If you are about to lease commercial space in New Orleans, the rent is usually the easy number. The harder question is who pays for a build-out, the work that turns an empty suite into a working business, and the answer is buried in lease language that is easy to skim.
That question carries serious money. Cushman & Wakefield’s 2026 Cost Guide put office fit-out costs across the Americas at an average of $149 per square foot, up 5.5 percent from the year before. On a 3,000-square-foot suite, a gap of even $20 per foot between what the landlord covers and what the work costs is a $60,000 surprise.
At TurnKey Renovators, we build out commercial spaces across the New Orleans metro, and our consultations include a look at the landlord’s work letter obligations, because that document decides who pays for what long before construction starts.
If you are comparing spaces or reviewing a lease right now, contact us to request a free build-out estimate before you commit to anything.
The short answer to who pays for a build-out: the landlord and tenant split it, and the lease decides the split. Base building systems usually sit with the landlord, and the finishes that make the space yours sit with you. Anything over the allowance lands on the tenant unless the lease says otherwise.
Every commercial lease answers the same question in its own words: where does the owner’s work stop and yours begin? The document that draws that line is the work letter, a lease exhibit that lists what the landlord builds, what the tenant builds, and who approves what.
Vestian, a workplace project firm, describes the landlord’s usual share as the base building. That covers the structure, core restrooms, elevators, main electrical switchgear, primary HVAC plant, base sprinkler systems, life safety equipment, and common corridors. The tenant’s usual share is the suite itself: demising walls, interior finishes, supplemental mechanical systems, special power, data infrastructure, and signage.
Build-out costs are commonly handled in one of three ways, and knowing which one you are being offered changes how you read every other clause.
Here is how the three structures compare side by side.
| Lease Structure | Who Manages Construction | Who Pays Above the Allowance |
|---|---|---|
| Tenant improvement allowance | Usually the tenant | Tenant, typically |
| Turnkey build-out | Landlord | Tenant, if the deal has a cap |
| As-is lease | Tenant | Tenant pays all of it |
None of the three is automatically the better deal. A large allowance on a raw shell can leave you paying more out of pocket than a modest allowance on a space that already has working systems. A turnkey delivery saves you the management work but gives you less say over materials and layout. The only fair comparison is the total cost to open, minus everything the landlord contributes in cash, work, or free rent.
Before you compare allowances, compare starting points. Two suites with the same allowance can cost very different amounts to finish, because one might be a raw box and the other might already have working air conditioning.
Commercial listings use shorthand for the delivery condition:
Ask the listing broker which one you are looking at, then verify it in person. “Vanilla shell” is not a legal standard, and two landlords can mean different things by it. A walkthrough with your contractor settles what is actually there.
In older New Orleans buildings, that walkthrough matters even more. Existing electrical service, the age of the HVAC, and whether the restrooms meet current accessibility standards can all shift cost onto whoever owns that line in the lease.
An allowance sounds generous until you multiply it out. The most common structure is a per-square-foot figure. Less common are a fixed dollar amount or a cost-matching arrangement with a cap.
Do the math against an actual scope, not a hopeful one. If a landlord offers $25 per square foot on a 2,500-square-foot suite, you have $62,500 to work with. A basic office with new walls, ceilings, lighting, and finishes can use that up quickly, and a restaurant or medical suite can exceed it quickly.
Three details decide what the allowance is really worth:
This is the step that protects you most, and the easiest one to skip. Once the lease is signed, your negotiating leverage on the build-out is largely gone.
Bring a contractor into the space during the letter-of-intent stage. A good contractor looks at the delivered condition, the layout you need, and the systems your business depends on, then prices the work in enough detail to compare against the allowance. That number turns the negotiation from a guess into a conversation about actual costs.
On that visit, check the things that quietly move the number:
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