You should begin reviewing your lease twelve months before expiry. This timeline allows sufficient time for professional assessment, budgeting, and negotiation with your landlord.
Waiting until three months before expiry removes your negotiating leverage and increases the risk of project delays.
Why start the make-good process 12 months early?
Reviewing the make-good clause a year before the lease ends avoids rushed decisions. This window allows you to obtain a professional assessment and find the original lease commencement condition report. This document is your single most valuable piece of protection as it prevents negotiations based on memory and interpretation.
What happens if you miss the lease expiry date?
Many leases allow landlords to hire their own contractors and charge the costs back to the tenant at higher rates. You may also remain liable for rent even if you have already moved into your new premises. Late completion is a common and expensive problem for Melbourne tenants.
Make-good options for tenants
Condition make-good involves returning the space to its original state accounting for fair wear and tear. A full strip-out removes all partitions and fitout, which can cost hundreds of thousands of dollars for large offices. Some landlords accept a cash settlement, known as a make-good equivalent, to avoid physical works.
Drivers of make-good costs
Costs depend on the volume of removal and the reinstatement of HVAC, electrical, and plumbing services. Small offices under 200sqm typically range from $15,000 to $60,000, while large offices over 500sqm can cost $180,000 to $500,000 or more. Budget for hidden costs like asbestos removal, structural repairs, or required compliance upgrades to building codes.
Steps for a successful handover
Appoint a specialist contractor who understands the standards required by commercial landlords. They must provide a detailed week by week programme to ensure the space is ready for final inspection. Progressive Corporate manages this process to ensure practical completion is achieved on time.
Frequently asked questions
What is a make-good assessment?
A professional review by a contractor, project manager, or quantity surveyor that determines the necessary work, estimated costs, and timeline.
How is a make-good equivalent calculated?
The cash payment is usually based on the estimated cost of the physical reinstatement works.
Why is a condition report important?
It provides factual evidence of the space at lease commencement, which limits the scope of works you are required to perform.
Questions to ask your fitout company before you sign
- Do you have a track record of delivering make-good projects specifically for Melbourne commercial landlords?
- Will you provide a detailed week by week programme to ensure practical completion before the lease expiry date?
- How do you manage the discovery of hazardous materials or structural damage during the strip-out phase?