What is a fair amount to ask for in landlord improvements on a 10 yr commercial lease for biotech company?
Is there a standard amount for an improvement allowance from the landlord on a new lease?  I am negotiating a lease for my biotech company. It’s an 8000 sq ft space and they are proposing a 10 year lease. The build out I need would cost ~$50/sq ft and landlord is proposing to cover $20/sq ft in improvements. 

Thanks!
[{"id": "gsr0f6s", "text": "A good commercial real estate attorney in your local area should have a good idea of the answer to that question. You may have to pay him or her $300 an hour for that answer but I imagine it would be well worth it.", "replies": [{"id": "gsr4a52", "text": "Or a broker will tell you for free", "replies": [], "depth": 2}, {"id": "gsr5ozg", "text": "Eh. This is definitely broker territory. Save the legal fees for lease review.", "replies": [{"id": "gsvd6mg", "text": "Oh, for sure, broker too. Good point.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gsr19t1", "text": "There\u2019s a lot of variables and not enough info. It depends on the market, credit of the tenant, how the space is being delivered to the tenant, 1st or 2nd generation space, etc.", "replies": [], "depth": 1}, {"id": "gsr2wce", "text": "It really depends on your rental rate, lease term, and covenant. It\u2019s helpful to have a good commercial broker run a financial analysis from the landlords perspective to see what the landlords ROI will be and tailor your response from there. For a 10 year lease and assuming you have decent credit, I would push for the landlord to cover 100% of the upfront costs in exchange for a rental rate which justifies the landlords upfront investment in space improvements.", "replies": [], "depth": 1}, {"id": "gsr5p6p", "text": "Also depends how specific your needs are, General buildout is one thing. Installing specialized building components is another. The main reason is it limits or requires a lot of changes once you leave. Once a space is built out for a very specific use it\u2019s either A. Hard to find tenants once you leave or B. Requires a lot of money to redo it for the next tenant.", "replies": [{"id": "gsr72bx", "text": "Thanks. It\u2019s nothing special or custom at all. Just  basic stuff electrical lines, paint, flooring, etc...", "replies": [{"id": "gsr7o38", "text": "Then you might be able to negotiate a better deal. You can always fall back and agree on what they offer.", "replies": [], "depth": 3}, {"id": "gt0eegb", "text": "Then, unless it\u2019s a shell, $50/ft sounds like a fake number that tenant is using to play with TI \u201cneeds.\u201d Maybe you\u2019ve got it broken out and with estimates? In any event, without knowing the market/rent we can\u2019t answer your question. If you\u2019re Theranos in 2010, I\u2019d put in $200psf of work to get you in if you\u2019re paying that startup *set money on fire* kind of money for rent.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gsr6jl6", "text": "How much is custom for you, compared to standard office stuff?", "replies": [{"id": "gsr6vll", "text": "It\u2019s nothing special. Replace flooring. Paint. Some new cabinets. Electrical lines...", "replies": [{"id": "gsr7xrd", "text": "I bet the 20 bucks covers paint and flooring. Specialized build outs is typically on you. Really market dependent. Ask your broker whats the norm.", "replies": [{"id": "gsrcnxv", "text": "Paint and carpet is 7-10/ foot", "replies": [{"id": "gstxzzu", "text": "I don't even think that much per foot carpet and paint.  5 to 7/foot is realistic but regardless 20.00 a foot is not close way to high.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gsrccwb", "text": "For the sake of everyone in this thread-\nBroker-Knows market and will negotiate business terms on your behalf \nLawyer-doesn\u2019t always know market but knows legal terms in your lease.\n\nI suggest you use both or stand to lose hundreds of thousands of dollars.", "replies": [{"id": "gss4nox", "text": "Every decent brokerage has a legal team to advise... And thus any decent broker should be able to read lease language. \n\nAnyways, the biggest question is what market standard is. For 10 year deals my team has done as much as $150/RSF on a 50,000 RSF space. \n\nIMO, beyond market standard there's only one other factor. How credit the tenant is... \n\nOf course the tenant improvements get added to the rental price or additional time gets added to the lease. The landlord is always getting their lump sum back with interest no matter how much TIs they dole out. So the question is, could the company go bankrupt and stop paying. \n\nIf it's JP Morgan or Google renting, you'd probably give them anything. If it's a startup with no leasing history, no significant market cap... Then hell no. \n\nThis is why landlords request a review of tenants financial information as proof of their ability to pay. Look directly at the balance sheet. Determine credit. Determine TIs.", "replies": [{"id": "gstc05i", "text": "I'm gonna disagree with your comment about a legal team to advise. Depending on state, most brokerages are completely forbidden from offering legal advice of any kind, even from their in house attorneys. If you are saying every broker should have a lawyer referral, I agree with that but I also always tell commercial owners they need to find their own lawyer, not recommended by their broker in order to make sure their interest truly takes precedence over any relationship between broker and lawyer.", "replies": [{"id": "gstjouk", "text": "In terms of interpreting legal language?? Don't make me laugh!", "replies": [], "depth": 4}], "depth": 3}, {"id": "gsu1764", "text": "&gt;Every decent brokerage has a legal team to advise\n\nWhile true, no in-house legal rep from a brokerage should EVER be reviewing/redlining leases. \n\n&gt;And thus any decent broker should be able to read lease language.\n\nBeing able to read /= qualified to give dependable, trustworthy and expert advice. You are spouting nonsense. \n\nI've worked in brokerage, development and am now on the owner side. I have never been a part of any deal where a tenant uses an attorney from their brokerage to negotiate a lease. It's scary that this seems to not be true in your case.", "replies": [{"id": "gsu8y93", "text": "I'm surprised you got so far being unable to read. The comment I replied to specifically said lawyers can read legal language. I said decent brokers can read legal language. You're taking that very specific phrase and calling it legal lease advisement. It's amazing how fucking arrogant and dumb people are in this industry. What's your ownership entity so I can steer my company from bringing tenants to your buildings?", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "gstbphx", "text": "Ding ding, as broker and lawyer, this is the answer.", "replies": [], "depth": 2}, {"id": "gstek91", "text": "My Lord who would give this advice?  You absolutely need both a Broker and a real estate atty (at the very least a GC if you have one.). Way too many terms in a lease that a broker would pay absolutely no attention to in a lease.  Furthermore, a good real estate atty will have read hundreds of not thousands of lease contracts throughout their career.  They will absolutely know whether certain points beyond the economics are reasonable or unreasonable in the market.\n\nIn fact, I think a real estate atty is far more valuable than a Broker. Worst thing you can do on businesses terms is overpay a bit for rent.  Worst thing that can happen with unfavorable legal terms is lose your space and possibly do something that will cost you your business.", "replies": [], "depth": 2}], "depth": 1}, {"id": "gsrd71d", "text": "Term, TI, Rate.  Sliding scales like good, fast, cheap.\n\nFor a 10 year deal I think $20 a foot is rather anemic, but your credit and operating history might be a huge factor in the LL wanting to cap their investment in your company.  \n\nCan you give us more info on your company?  Apologies if I missed it.", "replies": [], "depth": 1}, {"id": "gsrke90", "text": "Depends on the rent and lease terms. Is it wet or dry lab space? Biotech firms in larger biotech markets like in Cambridge can get $100 psf in TI but also pay close to that in rent.  If it\u2019s an unsophisticated landlord or landlord that doesn\u2019t want to spend money, it will be tough. But they are likely negotiating with you telling you $20 psf.  If you aren\u2019t working with a tenant broker already, I\u2019d suggest you speak with one or two. Landlords will pay the commission and they will get you a better deal than you would get direct.", "replies": [], "depth": 1}, {"id": "gsrvpdi", "text": "Agreed with getting a broker - landlord is used to paying for that cost anyways. Most landlords will give whatever is \u201cmarket\u201d which can scale up or down depending on your lease term and credit.", "replies": [], "depth": 1}, {"id": "gss8c7c", "text": "There\u2019s a trade off, right? Huger rent, more concessions.", "replies": [], "depth": 1}, {"id": "gsss28a", "text": "You'll run into a lot of brokers on here that will tell you your broker will help with this but I find it to rarely be the case. As a landlord my TI allowance varies a bit depending on the space. Generally I try to have a base package that would work for any tenant and that's what I include. Partition walls, sheetrock, paint, LED lighting, flooring, 6' kitchenette, tiled bathroom with ADA fixtures are all included. What I make the tenant pay for are tenant specific improvements. If your biotech startup has some specialized equipment that requires a dedicated circuit (homerun) then that expense is on you. If you have a lab that needs plumbing, that's on you. I also allow the tenant to pay for upgrades. I might include $10/ft flooring allowance. If they want some exotic wide plank flooring, that's great I let give them the $10/ft credit and anything above that is on them.", "replies": [], "depth": 1}, {"id": "gssxpgu", "text": "It\u2019s all negotiable. If it\u2019s a new company and the space will be built out very specifically they they may not want to fund 100%. If you want more then think of it as a loan from the landlord. Then it becomes more of a financial decision on the landlord\u2019s part and you could potential he be personally guaranteeing the lease. I\u2019ve been a commercial real estate broker for over 25 years so if you want to DM me feel free to", "replies": [], "depth": 1}, {"id": "gst6p12", "text": "Depending on credit worthiness of Tenant, I typically allow the first years' rent in TI. Obviously I've done more than that for really good Tenants and I've done less for non-credit worthy.", "replies": [], "depth": 1}, {"id": "gstdzm3", "text": "There are SO many variables that it's impossible to give you even a ballpark number.  How much are you paying in rent? What are the improvements?  Will they add value to the building if you vacate or are they specialized for you or a very specific use?  Is it flex space and if so are you converting more to office than the landlord would typically like?  Is there a restoration clause in the lease?  What market?  What's the current condition of the space? Are your financials strong or is this a startup?  \n\nIf you don't have a good broker involved you're flying blind.  \n\nThat being said, to answer your question a little more directly, firms I've worked for would generally be willing to give around 4 months worth of rent for every 5 years.... Although I think I've made my point that YMMV.", "replies": [], "depth": 1}, {"id": "gsuhina", "text": "A broker would be able to tell you best. I can say that in my market, landlords would do almost anything to get a 10-year lease. The average build out cost I have seen for basic office is around $30/SF, but this figure can range widely based upon your market.", "replies": [], "depth": 1}, {"id": "gsv52di", "text": "A broker isn't going to help with anything except for telling you what is common practice. If a broker is not involved in finding you the space, you can use that savings to get your $50 TI no problem. If landlord has to pay broker and your TI, i would think his upper limit would be one years rent in total. So commission + $400k (TI) = one years rent.", "replies": [], "depth": 1}, {"id": "gsxcxv6", "text": "I work in Acquisitions for a healthcare REIT and have acquired around $2.8 billion of medical office buildings in my career.  A good rule of thumb for a new medical office lease is approximately $5 PSF / year.  So a 10 year deal would be $50.  I haven't acquired any life science/biotech buildings, but I do know those buildouts are usually quite high with commensurately high rents.\n\nWhat is your rent going to be if he's offering only $20 PSF?  It sounds like he is low-balling you.\n\n&amp;#x200B;\n\nMy advice is hire a tenant rep and let the negotiation with him begin.", "replies": [], "depth": 1}]