumption that you own what you paid for is usually wrong.
The restoration clause. This is the one that costs money nobody budgeted. A restoration or make-good clause can require the tenant to return the space to its original condition at the end of the term, which means demolishing the improvements you funded. Some leases require full restoration, some waive it, and some let the landlord elect at the end of the term, which is the worst version because it leaves the liability unquantified for the whole tenancy. Negotiating this at signing, ideally to a waiver or a defined scope, is far cheaper than negotiating it at exit.
Where TI Projects Go Wrong
Four failures recur often enough to be predictable, and all four are avoidable before a lease is signed.
The allowance was negotiated against a generic fit-out. A tenant agrees a number that sounds generous, then designs the space they actually want and discovers the gap. The fix is sequencing: price the real layout first, negotiate second.
The base building condition was assumed rather than described. A lease that says warm shell without defining what is delivered leaves the tenant funding whatever is missing. Panel capacity, HVAC distribution to the unit, plumbing rough-in, and the state of the ceiling are each worth writing down.
A change of occupancy was not identified early. A pre-application meeting with the City surfaces it before drawings are paid for, and the cost consequence is set out below.
The draw schedule did not match the construction schedule. Landlord draws release against documented milestones. Trades invoice on their own cycle. Where those two calendars are not aligned before the contract is signed, the tenant funds the gap out of working capital, which is a cash flow problem rather than a cost problem and is no less real for it.
The common thread is that all four are documentation problems solved at the negotiating table, not construction problems solved on site. By the time a crew is mobilized, the terms that determine whether the project works financially were fixed months earlier.
Cost Breakdown
Commercial renovation in Vancouver runs $100 to $300 per square foot depending on specification and base building condition.
| Tier | Range | What it covers |
|---|---|---|
| Basic office fit-out | $100 to $160 per sq ft | Partitioning, flooring, paint, lighting, HVAC distribution, data conduit. Warm shell assumed. |
| Mid-specification office | $160 to $220 per sq ft | Glass partition systems, carpet tile, acoustic ceiling, improved lighting, kitchenette, boardroom AV rough-in |
| High specification or food service | $220 to $300 per sq ft | Custom millwork, stone surfaces, premium finishes, full mechanical and electrical scope, fire suppression where required, all permits |
Permit class drives the schedule inside those numbers. A standard renovation inside an existing occupancy is a Class B permit at 4 to 8 weeks of review. A change of occupancy is Class A at 6 to 12 weeks with a full code compliance review, and the City can require upgrades to fire suppression, accessible design, and mechanical ventilation to match the new use. That last point is where a TI budget breaks, because those upgrades are frequently base building in character and were never in the tenant's number.
The arithmetic to run before signing is simple and rarely done. Take the priced cost of the space you intend to build, subtract the allowance, and look at the remainder as a capital cost amortized across the term. That figure, not the allowance, is what the lease actually costs you.
The full commercial scope is on the commercial renovation service page. Office-specific delivery including after-hours and phased construction is on the office renovation page, allowance and lease-side mechanics on the tenant improvement page, and storefront work on the retail renovation page.