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Retail Tenant Improvement Allowances

Posted by Capital Retail on February 20, 2018
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Retail Tenant Improvement Allowances – DC Landlords may still provide tenant improvement allowances to fund the build out of new retail space for tenants. However the tightened credit markets and increased failure rate of retailers has changed their thinking. Some Washington DC Landlords previously willing to provide allowances are now challenged by their lenders to do so and others are tightening standards for providing an allowance, if any.  The amount depends on several factors including the creditworthiness of the tenant, the terms in the lease and the total square footage of the space. Generally, a landlord offers more for larger tenants with excellent credit and longer lease terms.

Before releasing the monies, most Landlords will require retail tenants meet certain terms and conditions which should be specified in the lease and may include:

(a)        Completion of the improvements in or to the Premises required by the Lease;

(b)        Acquisition by Tenant of a Certificate of Occupancy for the Premises properly issued by the governmental body having jurisdiction;

(c)        The opening by Tenant of Tenant’s business in the Premises;

(d)        Tenant furnishing to Landlord unconditional waivers of lien and sworn statements from Tenant’s general contractor and any subcontractor showing that all of said persons have been paid in full;

(e)        Submission by Tenant to Landlord of a breakdown of Tenant’s final and total construction costs, along with all supporting invoices, agreements and related documents covering the amount of the Allowance;

(f)        Receipt by Landlord of Internal Revenue Service Form W-9, Request For Taxpayer Identification Number and Certification. Tenants may have to report Tenant Allowance as income depending on several factors and should check with a CPA regarding tax implications.

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