Rule of thumb for what % of a needed remodel the LL should pay for?

Have a class B, 15-year old medical office space that’s now up for lease to a 2nd or 3rd long-term Tenant. When negotiating TIs in the lease with a prospective Tenant for space that is clearly in need of remodeling, is there a rule of thumb for what percentage of the remodel TIs the LL should expect to pay for and what % the Tenant should pay for?
In Leasing Property - Asked by David V. - Mar 7, 2013
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Amos B.
Great Neck, NY

David, in a softer market I would throw any older formulas out the window. If it is a good tenant signing a longer term lease, with decent rental -- do the best you can do and get done.

Mar 11, 2013
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Steve S.
Plainview, NY

I think you need to be careful what LL should pay for. soft market doesn't mean LL should pay anything for tenants improvements. I would only pay for some improvements that are related to the structure and have a value to the property once the tenant may leave. A tenant looking for LL to pay for the start up of their business is not a good tenant to begin with. Does not show a very good sign of commitment to the space by tenant. Not professional for landlord to pay for tenants improvements unless related to real improvements to LL property. You will just attract a poor tenant in my opinion. The market is not so bad, unless your location or property is real bad.

Mar 13, 2013
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