An end of lease office make good involves restoring a commercial space to an agreed condition, often requiring the removal of partitions, joinery, and the reinstatement of building services. This is a legal obligation defined within the commercial lease.
The specific scope of work depends entirely on the terms of your individual lease agreement.
Full strip out versus condition make good
A full strip out requires the removal of all tenant installations, including walls and ceilings, to return the space to a shell or base build condition. Condition make good returns the space to its state at lease commencement, accounting for fair wear and tear. The latter requires a thorough condition report from day one to avoid disputes over memory and interpretation.
Factors that drive make good costs
Costs increase based on the complexity of the original fitout, such as custom joinery and glass partitions. Tenancy length and the physical condition of the space at expiry also impact the final bill. In Melbourne, a large, highly fitted out office can cost hundreds of thousands of dollars to strip out.
Hidden expenses and compliance risks
Tenants often face unexpected costs for hazardous material removal, such as asbestos in older Melbourne buildings. Reinstating building services can also trigger required compliance upgrades to meet current codes. If works are not finished by lease expiry, landlords may engage their own contractors and charge the tenant at higher rates.
Ways to manage make good liability
Some landlords accept a cash settlement known as a make good equivalent instead of physical works. In other cases, a landlord may agree to fitout retention if the existing installation suits the next tenant. Progressive Corporate’s project team can help you assess the physical scope before you enter these negotiations.
Frequently asked questions
What happens if I do not have a condition report?
The process becomes a negotiation based on memory and interpretation. This puts the tenant in a weak position compared to having a written record with photos.
Is a cash settlement always the cheaper option?
Not necessarily. The payment amount depends on your lease, your negotiating position, and the landlord.
When should I get a lawyer to review my make good clause?
You should seek legal advice if the clause is lengthy or requires you to return the space to base build condition.
Questions to ask your fitout company before you sign
- Does our lease require a full strip out to base build or a condition make good?
- Can we negotiate a make good equivalent cash payment to avoid physical works?
- Will the landlord consider fitout retention for the incoming tenant?