A tenant improvement (TI) is the construction work that customizes leased commercial space for a specific tenant, such as new walls, lighting, plumbing, HVAC changes, accessibility upgrades, and finishes. You may also hear it called a tenant finish, a build-out, or leasehold improvements. In the Las Vegas valley, most TI work needs a building permit.
This guide is for business owners leasing office, retail, restaurant, or medical space. It covers what TI work usually includes, how the cost gets split with the landlord, what to settle in the lease, and how permits, accessibility rules, and inspections work across the valley. It reflects the published rules of each agency as of October 2026. It is general information, not legal, tax, or real estate advice, so confirm the details for your space with your attorney, your landlord, and the building department that covers your address.
What Counts as a Tenant Improvement?
Any construction inside a leased space that adapts it to the tenant’s use can be part of a TI. Common scopes include:
- Walls and layout, such as framing new offices, exam rooms, a break room, or a storage area, or removing partitions to open the floor.
- Electrical and lighting, such as new circuits, outlets, data cabling, panels, and light fixtures.
- Plumbing, such as restrooms, break room sinks, or the water and drain lines a salon, clinic, or restaurant needs.
- HVAC, such as rebalancing, extending, or adding ductwork and equipment for the new layout.
- Fire and life safety, such as sprinkler head relocation, fire alarm changes, and exit signage.
- Accessibility, such as an accessible entrance, route, and restrooms.
- Finishes, such as ceilings, flooring, paint, millwork, and storefront work.
Henderson draws a useful distinction in its own permit checklists. Its Tenant Improvement checklist says a tenant improvement is for the first-time build-out of a commercial tenant space, while a commercial interior remodel is for changes to an existing tenant space. Other jurisdictions use their own labels, but the idea is the same: you are building out or reworking the interior of a commercial suite.
What Is a Shell Space?
Most TI projects start from a shell. Clark County’s Shell Building Permit Guide defines a shell building as a structure that is not ready for occupancy when completed. It consists of the exterior walls, property line fire walls, and roof structure, and its mechanical, plumbing, and electrical work is limited to rough-ins for future tenant improvements.
The county’s guide says a shell building does not include offices, corridors, interior partitions, suspended ceilings outside rated designs, or lighting beyond emergency and site lighting. Toilet rooms are excluded except in multi-story shell buildings. Shell plans must carry a note that separate building permits are required for all future tenant improvements and Certificates of Occupancy. In other words, the shell is the starting line, and the TI is everything that makes the suite usable.
What Do Vanilla Shell, Cold Dark Shell, and Turnkey Mean?
Brokers and landlords use shorthand to describe the condition a space is delivered in. These are industry terms, not legal or code definitions, and their meaning varies from one landlord and lease to the next. As they are commonly used:
- Cold dark shell usually means a bare structure with little or no interior finish, often without distributed HVAC, finished restrooms, or lighting.
- Vanilla shell (sometimes called warm shell) usually means some basics are in place, which may include restrooms, a ceiling grid, base lighting, HVAC distribution, and finished perimeter walls, so the tenant builds out the layout and finishes.
- As-is means the tenant takes the space in its current condition, often a previous tenant’s build-out, and pays for any changes.
- Turnkey means the landlord builds the space to an agreed plan and hands it over ready to use.
Because these labels are not standardized, never rely on the label alone. Ask for a written description of exactly what is in the space today and what the landlord will deliver before your work begins.
Who Pays for a Tenant Improvement?
It is negotiated in the lease. The common arrangements are:
- A TI allowance, where the landlord contributes a set amount, often stated per square foot or as a total, and the tenant pays any costs above it.
- Landlord-performed work, where the landlord builds an agreed scope, sometimes on a turnkey basis.
- Tenant-funded work, where the tenant takes the space as-is and pays for the whole build-out.
With an allowance, read the details. Leases can limit what the allowance covers (for example, construction versus design fees, furniture, cabling, or signage), how and when it is paid out (up front, in draws, or after completion), and what paperwork the landlord needs before it pays. Landlords may also recover their contribution through the rent or the lease term, so compare offers on total cost, not just the allowance number.
What Should the Lease Say About TI Work?
The lease, and often a separate exhibit called a work letter, is where TI terms get settled. Before you sign, make sure the documents answer these questions in writing:
- What condition will the space be delivered in, and by what date?
- What is the TI allowance, what does it cover, and how is it disbursed?
- Who designs the space, who hires the contractor, and does the landlord have to approve the plans and the contractor?
- Who is responsible for permits, and what happens to rent if permits or construction run late?
- Who is responsible for base building items like the roof, structure, main electrical service, and existing HVAC equipment?
- Who pays for accessibility upgrades outside your suite, such as restrooms, entrances, or parking, if the build-out triggers them?
- Who owns the improvements when the lease ends, and do you have to remove them and restore the space?
Restoration clauses deserve extra attention. Some leases let the landlord require the tenant to remove improvements and return the space to its original condition at move-out, which can be a real cost years later. A real estate attorney who reviews commercial leases can help you spot these terms before you are committed.
Does a Tenant Improvement Need a Permit in Las Vegas?
In most cases, yes. Clark County’s Do I Need a Permit? page states that anyone who intends to construct, alter, repair, or change the occupancy of a building, or to install, alter, or replace any electrical, gas, mechanical, or plumbing system regulated by code, must first apply for and obtain the required permit. A separate fire code permit is required to install or modify systems regulated by the fire code. A typical TI touches several of those systems at once. Our guide on when a remodel needs a permit in Las Vegas covers the general permit rules in more detail.
Which building department you deal with depends on the address, not the mailing city. The valley is split among the City of Las Vegas, Henderson, North Las Vegas, and unincorporated Clark County, and each runs its own plan review, permits, and inspections. Some details from each:
- City of Las Vegas: only a Nevada licensed contractor may obtain a building permit for commercial construction, new commercial plans must be submitted electronically, and work not on the city’s list of permits without plans requires plans to be submitted and reviewed.
- Henderson: TI applications go through the city’s online portal as a commercial building permit, with prerequisites that include a shell building permit, zoning in place for the proposed use, and an assigned address, including the suite number where applicable.
- North Las Vegas: the Building Safety division performs plan reviews, issues permits, and conducts inspections, and it issues Certificates of Occupancy and Temporary Certificates of Occupancy electronically.
- Unincorporated Clark County: the Department of Building and Fire Prevention handles plan review, building permits, fire code permits, and inspections for unincorporated areas like Paradise, Spring Valley, and Enterprise.
Who Prepares the Plans for a TI?
A commercial TI usually needs a full set of construction drawings. Clark County’s Checklist for Commercial Submittals calls for plans stamped or signed by a Nevada design professional, including architectural, electrical, plumbing, mechanical, and structural sheets as they apply, plus energy code compliance documents. Henderson’s TI checklist similarly requires a plan set signed and sealed by the registered design professional, energy code compliance documentation, and electrical load calculations, with structural calculations where the work affects the structure.
The plans also carry the code analysis for your use, including the occupancy classification, occupant load, exits, fire sprinklers, and fire alarms. That is why a change in how the space is used, such as turning an office into a restaurant or a clinic, can change what the design has to include.
Do Fire Department Reviews Apply to a Build-Out?
Often, yes. Moving walls usually means relocating sprinkler heads, adjusting fire alarm devices, and updating exit signage, and those systems have their own review. North Las Vegas publishes fire plan review guidelines covering fire sprinkler system modifications, fire alarm systems, and kitchen hood suppression systems. Henderson keeps separate submittal checklists for fire alarm, fire sprinkler, wet chemical or kitchen hood, and grease interceptor work. Restaurants in particular should expect hood, suppression, and grease interceptor items to be part of the review.
How Does the ADA Affect a Tenant Improvement?
A TI in a place of public accommodation or a commercial facility is an alteration under the Americans with Disabilities Act. Under 28 CFR 36.402, alterations must make the altered portions readily accessible to and usable by people with disabilities to the maximum extent feasible. The rule lists remodeling, renovation, and changes to the plan configuration of walls and full-height partitions as alterations. New and altered work is measured against the 2010 ADA Standards for Accessible Design.
The rules reach past the suite itself. Under 28 CFR 36.403, when an alteration affects an area containing a primary function, such as offices, work areas, or a dining area, the path of travel to that area and the restrooms, telephones, and drinking fountains serving it must also be made accessible, unless the cost is disproportionate. Key points from the regulation:
- Path of travel costs are considered disproportionate when they exceed 20% of the cost of the alteration to the primary function area.
- When costs are disproportionate, the path of travel still has to be made accessible to the extent possible without exceeding that threshold, starting with an accessible entrance, then an accessible route to the altered area, then accessible restrooms.
- A tenant’s alterations in areas only the tenant occupies do not trigger a path of travel obligation on the landlord for areas under the landlord’s authority, if those areas are not otherwise being altered.
- The obligation cannot be avoided by splitting work into a series of smaller alterations, and alterations on the same path of travel within three years can be counted together when judging disproportionality.
This is one more reason to settle in the lease who pays for accessibility work outside your suite, and to have your designer check the existing entrance, route, and restrooms early.
Who Can Build a Tenant Improvement in Nevada?
A licensed contractor. Under NRS 624.700, it is unlawful to act as a contractor or bid on a job in Nevada without an active license unless an exemption applies. Clark County’s licensing requirements state that contractors and subcontractors receiving permits must hold an active Nevada State Contractors Board license and an active business license from the local jurisdiction, and the City of Las Vegas issues commercial building permits only to Nevada licensed contractors.
Before you or your landlord hire anyone, look the contractor up with the Nevada State Contractors Board license search, and see our guide on how to choose a general contractor in Las Vegas for what else to check.
What Are the Steps in a Tenant Improvement?
Every project is different, but a typical TI follows this sequence:
- Letter of intent, where you and the landlord outline the rent, term, delivery condition, and TI allowance.
- Space plan, a preliminary layout that tests whether the suite fits your needs and helps price the work.
- Lease and work letter, where the TI terms, allowance, and approvals are put in writing.
- Landlord approval of the plans and, where the lease requires it, the contractor.
- Construction drawings prepared by the design professional for permit submittal.
- Plan review, where the building and fire reviewers check the drawings and request corrections if needed.
- Permit issuance, followed by construction.
- Inspections during construction, through the final building and fire inspections.
- Certificate of Occupancy or other occupancy approval, then move-in.
Do not move in early. Clark County’s occupancy guidance says a building that requires a Certificate of Occupancy cannot be used or occupied until the Building Official issues one, and that stocking goods, training employees, or installing furnishings may be considered a form of occupancy. The county also notes that a tenant build-out inside a shell building cannot get a final inspection or any occupancy authorization until the shell itself has passed its final inspection and received a Certificate of Completion.
How Long Does a Tenant Improvement Take?
It depends on the size of the space, the complexity of the work, how long design and landlord approvals take, and how many rounds of plan corrections are needed. Long-lead equipment, such as HVAC units, electrical gear, or kitchen hoods, can also set the schedule.
Plan review is one piece you can estimate. Clark County publishes plan review timeline goals for the first review: 21 days for commercial projects valued at $250,000 or more, 14 days for commercial minor projects under $250,000, and 7 days for commercial projects under $100,000 that already have zoning approval. Corrections and later reviews have a 10-day goal. These are goals, not guarantees, and the cities set their own timelines. Some jurisdictions, including the City of Las Vegas and Clark County, also offer express plan review for an added fee.
Are Tenant Improvements Tax Deductible?
They may have tax benefits, but the rules are technical. The IRS describes qualified improvement property in Publication 946 as, generally, an improvement to an interior portion of a nonresidential building placed in service after the building was first placed in service. It excludes costs for enlarging the building, elevators or escalators, and the internal structural framework. How that applies to your build-out, and whether you or the landlord claims it, depends on the lease and your situation, so talk to your tax advisor.
How Butler’s Construction Handles Tenant Improvements
Butler’s Construction is a licensed Nevada general contractor and C-1 plumbing contractor serving the Las Vegas valley. We handle tenant improvements for tenants, property owners, and property managers, from design and permitting through construction, inspections, and a final walkthrough. We coordinate with the landlord along the way so the work stays within the lease and the code.
If you are looking at a space or already have a lease in hand, call us or request a free estimate. We will walk the suite with you and tell you what the build-out requires.
Sources
- Clark County Building and Fire Prevention: Do I Need a Permit?
- Clark County Building Department: Shell Building Permit Guide (BPG-181)
- Clark County Building Department: Checklist for Commercial Submittals (BPC-001)
- Clark County Building and Fire Prevention: TCO/CO Occupancy
- Clark County Building and Fire Prevention: Plan Review Timelines
- Clark County Building and Fire Prevention: Licensing and Payment Requirements
- City of Las Vegas Building and Safety: Building and Offsite Permits
- City of Las Vegas: Online Permits List
- City of Henderson: Tenant Improvement Application Submittal Checklist
- City of Henderson: Submittal Checklists
- City of North Las Vegas: Building Safety
- City of North Las Vegas: Fire Plan Review
- 28 CFR 36.402: Alterations
- 28 CFR 36.403: Alterations, Path of Travel
- ADA.gov: 2010 ADA Standards for Accessible Design
- NRS Chapter 624: Contractors
- Nevada State Contractors Board: Contractor License Search
- IRS Publication 946: How To Depreciate Property