The work letter is the single most expensive document an international retail tenant signs in the US. It is also the document most international tenants pay the least attention to — because the headline lease economics (rent, term, percentage rent) dominate the negotiation, and the work-letter exhibits get treated as boilerplate.
They are not boilerplate. The work letter is where US landlords routinely shift base-building scope, MEP capacity upgrades, ADA upgrades to common areas and life-safety work onto the tenant in ways international operators do not expect — until the GC's first cost-to-complete report flags an unbudgeted $200K of landlord-criteria scope.
This guide walks through what to actually negotiate, in what order.
What a US work letter does
A work letter is an exhibit to the lease that defines who does what construction work, who pays for it, and on what timeline. In the US specialty retail market the typical structure splits work into three categories:
- Landlord's work. Base-building delivery condition — shell, demising walls, primary MEP capacity, common areas, life-safety up to the demising wall.
- Tenant's work. Everything inside the demised premises — TI buildout, finishes, fixtures, branded environment, supplemental MEP, signage.
- Tenant improvement (TI) allowance. A cash contribution from landlord to tenant, typically expressed in $/SF, intended to offset some of the tenant's work cost.
The fight is at the boundary between the first two categories. Landlords will draft the boundary to push as much scope as possible into “tenant's work.” You need to push it back.
The TI allowance ranges international tenants should ask for
Per Tyler Cauble's 2026 Nashville benchmarks: $10–30/SF for second-generation retail space and $40–80/SF for first-generation retail space. Those are typical. The specific number depends on the market, the landlord's position in the leasing cycle, the lease term you are accepting and whether you are anchoring a new center or backfilling an existing space.
The headline TI allowance number is not the question. The question is what TI covers — and the answer is in the work-letter exhibits.
The five clauses that move money
1. What the TI allowance is and isn't allowed to be spent on
Per Tyler Cauble: “Not specifying what TI covers. Does it include architect fees? Permit fees? Soft costs? If it's not in the work letter, the tenant will ask for more money later.”
Push for TI to be applicable to: hard construction costs, architect and engineer fees, permit and expediter fees, signage permits, brand-required AV and lighting, and project management fees. If the landlord refuses any of those, get a clear written statement of what is excluded — and price those exclusions into your separate budget.
2. The base-building delivery condition
The lease will reference a “landlord's work exhibit” or “delivery condition exhibit.” Read it line by line. It should specify:
- Concrete slab to a defined finish level
- MEP capacity to specific tonnage, amperage and water/sanitary intakes at the demising wall
- Demising walls fire-rated and patched to a defined condition
- Storefront and exterior wall in agreed condition
- ADA-compliant path of travel to the storefront from public ways
- Restroom rough-in if not in the demised area
Anything not in this exhibit lands as tenant's work. If the exhibit says “in as-is condition,” you are taking the whole base-building risk.
3. Who pays for ADA upgrades to common areas
Public-accommodation ADA rules in the US apply to the common areas the tenant's customers use to reach the store. If the common areas are not compliant, the AHJ can require upgrades as a condition of the tenant's certificate of occupancy. Standard landlord position: that's your problem. Push it back into landlord's work.
4. MEP capacity upgrades
If your brand standards require MEP capacity beyond the landlord's base-building intent — heavy lighting, AV, kitchen, supplemental HVAC — clarify in the work letter who pays for the capacity upgrade from the building shaft / service point to the demised premises. Standard landlord position: tenant. Negotiate a TI uplift to cover the realistic upgrade cost.
5. The TI disbursement schedule
TI is rarely paid in advance. The standard schedule disburses TI in stages against construction milestones (foundation, framing, MEP rough-in, finish, CO) or in a single payment after CO with evidence of lien releases. The latter is bad for cash flow. Push for a 60% / 40% staged structure or, if you have leverage, a 80% / 20% structure with the final 20% at CO.
What good legal and construction review looks like
Guidance Corporate Realty Advisors and Aquila Commercial both publish guides specifically arguing that any tenant should have a project manager review every work letter before signing. We agree. Your broker negotiates the headline economics — rent, term, TI allowance amount. They are not paid to read the construction exhibits.
The right review process:
- Your real-estate counsel reads the lease for legal exposure
- Your real-estate broker negotiates the headline economics
- A US-based retail construction adviser reads the work letter for scope-shift exposure and tells you what to push back on
- You go back to landlord with a unified position before lease execution
Steps 3 and 4 typically cost $8K–$25K per site. They routinely save $50K–$300K per site in scope shift that would otherwise show up as change orders during construction.
The single most important sentence in a US work letter
Watch for language like this:
“Tenant's work shall include any and all work required by the local authority having jurisdiction to issue a certificate of occupancy for the Premises.”
As written, that clause makes you responsible for everything the AHJ demands to issue your CO — including base building items outside your walls: common-area ADA upgrades, building-wide fire alarm modifications, sprinkler additions, or accessibility upgrades to bathrooms outside your demised space. Push back hard.
The tenant-protective version limits your obligation to the space you actually control:
“Tenant's work shall include any and all work required by the local authority having jurisdiction to issue a certificate of occupancy for the Premises, limited to work within the demised premises. Any upgrades, modifications, or remediation to the base building, structure, or common areas required to obtain Tenant's certificate of occupancy — including but not limited to fire/life safety systems, ADA compliance, and accessibility improvements outside the demised premises — shall be performed at Landlord's sole cost and expense.”
How we help
Our tenant coordination service is built for this. We review the work letter, identify the scope-shift clauses, give you a written position to take back to your broker and landlord, and stay in the room through lease execution. Average fee per site: $8K–$25K. Average saving per site: $50K–$300K, validated against the change orders we don't have to issue later.
Sources cited
Tyler Cauble, 2026 Nashville TI benchmarks. Guidance Corporate Realty Advisors, work-letter review guides. Aquila Commercial, tenant-side work-letter guidance. Field benchmarks from Inscape Retail Projects, refreshed quarterly. This guide is for informational purposes; specific lease terms require review by qualified counsel and a US construction adviser.