When you lease industrial space in Indianapolis, the landlord may help pay to make it work for your business. Tenant improvement allowances and free rent are two of the most valuable concessions in any industrial lease — and two of the most misunderstood. Here's how they work and how I negotiate them for clients.
What is a tenant improvement allowance?
A tenant improvement (TI) allowance is money the landlord contributes toward building out your space. It's usually quoted per square foot or as a lump sum. Common uses in Indianapolis industrial and flex space include:
• Office remodels, restrooms and break rooms
• LED lighting
• Electrical upgrades for equipment
• New dock levelers, seals and overhead doors
• Warehouse HVAC or ventilation
• Paint, flooring and finishes
• Demising walls to create the right size space
How landlords decide how much TI to offer
Landlords weigh lease term, tenant credit, how long the space has been vacant, current market concessions and whether the improvements will help future tenants. A five-year lease in a building that's been vacant for a year will typically justify more TI than a three-year lease in a building with multiple interested tenants.
Turnkey vs. TI allowance
In a turnkey deal, the landlord builds the space to agreed plans and handles construction, delivering it ready for occupancy. With a TI allowance, you manage construction and the landlord reimburses up to a set amount. Turnkey is simpler and transfers cost-overrun risk to the landlord. An allowance gives you more control over contractors and finishes.
How free rent works in Indianapolis industrial leases
Free rent — also called abated rent — gives you a period without base rent, usually at the start of the lease. It helps with cash flow while you move, install racking and equipment and ramp up operations. Read the clause carefully: many leases still require tenants to pay NNN charges during free rent.
Trading between concessions
Landlords often view free rent and TI as interchangeable. A tenant who needs significant build-out might ask for more TI and less free rent. A tenant moving into a ready-to-use space might prefer more free rent. Sometimes unused TI can be applied to rent, moving costs, cabling or signage.
Concessions vary across Central Indiana
Concessions depend on supply and demand in your specific segment. A large vacant building in a newer logistics park around Plainfield or Mt. Comfort may offer generous free rent and TI. A scarce small-bay or flex space in Carmel or Fishers may offer very little because the landlord has other interested tenants.
Tips for maximizing your concession package
• Get contractor bids early so you know what your build-out truly costs
• Tie a longer lease term to a bigger concession package
• Ask for improvements to be completed before the lease commencement date
• Clarify who owns improvements and whether you must remove them later
• Compare offers from multiple landlords to establish market concessions
An example of a strong concession package in Indianapolis
A medical supply company needed about 15,000 square feet of flex space on the north side of Indianapolis with a clean office, a small lab area and two dock doors. The first proposal it received offered one month of free rent and no improvements — the landlord's "as-is" offer.
We gathered contractor estimates for the office refresh, lab build-out and LED lighting, then requested proposals from two competing buildings. With real numbers and real alternatives on the table, the original landlord came back with several months of free rent, a meaningful tenant improvement allowance covering most of the build-out, and a commitment to service the HVAC units before move-in. The company moved into a space that fit its operation without draining its cash. The lesson: industrial tenant improvements in Indianapolis are negotiated, not given. Landlords respond to preparation, competition and a clear business case.
How improvements affect your lease end
At lease expiration, many Indianapolis leases require tenants to remove improvements and restore the space. Negotiate upfront that standard office and warehouse improvements can stay, and limit restoration to specialized items like equipment pads or cranes. That single clause can save tens of thousands of dollars when you move out.
Frequently asked questions about TI and free rent in Indianapolis
Do I still pay NNN charges during free rent? Often yes. Negotiate to abate NNN too, if possible.
Can I use TI money for equipment? Usually not. TI typically covers permanent building improvements.
What happens if my build-out costs more than the allowance? You typically pay the difference, unless the deal is turnkey.
Are concessions available on small industrial spaces? Sometimes, though they're usually smaller in tight segments.
Maximize your industrial lease concessions
I negotiate tenant improvement allowances, free rent and other concessions for tenants throughout Indianapolis, Carmel and Hamilton County, turning standard proposals into stronger deals.
Annie Scott — Annie Scott Realty Group LLC / F.C. Tucker Company Cell: (317) 902-8622 ·
