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A sinking American office market raises questions about the impact and value of tenant improvement allowances to owners and investors. In a note to me, a veteran portfolio manager suggests shifting the T-I burden to tenants–the industry practice in most other world markets. He argues that would reduce future volatility and buffer U.S. office investors in the next cycle from the severity of losses they now face in today's tailspin. Leasing brokers probably will take issue since this shift would impact commission volumes and tenant moves, and my correspondent would prefer that I not use his name to maintain good relations with them. But his arguments are worth considering. Here is his analysis:

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