Everything You Need to Know About a Make Good Clause in a Commercial Lease

When leasing office space, the focus is often on rent, incentives and fit out. However, one of the most misunderstood and frequently underestimated parts of a commercial lease is the make good clause.

A make good clause outlines a tenant’s obligations for the condition in which the office space must be returned to the landlord at the end of the lease term. These obligations can vary significantly and, if not properly understood upfront, can result in unexpected exit costs when vacating office space in Brisbane or any major CBD market.

For businesses leasing office space in Brisbane, understanding how make good clauses work is critical to budgeting accurately and avoiding disputes at lease expiry.

What Is a Make Good Clause?

A make good clause is a standard provision within a commercial lease that specifies how the premises must be handed back once the lease ends.

Make good obligations can range from something relatively simple, such as leaving the space clean and tidy, through to a full removal of all fit out and reinstatement of the tenancy to base building condition, including services such as air conditioning and lighting.

Because make good can represent a material financial liability, it is often a key point of negotiation between landlords and tenants before a lease is signed.

Why Make Good Clauses Matter

Make good obligations are closely linked to:

• How the space was delivered at lease commencement
• Whether the office was fitted, partially fitted or provided as a warm shell
• Whether the landlord contributed to the fit out via an incentive

Without a clear understanding of the make good clause, tenants can be exposed to significant costs at the end of a lease term, particularly in longer leases or highly fitted office spaces.

Common Types of Make Good Obligations

Depending on how the office was handed over, landlords will typically propose one of the following make good structures.

1.   Removal of Tenant Property Only

This is the most basic form of make good and is commonly seen in Heads of Agreement for fitted offices.

Under this arrangement, the tenant is required to remove only the items they introduced to the tenancy, including:

• Computers and IT equipmentMonitor arms
• Filing cabinets
• Furniture and loose items

The existing fit out remains in place, provided it was already there when the tenant took possession.

In most cases, landlords will still require the space to be returned in a clean and tidy condition, so professional cleaning is usually expected.

This option is generally the lowest-cost make good scenario for tenants.

2.   Return to the Condition at Lease Commencement

This obligation goes a step further and requires the tenancy to be returned to the same condition it was in at the start of the lease, subject to fair wear and tear.

This typically includes:

• Professional cleaning
• Carpet cleaning
• Repainting walls
• Minor repairs

The benchmark for this type of make good is the condition report completed at lease commencement.

This structure is commonly used in spec fit outs or where the landlord funded the fit out through the lease incentive and intends to re-lease the space in its existing configuration for future tenants.

3.   Return to Base Building Condition (Full Make Good)

Often referred to as a full make good, this is the most comprehensive and expensive form of make good obligation.

It generally requires the tenant to:

• Remove all fixtures and fittings
• Remove all furniture
• Strip the tenancy back to a warm shell or base building standard
• Reinstate base building carpet and ceiling tiles
• Repaint the tenancy
• Return all above-ceiling services, including air conditioning and fire systems, to base building condition

This type of make good is typically imposed on fully customised fit outs and longer lease terms.

As a guide, tenants should budget approximately $200–$300 per square metre, depending on:

• The size of the tenancy
• The complexity of the fit out
• Contractor availability and market conditions

Engaging the property manager early is critical to ensure compliance and avoid disputes at lease expiry.

4.   Cash Settlement

A cash settlement allows the tenant and landlord to agree on a fixed cash payment instead of physically completing the make good works.

This is negotiated upfront and paid at the end of the lease, allowing the landlord to manage the reinstatement themselves.

Cash settlements can offer:

• Cost certainty for tenants
• Reduced operational disruption
• Greater flexibility for landlords

However, the agreed amount should be carefully assessed to ensure it accurately reflects likely make good costs.

Final Thoughts

The make good clause is one of the most important parts of any commercial office lease, yet it is often overlooked until the lease is nearing expiry.

Whether you are reviewing office space for lease in Brisbane, negotiating a new commercial lease, or planning ahead for a future exit, understanding your make good obligations early can save time, cost and unnecessary stress.

If you are unsure how a make good clause applies to your lease, or want guidance before committing to office space in Brisbane, speak with a commercial leasing specialist before you sign.