Leasing & tenant law · Owners & management · Deals & development · 10/20/2026
Manhattan Office TI Allowances Climb 7.9% to $120.80 a Foot
Avison Young data show Manhattan office tenant improvement allowances up 7.9% year over year in September, and up 59.2% since 2019, while free rent declined. Gains are concentrated in trophy and Class A space. Owners of older buildings or facing refinancing are cutting concessions overall, and more landlords are offering pre-built space instead.
Reported by Commercial ObserverRead the original ↗
What happened
Commercial Observer reported on October 20, 2026 that tenant improvement (TI) allowances in Manhattan offices are rising again. A TI allowance is money a commercial landlord pays so a tenant can remodel its space. Brokers and landlords told the outlet these allowances are no longer a simple deal sweetener. They are now treated as a necessity in office deals.
Avison Young data, based on 12-month moving averages, shows Manhattan TI allowances are up 59.2 percent since 2019. They peaked in 2024, dipped substantially in 2025, and rose again in 2026. They reached $120.80 per square foot in September, up 7.9 percent from a year earlier. Free rent moved the other way. It fell 8.6 percent from 2025 to just over 10 months per lease on average as of October. Avison Young's Vikrant Ghate said this breaks the usual pattern, where high interest rates bring more free rent.
The gains are concentrated at the top of the market. Trophy TI allowances rose 15.8 percent to $130.40 per square foot. Class A rose 9.5 percent to $124.20. Class B and C buildings fell 4.3 percent to $103.40, and free rent in those buildings fell 14.3 percent. Savills' Matt Schreck said owners refinancing maturing loans at higher rates struggle to fund both building upgrades and tenant concessions. Lower Manhattan saw TI allowances drop 11.5 percent and free rent drop 13.8 percent. Midtown trophy TI allowances rose 18.2 percent.
Some owners are building out spaces themselves instead of giving TI money. Olmstead Properties said it has leased over 110,000 square feet of pre-built office space at 373 and 381 Park Avenue South in the Flatiron District. It is repeating the approach at 180 Varick Street and 19 West 44th Street.
Key facts
- Average Manhattan TI allowance
- $120.80 per square foot in September 2026, up 7.9% year over year (Avison Young)
- Change since 2019
- TI allowances up 59.2%
- Free rent
- Just over 10 months per lease as of October, down 8.6% from 2025
- Trophy buildings
- TI up 15.8% to $130.40 per square foot
- Class A buildings
- TI up 9.5% to $124.20 per square foot
- Class B and C buildings
- TI down 4.3% to $103.40 per square foot; free rent down 14.3%
- Lower Manhattan
- TI down 11.5%; free rent down 13.8%
- Pre-built leasing
- Over 110,000 sq ft leased at 373 and 381 Park Avenue South (Olmstead Properties)
What it means
Landlords
This is Manhattan office data, not residential. Small owners with commercial space may still notice the trend: tenants expect build-out money or ready-to-use space, and owners with tight finances are cutting concessions overall rather than swapping one for another.
Buyers and owners
Sources said owners refinancing maturing loans at higher borrowing rates have less room to fund concessions. One broker said a basic build-out can exceed $100 per square foot while rents in weaker buildings sit in the $60s and $70s, so it can take years to break even.
Tenants and voucher holders
The story does not cover apartment rents, vouchers or rent-regulated housing, so it has no direct effect on residential tenants. It notes only that residential conversions have removed weaker office buildings in Lower Manhattan.
The highlights
- Free rent fell 8.6% this year to just over 10 months per lease on average.
- Trophy TI rose 15.8% to $130.40 a foot; Class B and C fell 4.3% to $103.40.
- Olmstead leased over 110,000 sq ft of pre-built space at two Flatiron buildings.
Why it matters Landlords
Rising build-out and borrowing costs are pushing owners with tight finances to cut concessions or offer pre-built space rather than fund custom work.
Not known yet
- Whether these concession trends apply to offices outside Manhattan, such as Brooklyn
- How many apartments the Lower Manhattan residential conversions created
- Whether TI allowances are expected to keep rising into 2027
- What Olmstead's pre-built spaces rent for compared with custom builds
Background
Commercial leases in New York City are not covered by rent stabilization or most residential tenant protections. Rent, length and concessions are negotiated between landlord and tenant. Build-out or renovation work in a commercial space generally needs Department of Buildings (DOB) permits, and who pays for that work is a key term in the lease negotiation.
Summary written by Bulwark from Commercial Observer’s reporting. The original story is at commercialobserver.com. This is general information, not legal advice.
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Photo: Andre Carrotflower, CC BY-SA 4.0