Most lease negotiations end with a handshake over the rental rate. That’s the figure that gets reported to the board, cited in the press release, and used to benchmark the deal against the market. It feels like the win. But it isn’t the whole story.
The Tenant Improvement (TI) Work Letter is where the actual project gets defined. It’s the language that specifies what the landlord will build, to what standard, with whose money, on what timeline. Get it right and the construction process has a clear scope to execute against. Get it vague and you’ll spend the next several months discovering exactly what “standard finishes” means to a landlord who isn’t paying for the overage.
There is almost always a gap between what a tenant envisions and what a landlord has agreed to build. It doesn’t become visible until after the lease is executed, the leverage is gone, and the change orders start arriving.
The problem isn’t that tenants negotiate badly. It’s that most tenants don’t know what they need to specify before they negotiate. A detailed TI Work Letter requires room-by-room requirements, clear standards for fit and finish, defined specifications for each scope item, and enough detail that a contractor can produce an accurate estimate from it. That level of detail doesn’t come from a tour of the space and a conversation with your broker. It comes from a disciplined requirements gathering process. This is something many business leaders skip because they don’t know they need it.
The downstream effects are predictable. Without a detailed TI Work Letter, the construction budget is a guess. The timeline is optimistic. The scope is whatever the GC interpreted from the testfit, not what you actually needed. Every gap surfaces as a change order, and change orders always arrive at the worst possible moments when construction is underway, your current lease is ticking down, and your leverage is zero.
The fix is not complicated, but it has to happen early. Before you tour properties seriously. Before you table a letter of intent. Before the broker is comparing your deal against comps. At that stage, you still have the ability to specify conditions of the deal. A landlord who wants a signed lease has every reason to give you what you’ve asked for in writing.
When you get this right, the construction cost estimate is based on an actual scope, not assumptions. The timeline reflects real task durations. The landlord’s obligations are documented, not implied. And when something goes sideways, you have a record of what was agreed upon. Clarity and specificity provide protection for all the parties involved.
If you’re approaching a lease decision and haven’t worked through your TI requirements in detail, that’s the conversation worth having before anything else. The negotiation window is short. The construction project is long.
If you’d like a second set of eyes on where you stand, no matter where you are in the process, feel free to schedule a call.