Make-good is a legal obligation in a commercial lease that requires a tenant to restore a space to an agreed condition before handing back the keys. This usually involves removing tenant-installed fitouts and repairing damage to return the property to the landlord.
The exact scope of work depends entirely on the specific language used in the lease agreement.
Common make-good obligations
Leases typically specify three conditions: base build, warm shell, or as at lease commencement. Base build is the most extensive requirement as it involves stripping the space back to the raw structural slab and core walls.
What a full strip-out involves
A full strip-out requires the removal of all partitions, joinery, and ceiling alterations. Contractors must also reinstate building services, including HVAC, electrical, and plumbing, to their original configuration.
Cash settlements and negotiations
Some leases allow for a make-good equivalent payment instead of physical works. Tenants can negotiate these payments or reduced scopes with landlords if they provide professional cost information early in the process.
How to manage your exit
Get a professional make-good assessment to define your budget and required scope. Progressive Corporate’s project team can provide the cost estimates and scope of works needed for landlord negotiations.
Frequently asked questions
Is make-good optional?
No, it is a legal obligation written into the commercial lease. Landlords use these clauses to ensure they do not have to fund a full strip-out before re-leasing the space.
What is the difference between base build and warm shell?
Base build is a raw shell with no finishes or partitions. A warm shell retains basic services like lighting and air conditioning but removes all other fitout works.
When should I get legal advice?
Consult a commercial lawyer if the make-good clause is long or requires returning the space to base build condition. This prevents discovering large unexpected costs at the end of the lease.
Questions to ask your fitout company before you sign
- Can you provide a detailed make-good assessment based on the specific reinstatement clauses in my lease?
- Do you have experience reinstating base building services to meet landlord and building surveyor requirements?
- What documentation do you provide to confirm practical completion and satisfy the landlord that make-good is complete?