Why HVAC Is the Most Overlooked — and Most Expensive — Part of a TI Build-Out
Short answer: HVAC modifications typically represent 15-30% of a tenant improvement (TI) build-out budget in Las Vegas — often $8-$25 per square foot — yet most tenants do not evaluate HVAC capacity until construction is underway. The existing building system may lack the capacity to serve your space, the ductwork may need complete redesign for your floor plan, and the landlord's responsibility versus yours depends entirely on the lease language. Before signing a lease or finalizing a TI budget, get an HVAC capacity assessment from a licensed commercial contractor. A $500-$1,500 pre-lease assessment can prevent $15,000-$50,000 in surprises during build-out. In Las Vegas, where cooling accounts for 40-60% of commercial energy costs, HVAC also has the largest ongoing impact on your operating expenses.
Planning a TI build-out? Call (702) 567-0707 for a pre-lease HVAC capacity assessment before you sign.
A dental practice in Henderson signed a lease for a 3,200 square foot suite in a multi-tenant professional building. The TI allowance was $45 per square foot — $144,000 total — which seemed generous. The architect designed the space with eight operatories, a sterilization room, a digital X-ray room, a lab, a reception area, and two private offices. Construction began. Three weeks into the build-out, the HVAC contractor discovered that the building's rooftop unit serving that wing had 2 tons of available capacity — and the dental office needed 6 tons.
The options: add a supplemental 4-ton unit at a cost of $22,000 (including structural roof support, electrical, and crane), renegotiate with the landlord (who argued the excess capacity was the tenant's responsibility), or redesign the space to reduce cooling needs. The dental practice was already 60 days into a 120-day build-out timeline with a hard opening date tied to an equipment financing deadline. They ended up spending $18,000 on supplemental cooling that consumed 40% of their remaining TI budget and delayed the opening by three weeks.
This scenario happens in Las Vegas commercial real estate every week. It is preventable with one step: evaluate HVAC capacity before finalizing the lease, not during construction.
Understanding Your TI Allowance and HVAC Costs
A tenant improvement (TI) allowance is the dollar amount the landlord provides toward the cost of customizing a commercial space for the tenant's use. In Las Vegas, TI allowances for office and medical space typically range from $30-$80 per square foot, with retail and restaurant spaces sometimes negotiated higher due to greater build-out complexity.
How HVAC fits into the TI budget
HVAC modifications are one of the largest single line items in a TI build-out. The scope ranges from minimal (connect to existing ductwork, add a few registers) to extensive (add tonnage, redesign ductwork, install supplemental systems).
| HVAC Scope | Typical Cost (per sq ft) | % of TI Budget | Common Situations |
|---|---|---|---|
| Minimal — connect to existing system, minor duct modifications | $3-$8 | 5-15% | Standard office occupying space previously used as office, minimal layout change |
| Moderate — ductwork redesign, add zones, thermostat relocation | $8-$15 | 15-25% | Retail to office conversion, significant layout change, added conference rooms |
| Major — supplemental cooling, new equipment, extensive ductwork | $15-$30+ | 25-40% | Medical/dental, restaurant, server room, high-density occupancy, change of use |
The critical mistake tenants make: assuming the TI allowance covers all HVAC costs. If the space needs supplemental cooling because the existing system lacks capacity, that cost may come from the TI allowance, from the tenant's pocket, or from the landlord — depending on the lease terms. Clarify this before signing.
Pre-Lease HVAC Capacity Assessment: The $500 That Saves $50,000
Before signing a commercial lease in Las Vegas, have a licensed HVAC contractor perform a capacity assessment. This is different from a building inspection — it specifically evaluates whether the existing HVAC infrastructure can support your intended use of the space.
What the assessment covers
- Existing system capacity: What is the total tonnage serving your space or zone? How much of that capacity is available (not committed to other tenants)? Is the system shared with other tenants or dedicated to your space?
- Current system condition: What is the age, brand, and condition of the equipment? A system with 3 tons of available capacity is not useful if the equipment is 18 years old and approaching end of life. You do not want to invest $40,000 in HVAC build-out connected to a system that the landlord will need to replace in 2 years (with your space offline during replacement).
- Load analysis for your intended use: Based on your floor plan, occupancy density, equipment heat loads (medical equipment, servers, kitchen equipment), and Las Vegas cooling requirements, how many tons does your space need? This is a simplified Manual J calculation specific to your space.
- Ductwork evaluation: Are the existing ducts sized, located, and accessible for modification to serve your new layout? Can the existing trunk lines support additional branches for your rooms, or is the main duct already at capacity?
- Electrical capacity: Does the electrical panel have capacity for additional HVAC equipment if supplemental cooling is needed? A new 5-ton split system requires a dedicated 30-50 amp 208/230V circuit.
This assessment typically costs $500-$1,500 and takes 2-4 hours. The results give you the information needed to negotiate HVAC provisions in the lease, budget accurately for the TI build-out, and avoid mid-construction surprises.
Common HVAC Scenarios in Las Vegas TI Build-Outs
Scenario 1: Standard office — sufficient existing capacity
You are leasing 2,500 square feet in a multi-tenant office building for a professional services firm. The previous tenant was also an office user. The building has a dedicated 7.5-ton rooftop unit for your zone with adequate capacity for office-density occupancy (150 square feet per person). The HVAC work involves modifying ductwork to serve your specific room layout — moving a few supply registers, adding a supply run to a new conference room, and relocating the thermostat.
Typical HVAC cost: $8,000-$18,000 ($3-$7/sq ft)
Timeline: 1-2 weeks of HVAC work, coordinated with other TI trades
Responsibility: Typically covered by TI allowance
Scenario 2: Change of use — additional capacity needed
You are converting a 4,000 square foot retail space into a medical clinic. The retail space had a 10-ton system adequate for open retail (400-500 sq ft/ton). Your medical clinic has exam rooms, a procedure room with medical equipment generating heat, a sterilization area, and a digital imaging room. The calculated load is 14 tons. You need 4 additional tons of cooling capacity.
Options for additional capacity:
- Supplemental split system: A 4-ton split system with outdoor condensing unit and indoor air handler. Cost: $12,000-$22,000 installed, plus structural and electrical work for the condenser pad or roof mount.
- Supplemental mini-split system: Multiple ductless mini-split heads serving the high-load rooms (procedure room, imaging room, server closet). Cost: $10,000-$18,000. Advantage: no ductwork modification needed for supplemental zones.
- Replacement of existing unit: Replace the 10-ton rooftop unit with a 15-ton unit. Cost: $18,000-$35,000 including crane and structural assessment. This is the cleanest solution but the most expensive and may require landlord participation since the RTU serves the building infrastructure.
Responsibility: This is where lease negotiation matters. The base building system provides 10 tons, which was adequate for the space's original use. The additional 4 tons is a tenant-driven requirement. In most leases, the tenant bears this cost — but it is negotiable. A landlord who wants a medical tenant (longer leases, higher rents) may contribute to the supplemental HVAC cost.
Scenario 3: Restaurant or food service — heavy HVAC modifications
Converting any space to a restaurant in Las Vegas is an HVAC-intensive project. Commercial kitchen equipment (ranges, ovens, fryers, dishwashers) generates enormous heat — a typical restaurant kitchen adds 8-15 tons of cooling load beyond standard commercial occupancy. Kitchen exhaust hoods require make-up air systems to replace the air pulled out of the building. And the dining area needs comfortable temperatures despite proximity to the kitchen heat.
Typical restaurant HVAC cost in a TI build-out: $25-$50/sq ft ($75,000-$200,000 for a 3,000 sq ft restaurant)
Key components: Kitchen exhaust hood system, make-up air unit, supplemental cooling for kitchen and dining zones, dedicated exhaust for restrooms, grease trap ventilation, and fire suppression coordination.
Scenario 4: Server room or data closet — supplemental cooling required
Nearly every modern commercial tenant needs an IT closet or server room. A small server closet (100-200 sq ft) with a single rack of networking equipment generates 3,000-8,000 BTU/hour of heat — equivalent to 1-2 additional people in the space. A larger server room with multiple racks can generate 20,000-50,000+ BTU/hour. This concentrated heat load cannot be served by the building's general HVAC system — it requires dedicated, 24/7 cooling independent of the building's occupied/unoccupied schedule.
Solutions:
- Dedicated mini-split for server room: A 1-2 ton ductless mini-split with 24/7 operation and high-temperature alarm. Cost: $4,000-$8,000 installed. This is independent of the building system and operates on its own schedule.
- In-row or in-rack cooling: For larger server installations, self-contained cooling units that mount between or within server racks. Cost: $5,000-$15,000 per unit.
Adding Zones to Shared Building Systems
Many multi-tenant Las Vegas buildings use shared HVAC systems — a single rooftop unit serving multiple tenant spaces through a common duct distribution system. Adding zones to a shared system is one of the most technically complex aspects of TI HVAC work.
Zone dampers and controls
To independently control temperature in your space when sharing a system with other tenants, a zone damper and thermostat must be installed in the ductwork serving your space. The zone damper opens and closes based on your thermostat's call for cooling, independent of what the other tenants' thermostats are doing.
Considerations:
- Bypass or dump zone: When your zone damper closes (because your space is satisfied), the air that would have gone to your space must go somewhere. A properly designed zone system includes a bypass damper that redirects excess air to prevent pressure buildup in the duct system. Without this, closing your zone damper creates high static pressure that wastes energy and can damage ductwork.
- Minimum airflow: Your space needs minimum fresh air ventilation regardless of the cooling call. The zone system must maintain minimum outside air delivery per ASHRAE 62.1 — typically 5-20 CFM per person depending on the space type.
- Control compatibility: The zone controls added for your space must be compatible with the building's existing thermostat/BAS system. Adding a standalone zone board to a building with a centralized BAS requires integration — which is not always straightforward or inexpensive.
When shared systems do not work
Shared systems work well when all tenants have similar schedules and cooling needs (standard office hours, standard office loads). They struggle when:
- One tenant operates extended hours (law firm working until 10 PM while others close at 5 PM) — the shared system must run for the extended-hours tenant, conditioning the entire zone
- One tenant has significantly higher cooling needs (medical, dental, restaurant) — the shared system may not have enough capacity to serve the high-load tenant without starving the others
- Tenants have conflicting temperature preferences — one tenant wants 72°F and the adjacent tenant wants 76°F on a shared zone
In these cases, supplemental or independent HVAC systems for the nonconforming tenant are usually the better solution.
Permit Requirements for TI HVAC Work in Las Vegas
Clark County and the cities of Las Vegas, Henderson, and North Las Vegas require mechanical permits for most HVAC modifications in TI build-outs. Understanding permit requirements upfront prevents delays and compliance issues.
What requires a permit
- Installing new HVAC equipment (split systems, mini-splits, packaged units, air handlers)
- Modifying existing ductwork — adding, removing, or resizing duct runs
- Adding or relocating gas piping for gas-fired heating equipment
- Adding refrigerant piping for new split systems or VRF
- Electrical work for new HVAC circuits (requires separate electrical permit)
- Any change of occupancy classification that affects ventilation requirements (e.g., retail to medical)
What typically does not require a permit
- Replacing a thermostat (like-for-like)
- Changing air filters
- Cleaning ducts
- Like-for-like equipment replacement (same type, same capacity, same location) — though this varies by jurisdiction
Permit timeline and costs
In Clark County, mechanical permit review for a standard TI project takes 2-4 weeks. Complex projects (restaurant, medical) may take 4-8 weeks. Permit fees are based on project valuation — typically $200-$1,500 for the mechanical permit portion. Plan review and inspection fees are additional.
Your HVAC contractor should handle permit applications and coordinate inspections. If a contractor tells you permits are not needed for new equipment installation or major ductwork modifications, find a different contractor. Unpermitted work creates liability for the tenant, can violate lease terms, and must be corrected (at the tenant's expense) before the space can be sold, re-leased, or refinanced.
Landlord vs. Tenant HVAC Responsibilities
Who is responsible for HVAC in a commercial lease depends on the lease structure. This is the most frequent source of disputes in Las Vegas commercial real estate, and clarity in the lease prevents costly arguments during the tenancy.
Common lease structures and HVAC implications
| Lease Type | HVAC Responsibility | Maintenance | Repair/Replacement |
|---|---|---|---|
| Full-service (gross) lease | Landlord provides and maintains HVAC | Landlord | Landlord |
| Modified gross lease | Split — varies by lease | Often tenant | Often landlord for major, tenant for minor |
| Triple-net (NNN) lease | Tenant responsible for all HVAC | Tenant | Tenant |
| Industrial/warehouse | Typically tenant responsible | Tenant | Tenant (often including replacement) |
Key lease provisions to negotiate before signing
- Base building HVAC capacity: What is the landlord obligated to provide? The lease should state specific tonnage per square foot or total capacity available to your space. "Adequate HVAC" is subjective and litigable. "5 tons of cooling capacity dedicated to Suite 200" is clear.
- Supplemental HVAC for tenant use: If your use requires more cooling than the base building provides, who pays for supplemental equipment? Who pays for the energy to operate it? Who maintains and replaces it?
- After-hours HVAC: If the building system operates on a schedule (6 AM - 7 PM weekdays), what is the cost for after-hours cooling? Many landlords charge $50-$150 per hour for after-hours HVAC operation. If your business operates evenings or weekends, this cost can exceed $1,000/month.
- Maintenance obligations: If the tenant is responsible for maintenance, what are the specific requirements? Many leases require the tenant to maintain a service contract with a licensed HVAC contractor and provide proof of maintenance to the landlord. Failure to maintain can shift replacement costs to the tenant even in leases where the landlord would otherwise be responsible.
- End-of-lease condition: Must HVAC modifications be removed at lease end? Must supplemental equipment be surrendered to the landlord or removed by the tenant? This can represent $5,000-$20,000 in restoration costs if not addressed in the lease.
Energy Cost Implications of TI HVAC Decisions
In Las Vegas, HVAC energy costs represent 40-60% of a commercial tenant's total energy bill. The HVAC decisions made during TI build-out directly affect operating costs for the life of the lease — typically 3-10 years.
- High-efficiency equipment: Specifying 16+ SEER2 equipment instead of minimum-code 14 SEER2 reduces cooling energy consumption by 15-25%. For a 3,000 square foot Las Vegas office, this translates to $600-$1,500/year in energy savings. Over a 5-year lease, that is $3,000-$7,500 — often more than the incremental cost of the higher-efficiency equipment.
- Programmable controls: Installing a programmable thermostat with occupancy scheduling reduces HVAC runtime by 20-30% compared to a manual thermostat left at a constant setpoint. Cost: $200-$800. Payback: 1-3 months.
- Duct sealing: During the TI build-out, seal all duct connections with mastic or metal-backed tape. Typical duct leakage in commercial buildings wastes 15-25% of conditioned air. Sealing during construction costs $500-$1,500 and saves 10-20% on cooling costs indefinitely.
- Window film: If your space has west- or south-facing windows, solar control window film reduces heat gain by 40-60% for $8-$15 per square foot of glass. For a space with 200 square feet of west-facing glass, window film saves $500-$1,200/year in cooling costs.
Learn more about reducing HVAC costs from our energy savings guide and maintenance cost guide.
Get an HVAC Assessment Before Your TI Build-Out
The Cooling Company provides pre-lease HVAC capacity assessments and full TI build-out HVAC services for commercial tenants across the Las Vegas Valley. We work with tenants, landlords, architects, and general contractors to ensure HVAC is properly planned, budgeted, and executed — not discovered as a surprise during construction.
Call (702) 567-0707 for a pre-lease assessment, TI build-out HVAC design, or a second opinion on an existing HVAC plan. We service Summerlin, Henderson, North Las Vegas, Green Valley, Enterprise, Centennial Hills, downtown Las Vegas, and all surrounding commercial areas.
Explore our HVAC installation and AC installation services, or read our commercial HVAC guide for a broader overview of commercial systems.
Frequently Asked Questions
How much does HVAC cost in a tenant improvement build-out?
HVAC costs in a Las Vegas TI build-out typically range from $3-$30+ per square foot, representing 15-30% of the total TI budget. Minimal modifications (duct adjustments, register relocation) cost $3-$8/sq ft. Moderate work (ductwork redesign, zone additions) runs $8-$15/sq ft. Major modifications (supplemental equipment, change of use) cost $15-$30+/sq ft. Restaurant and medical build-outs are at the high end due to commercial kitchen ventilation, make-up air requirements, and high-density cooling loads. Always get an HVAC-specific assessment before finalizing your TI budget.
Should I assess HVAC before or after signing a commercial lease?
Before — always before. A pre-lease HVAC capacity assessment ($500-$1,500) reveals whether the existing system can support your intended use, identifies any supplemental equipment needs, and quantifies the HVAC portion of your TI budget. This information is essential for lease negotiations: you can negotiate a higher TI allowance, request the landlord provide specific HVAC capacity, or make an informed decision to choose a different space. Discovering HVAC deficiencies during construction creates budget overruns, timeline delays, and disputes with the landlord that are much harder to resolve after the lease is signed.
Who is responsible for HVAC in a commercial lease — landlord or tenant?
It depends on the lease type. In a full-service (gross) lease, the landlord typically provides and maintains HVAC. In a triple-net (NNN) lease, the tenant is responsible for all maintenance, repair, and often replacement. Modified gross leases split responsibilities — review the specific lease language carefully. Key items to clarify: base building HVAC capacity provided, supplemental cooling responsibility, after-hours HVAC costs, maintenance requirements, and end-of-lease equipment disposition. Have your attorney and HVAC contractor review the HVAC provisions before signing.
Do I need permits for HVAC work in a Las Vegas TI build-out?
Yes, most HVAC modifications in a TI build-out require mechanical permits from Clark County or the applicable city jurisdiction (Las Vegas, Henderson, North Las Vegas). Permit-required work includes: installing new equipment, modifying ductwork, adding gas piping, and any work associated with a change of occupancy. Permit review takes 2-4 weeks for standard projects and 4-8 weeks for complex ones (restaurant, medical). Fees are typically $200-$1,500 for the mechanical portion. Your HVAC contractor should handle permit applications and inspections. Unpermitted work creates lease violations and liability.
What HVAC options work for adding cooling to a tenant space without enough capacity?
Three common options: (1) A supplemental split system — an outdoor condensing unit paired with an indoor air handler, providing 2-5+ tons of additional dedicated cooling ($12,000-$22,000 installed). (2) Ductless mini-split units — one or more wall/ceiling-mounted indoor units for specific rooms that need extra cooling, no ductwork required ($4,000-$18,000 depending on the number of zones). (3) Replacing the existing rooftop unit with a larger capacity unit ($18,000-$35,000, requires landlord coordination). The best option depends on your specific load, available electrical capacity, space for outdoor equipment, and lease terms regarding building modifications.