What is a make good clause and how much can it cost in a retail lease?

A make good clause requires the tenant, at the end of their lease, to restore the premises to a standard specified in the lease document (usually their state at the start of the tenancy).

What Does Make Good Require?

Typical make good obligations in a retail shop lease can include:

• Removing all fixtures, fittings, shopfronts, and partitions
• Repairing any damage caused by the installation or removal of fitout
• Repainting the premises to a neutral colour
• Replacing floor coverings (where damaged)
• Returning the premises to shell condition (complete removal of everything down to the concrete slab and original structure)

How Much Can It Cost?

The cost of complying with an aggressive make good clause for a retail tenancy can range from $20,000 to well over $100,000 for high-end or large-scale retail fitouts. This is often an unbudgeted liability that can significantly impact the financial outcome of your business tenancy.

Tips for Tenants

1. Condition Report: Always insist on a condition report at the start of the lease, with photographs. This prevents you from being held liable for pre-existing damage.
2. Negotiate Limits: Try to negotiate that you only need to return the premises in a clean and tidy condition, or that the landlord retains the fitout if it adds value for the next tenant.
3. Fair Wear and Tear: Expressly include a provision that you are not liable for damage caused by fair wear and tear over the term of the lease.

For more information, see our Full Retail Leasing Guide .

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