What happens to your office fitout when the lease comes up for renewal depends on three things, in roughly this order: what the lease’s make-good clause says about the existing fitout, whether the landlord wants the space back in its current state or refreshed, and what the tenant wants the workplace to support for the next term. The renewal moment is one of the few windows where all three sit on the table at the same time, and a tenant who treats it as a fitout decision (not just a rent negotiation) usually comes out of it materially better than one who only signs paperwork.
The honest framing is that lease renewals are commercially asymmetric. Landlords have done dozens of renewals; most tenants have done one or two. The asymmetry gets used in subtle ways: assumptions about fitout reinstatement that favour the landlord’s interpretation, incentive offers that look generous but don’t quite cover the fitout work needed for the next term, and timelines that pressure tenants into accepting positions they would not accept under less time pressure. Understanding what is actually negotiable at renewal, and what the fitout choices mean for the next five to ten years, is what tilts the conversation back toward balance.
The Four Scenarios At Renewal
The first scenario is straight renewal with the existing fitout staying in place. The tenant signs a new term, the fitout continues to depreciate through the next lease, and any make-good obligations are deferred to the eventual exit. This is the simplest path and usually the cheapest in the short term. The trade-off is that the fitout is ageing into a new term without any refresh, which means the tenant is committing to live with a workplace that may already be tired.
The second is renewal with a fitout refresh. The tenant signs the new term and uses the renewal moment to refresh some or all of the fitout, often funded by a landlord contribution negotiated as part of the renewal incentive. The refresh might be cosmetic (paint, carpet, soft refurbishment) or substantive (layout reconfiguration, partition changes, services upgrades). The fitout work runs through the early months of the new term, sometimes in stages, sometimes as a single program.
The third is partial relocation within the building. The tenant gives back part of the existing tenancy and renews on a smaller footprint, often with a fitout refresh on the retained space. The released space is defitted under the existing make-good obligation, and the retained space is reworked into a more efficient layout for the new headcount.
The fourth is renewal with relocation to a different tenancy in the same building. The tenant moves floors, defits the old space, and fits out the new space. The renewal is effectively a new lease in a new tenancy, with the existing fitout treated as exit scope rather than continuing infrastructure.
What The Make-Good Clause Does At Renewal
The make-good clause in the existing lease defines what the tenant has to do to the fitout at the end of the term. At renewal, the make-good obligation usually does not trigger immediately (the lease is being extended, not ended), but its existence sits in the background and shapes the commercial negotiation.
The clause’s significance at renewal is that it sets the eventual cost of leaving. A tenant locked into a strict make-good obligation has more reason to renew (because leaving is expensive) and the landlord has leverage to extract value from that. A tenant whose make-good obligation is light, or has been negotiated away in earlier renewals, has more freedom to compare market alternatives.
Some renewals fold the make-good obligation into the new lease’s terms. The landlord may agree to waive or reduce the obligation on the existing fitout in exchange for the tenant accepting different terms on the new lease, or in exchange for a fitout refresh that the landlord wants for its own reasons. This is one of the more valuable conversations at renewal and usually does not happen unless the tenant initiates it. The pattern we see most often is tenants signing renewals without surfacing the make-good question, then discovering at the eventual exit that the inherited obligation is substantial.
Fitout Incentives And How To Read Them
Most commercial landlords offer some form of incentive on renewal, typically as a contribution toward fitout works, a rent-free period at lease start, or a combination. The incentive is real money, but the structure of the offer determines what it actually covers.
A fitout contribution paid against verified spend on improvements works cleanly: the tenant submits invoices for the agreed fitout scope, the landlord pays against them up to the contribution cap. This is the most useful structure for tenants planning real fitout work.
A rent-free period applied at lease start works differently: it gives the tenant the cash to fund their own fitout, but only if the cash is actually directed at fitout work. Where the rent-free period is treated as general business cash flow, the fitout work often does not happen and the workplace continues to age through the new term.
A landlord-managed fitout, where the landlord engages the contractor and delivers the works as part of the renewal, is sometimes offered for smaller refresh scopes. This can work commercially but the tenant has less control over the spec and the contractor selection. The fitout the landlord delivers may not be the fitout the tenant would have chosen, and the renewal incentive is partly an aesthetic preference of the landlord rather than the tenant.
The pattern we see most often is incentives quoted as headline numbers ($X per square metre for fitout) that look generous but do not cover the actual fitout scope the tenant needs for the next term. Costing the intended fitout against the offered contribution before signing is the cleanest way to test whether the incentive is enough.
The Fitout Decisions Worth Raising At Renewal
The renewal window is the right time to address fitout decisions that have surfaced over the existing term. Acoustic issues that staff have lived with, lighting that has aged, layout that no longer matches the team structure, meeting room ratios that have shifted since the original fitout, and any element of the workplace that is visibly tired can all be addressed at renewal with landlord support that would not be available mid-term.
The bundle of decisions usually looks like this: which fitout elements are still serving the tenant well, which are tired but functional, and which are actively hurting the workplace experience. The tired-but-functional category is the most contestable; some get refreshed and some carry through to the next term depending on the budget and the renewal incentive.
Layout reconfiguration is the highest-impact fitout move at renewal. Five to seven years into a tenancy, the original layout rarely matches the current team structure, hybrid attendance pattern, or meeting room demand. A reconfiguration that redesigns the office without adding more space often delivers more value than the equivalent budget spent on cosmetic refresh.
Services upgrades sit in a separate category. Lighting that has dated, mechanical systems that have lost their balance, and electrical capacity that no longer supports the current headcount all benefit from renewal-stage investment. The work runs more cheaply alongside other fitout activity than as standalone projects later.
Running The Fitout Work During The Renewal Transition
Fitout work tied to renewal usually runs in the early months of the new term, with the tenancy occupied throughout. This is live-tenancy work, and the program has to respect the working office around it. Working in the office during a fitout is a discipline of its own, and the renewal-stage refresh program benefits from being scheduled deliberately rather than crammed into the early term.
Phased programs work better than compressed ones. A six-month phased refresh that does one zone at a time, with the displaced occupants temporarily working from elsewhere on the floor, is less disruptive than a four-week shutdown program that closes large sections of the office. The total fitout cost is similar; the operating cost (productivity loss during the work) is materially lower on the phased approach.
After-hours and weekend work is common on renewal refurbishments, particularly for trades that generate dust or noise. The cost premium for after-hours work is typically 20 to 30 percent on the affected trades, but the alternative is daytime work that disrupts the operating tenancy. Tenants weighing the trade-off usually conclude after-hours is cheaper than the productivity loss from daytime disruption.
What Changes If The Lease Isn’t Renewed
If the renewal negotiation does not land and the tenant moves out, the existing fitout becomes exit scope under the original make-good clause. The defit cost can be substantial depending on how the original fitout was built, the lease’s specific make-good wording, and the condition of the space at handback.
Tenants who go into renewal negotiations with a clear picture of the alternative defit cost have more leverage. A renewal incentive of $X looks different against an alternative defit cost of $Y; if Y is high, the renewal is more attractive at lower X than if Y is low. The make-good cost picture is what makes the renewal incentive readable.
The other consideration is the contractor relationship. The same fitout contractor who delivered the original work usually has the cleanest path to either renewal refresh or exit defit, because the original drawings, services records, and as-built documentation are already in their system. Continuity of contractor across the term, where possible, makes the renewal-or-exit decision cheaper to execute either way.
The Timeline That Works
Renewal negotiations should start meaningfully before lease end. For a five-year renewal of a 200-person tenancy with potential fitout works, twelve to eighteen months before existing lease expiry is the realistic timeline. That gives time for the commercial negotiation, the fitout brief development, the contractor procurement, and the works program before the new lease is signed.
Tenants who leave renewal until three to six months before lease end typically have less negotiating leverage and less time to plan fitout works, which usually means accepting whatever the landlord offers and delivering a compressed fitout program in the first year of the new term. The cost of the late start is rarely the original lease’s rent; it is the missed fitout opportunity and the weaker commercial position on the new lease.
If you are working toward a lease renewal and want the fitout side of the conversation framed against the make-good position, the renewal incentive, and the practical refurbishment options, we can run through it on a complete office fitout basis and look at the renewal-stage refresh alongside the longer-term workplace direction.
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