Glossary

Medical Office Tenant Improvement (TI) Build-Out Intensity

Also known as: medical TI intensity, specialized medical build-out, TI

The substantially higher cost and specialization of tenant improvements required for medical office space -- plumbing for exam rooms, lead-lined walls for imaging, specialized electrical and HVAC -- relative to general office TI, a key factor in medical office lease economics and re-tenanting risk.

Because medical TI costs run materially higher per square foot than general office (often two to three times or more, depending on the specialty), landlords typically require longer lease terms to amortize the TI investment, and re-tenanting a vacated suite built out for one specialty (for example, an imaging suite with lead shielding) for a different medical use, let alone a non-medical use, can require substantial additional capital or stand largely unusable without it. This build-out specificity is a double-edged underwriting consideration: it raises switching costs that support tenant retention and long lease terms, but it also raises re-leasing capital risk and downtime if a specialized tenant vacates, making TI allowance structuring and amortization terms a more consequential lease negotiation point in medical office than in most other office subtypes.