TI Costs Are Up. Here’s What That Means for Medical Real Estate Deals

Tenant improvement costs in medical real estate have quietly climbed over the past 12 months—and they’re not slowing down. In some markets, we’re seeing $100 to $150 per square foot just to get space clinic-ready. And for behavioral health or surgical use? Even more.

This matters.

Because when TI costs go up, deal structures change. Landlords are becoming pickier about who they lease to. Generous TI packages are drying up. And in a lot of cases, tenants are expected to front more of the cost—or take longer lease terms to offset the investment.

For buyers, this also impacts capex planning. An otherwise solid building can become a drag if you’re underwriting a major backfill with heavy medical build-out needs. And for operators, the decision to lease vs own starts to look different when you realize you’re spending hundreds of thousands to improve someone else’s property.

It’s not all bad news. But it does mean you need a plan. Whether that’s baking TI costs into your negotiation, renegotiating rent escalations, or exploring sale-leasebacks to free up capital—you can’t afford to ignore the impact.

Need help modeling a deal with realistic TI numbers? Let’s run it together.

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