What outcome is anticipated when Tenant Improvements are factored into the resale calculation?

When factoring Tenant Improvements into the resale calculation, the anticipated outcome is that they are included as selling price deductions. This approach recognizes that while these improvements may enhance the value of the property in terms of marketability or functionality, they also represent costs incurred by the owner which should be deducted from the selling price to reflect the true net proceeds from the sale.

In practical terms, when a property is sold, the buyer might not value the improvements to the same extent or might have different plans for the space. As a result, acknowledging these costs as deductions allows sellers to present a more realistic financial picture of the transaction.

Including Tenant Improvements as deductions aligns with standard practices in real estate financial analysis, where improvements and expenditures are accounted for in terms of their impact on overall investment returns. Hence, by viewing them as deductions, it offers a clear financial understanding for both buyers and sellers during negotiations.