Commercial Office Make Good – Return to Base Building
Time to Find a new Commercial Office, your business has grown, the team has grown and you’re looking for somewhere new.
What is a Commercial Office Make Good?
It s the same as a “Commercial Office Defit”, or “Return to base Building” or “Fit-out back to Base building”, The task is to make good, as per the lease, back to Base Building.
At the end of a lease, under your commercial office lease, the lease is typically required to return the space back to the base building condition.
This allows the new owners to have a clear, clean canvas to customize according to their own business needs without spending time and money in removing your old fit-out.
It is very rare that the fit-out of one business will suit the incoming business. Typically owners and management have different styles and different cultures, which means the existing fit-out will be an unlikely fit for the new tenant.
Your Commercial office Make Good will liley involve the removal of all items within the property, from equipment, technology, and furniture to partitions, doors, false ceilings, signage, shelving, cabinetry, some fixtures, and other fittings which are not part of the base building “shell”.
The Commercial Office Make Good may also include the removal of any supplementary Air Conditioning, subject to the lease and the terms and conditions of the commercial office make good from the Landlord
You have a lot to think about:
- Getting back the Bank guarantee
- What does the lease say about a Make good
- What are the hours the make good or builder’s team can make noise
- Are there restricted lift times, do I need to pay for the good lift and /or curtains being put up to protect the inside fit-out of the lift from your contractors
- What is the last day we can work before we have to pay another month’s rent?
- Is there a tenant moving to take over our Fit-out, can we obtain a few dollars from them
- What about Disconnecting the power and the internet
- Are there obligations under the lease for plumbing, electrical, and air conditioning that must be adhered to at the end of the lease
- What is a “CDC” and do we need one
- What about the Builder and the work he has to do, how much will it cost? Do we need to use their Builder?
- Are there inspections and when should these be arranged for? Who performers the inspections
- What about the fire and lighting systems. Do zones need to be isolated during works, who is responsible for this?
In any of these cases, you will need to fulfill your “Make Good” obligations in your lease agreement before leaving, which usually requires the help of a professional commercial office make good providers.
More time to Focus On your Business
Don’t do the Commercial Office Make Good yourself. Focusing on your team and your business and putting dollars back on your bottom line are far more important.
We have seen tenants do it themselves, and it takes twice as long, is not a neat job and they struggle to get their bank guarantee back as the workmanship is clearly not professional and needs to be re-done.
Cash Settlement instead of the Commercial Office Make Good
There are times when the Landlord will consider a cash settlement.
What this involves is you, the tenant who is leaving pays the Landlord a sum of money and you are released from your make good obligations of the lease.
The process typically involves both parties getting quotes for the makegood based on a mutually agreed set of conditions, or scope of works that the builder will quote on. Once the vendors have submitted their prices the two parties get together and see if they can reach an agreeable price for the cash settlement.
The benefit for the tenant that is leaving is there is a lot less hassle and time involvement from your team. All the indirect costs go away. the benefit for the landlord is they may have a protective tenant that may be able to use part of all of the existing fit-out (which used to be yours) and is thereby an incentive for that tenant to take up the lease
The condition of being released from your bak guarantee in full depends on how well you restore the property to its original base building condition. Not only can the penalties of violating a ‘Make Good’ clause be very high, it could also damage your business’s reputation as most real estate agencies keep thorough records of how the property was given to you and how it was returned.
this is one of the benefits of a cash settlement also, in that the bank guarantee is returned or included in the maths of the settlement.
What is a “CDC”
The CDC is the Complying development Certificate, this is organized by your building certifier before any works commence. it is like a “mini” development approval that goes to the Landlord, the council, and of course you, the principal. For most fit puts the building certifier will do the paperwork for you and lodge the pare work as required. for the most part, it is formal, but it does include statutory obligations such as the reinstatement of the fire system as it should be for compliance when the annual fire safety statement is due.
If the Cash settlement is not available, for whatever reason, consider a Project Management, strategy, this is where you might consider a third party such as Performance Facility Management, to help make sure all the details are sorted and the project will cross the line, before the month end of the last month of the lease. A team with Construction experience as well as technical know-how to ensure the job is completed on time.