‘Make Good’ Planning Makes Good Sense For Leased Property
Fortunately, only a few Make Good disputes end up in the Courts. However, the potential for protracted arguments is on the rise.
Some of the drivers include:
- Changing conditions in the resources sector seeing engineering firms and the like, downsize;
- Large corporates relocating to new developments;
- An increasing demand for smaller spaces generally, through improved efficiencies and flexible work environments.
When it comes to handing back tenancy space the Lessee will need to comply with obligations to ‘yield up’. This is typically where the arguments start. Differences of opinion in who owns what; what work needs to be done to return the property to a condition ‘as at commencement’; whether current condition falls under the exception of ‘fair wear and tear’; and whether the extent of partial repair requires full replacement – to mention a few.
Disputes that run beyond the lease term are settled by ‘damages’ – a financial settlement following a claim. These not only include the costs associated with the physical works (typically $200 – $300/sqm for offices) but also legal costs, loss of rent and outgoings.
The good news is that such arguments (and additional costs) can be avoided – through good planning. Continue reading
Benchmark Data to ‘Make good’ Informed Decisions
Are you a corporate occupier or property portfolio owner faced with budgeting ‘make good’ costs and financial reporting compliance?
Napier & Blakeley have assessed, negotiated and managed ‘make good’ costs for many years, including benchmark data to help inform future strategy.
To manage large portfolios, property and lease profiles are reviewed and sampled to quickly determine ‘make good’ obligations and the cost for returning the property to the required condition.
Costs and square metre rates from the sample are risk adjusted against Napier & Blakeley’s independent bench mark data and applied to the leased portfolio. Continue reading
