Lease Expiry Risk Guide — Commercial Office
Everything you need to know before your lease expires.
A practical guide for CFOs, COOs, and executive teams navigating commercial office lease expiry in Sydney. What to do, when to do it, and how to ensure your organisation negotiates from strength, not under pressure.
Why this matters
Lease expiry is one of the most significant financial decisions your organisation will make.
For most organisations, the office lease is the second-largest item on the P&L after payroll. A 5- or 10-year lease commitment, signed under time pressure, without independent advice, can quietly erode cost, flexibility, and business performance for years.
The problem is not that organisations make bad decisions. It’s that they make decisions without the right information, at the wrong time, with advisors whose interests are not fully aligned with theirs.
Landlords and their agents are experienced, well-resourced, and motivated to lock in favourable terms. Most organisations face this negotiation once every five to ten years. The imbalance is structural, and it shows in outcomes.
"The earlier the process begins, the stronger the organisation's position. Most of the leverage available to a tenant disappears in the final six months before expiry."
CR Commercial Property Group — Lease Advisory
18+
Months before expiry to start
The minimum lead time to preserve genuine market leverage and fully assess all options, including relocation alternatives that take time to identify and negotiate.
2nd
Largest P&L item after payroll
Office occupancy, rent, outgoings, fitout amortisation, and make-good, represents a multi-year financial commitment with board-level visibility and consequences.
1 in 3
Organisations start too late
Most organisations begin the process inside 12 months of expiry, by which point their landlord already holds the advantage. Time is leverage, and most give it away.
0
Cost to engage CRCPG early
The 36-month timeline
When to act, and what to do at each stage.
36 – 24 months
Strategic
planning
Enough lead time to properly assess all options, run a genuine market process, and engage your landlord from a position of strength, not urgency.
- Review current lease terms and obligations
- Assess workplace needs against future business trajectory
- Identify critical dates, options, and make-good clauses
- Engage independent tenant advisor
24 – 18 months
Market
assessment
The window for a proper market review, testing what is available, at what cost, and on what terms, before the clock starts working against you.
- Commission independent market review
Identify and shortlist relocation alternatives - Establish market rental benchmarks
- Begin financial modelling: stay vs relocate
18 – 12 months
Active
negotiation
The primary negotiation window. With market data in hand and alternatives identified, your organisation can negotiate from knowledge, not deadline pressure.
- Formally engage landlord with strategy
Negotiate rent, incentives, and lease terms - Test alternative premises simultaneously
- Receive and assess landlord’s counter-proposals
Optimal window to secure maximum incentives and lease flexibility.
12 – 6 months
Decision and
documentation
Decision finalised, heads of agreement signed, and legal documentation under way. Make-good obligations assessed and managed.
- Sign Heads of Agreement
- Engage solicitors for lease documentation
- Finalise make-good scope and obligations
- Commence fitout design if relocating
6 – 0 months
Delivery and
transition
Fitout delivery, staff communication, IT and services relocation, make-good works, and operational handover, managed for continuity and minimal disruption.
- Fitout construction and project management
- Coordinate staff and operational transition
- Complete make-good works on existing premises
- Practical completion and occupation
The four costly mistakes
What organisations get wrong at lease expiry.
Commercial property decisions are high stakes, and most organisations face them without independent advice in their corner. Most commercial property agents act for both landlords and tenants. We don’t. We act solely for occupiers, and we change the outcome.
01
Starting too late
Engaging with less than 12 months to expiry significantly narrows your options and weakens negotiating leverage. Landlords are experienced at this, they know compressed timelines work in their favour, and they use them accordingly. Without time to genuinely test the market or assess alternatives, your organisation is negotiating from a position of weakness before talks have even begun.
The consequence: Above-market rents, reduced incentives, and lease terms that don't reflect current market conditions.
02
Accepting landlord-led terms
Many organisations negotiate directly with the landlord’s agent, or rely on a commercial agent with existing landlord relationships. The advice is rarely independent. Landlord agents are experienced negotiators acting in their client’s interest. Engaging them without independent representation is the equivalent of defending a legal matter using the opposing party’s solicitor.
The consequence: Paying above-market rent without access to the incentives and term improvements available to tenants who run a proper process.
03
Assuming renewal is the only option
Renewal feels like the path of least resistance, and landlords know this. Without properly assessing alternatives, most organisations don’t know whether renewal is actually their best option. A genuine market test is not about relocating. It is about establishing the leverage needed to secure better renewal terms. Without it, the landlord has no commercial reason to improve their position.
The consequence: Paying above-market rent without access to the incentives and term improvements available to tenants who run a proper process.
04
Underestimating make-good obligations
Make-good clauses in commercial leases can require tenants to restore the premises to a base-build condition at lease end, a cost that can easily reach hundreds of thousands of dollars on a large fitout. Many organisations are unaware of the full extent of their obligations until they receive a make-good claim, at which point the ability to negotiate is severely limited.
The consequence: Significant unbudgeted costs at lease end — with limited recourse if obligations were not addressed during the negotiation phase.
Your options
Three paths. One independent advisor to assess them all.
Every organisation’s situation is different. The right outcome depends on your lease terms, market conditions, business trajectory, and workplace needs. We assess all three options objectively, without a preferred outcome.
Option 1
Renew
- Market benchmarking to establish leverage
- Incentive and rental renegotiation
- Structural lease improvements
- Fitout and make-good negotiation
- Option terms and flexibility clauses
- Outgoings review and cap negotiations
Best suited when
Option 2
Renegotiate
- Review of current commitments
- Early engagement with landlord
- Commercial negotiation strategy
- Term and incentive analysis
- Restructuring and make-good review
- Mid-term break clause negotiation
Best suited when
Option 3
Relocate
- Market search and shortlisting
- Financial comparison of alternatives
- Negotiation of new premises
- Transition and make-good planning
- Fitout and project delivery support
- Landlord incentive maximisation
Best suited when
Why organisations choose CRCPG
Most organisations don't negotiate everything they could.
Commercial lease negotiation goes well beyond headline rent. The most significant value, and the greatest risk, often lies in the terms that receive less attention: incentive packages, outgoings obligations, make-good provisions, and flexibility mechanisms. Understanding what is available to negotiate, and what market conditions support, is the foundation of a sound outcome.
01
Face rent is the stated rent. Effective rent, after incentives are applied, is what you actually pay. Understanding the difference, and negotiating both, is fundamental to getting the best commercial outcome.
02
Rent-free incentives from landlords can be substantial, typically ranging from several months to over a year on larger tenancies. These are a function of market conditions, lease term, and the landlord’s vacancy position. Without market intelligence, they are rarely volunteered in full.
03
04
05
06
What the current market means for tenants.
In the current Sydney office leasing market, landlords in most grades and precincts are offering meaningful incentives to secure and retain quality tenants. Understanding what the market will bear, and having the data to support your position, is what separates organisations that negotiate well from those that accept what they are offered.
Market conditions change. The incentives and rent levels available to any tenant depend on the specific building, grade, precinct, and timing. The figures above are indicative, a current market review, specific to your situation, is the only reliable basis for negotiation.
Make-good obligations
One of the most underestimated costs in commercial leasing.
Make-good is the obligation to restore the premises to an agreed condition at lease end. In commercial office leases, this is often the base-build condition, which can require the removal of all fitout, reinstatement of services, and repainting of surfaces, at the tenant’s cost.
On a substantial fitout, make-good costs can reach $150 to $350 per square metre or more, representing a significant unbudgeted liability if not identified and managed well in advance.
Understand your current obligations
Review your lease's make-good clause carefully. The standard varies considerably, from base-build reinstatement to a simpler "fair wear and tear" standard. What your lease actually requires may be more, or less, than expected.
Negotiate make-good at lease renewal or relocation
The most effective time to renegotiate make-good obligations is during lease renewal or when negotiating a new lease. A cash settlement in lieu of physical reinstatement is often achievable, and typically at a fraction of the actual make-good cost.
Plan the timing, make-good takes longer than expected
Make-good works on a larger tenancy can take six to twelve weeks. Combined with a fitout programme on new premises, the schedule is tight. Poor planning leads to rent overlap, paying rent on two premises simultaneously.
Document your fitout from day one
Clear records of the base-build condition at lease commencement, and the scope of works subsequently carried out, are essential to a fair make-good assessment at lease end. Disputes are far more common where documentation is incomplete.
Important
Make-good is a negotiating point, not a fixed liability.
Most tenants treat make-good as an unavoidable cost and budget for it accordingly. In reality, make-good obligations are frequently negotiable, particularly when the landlord has an incentive to retain or attract a tenant, or when a re-fitout of the space is planned regardless.
A cash-in-lieu settlement, where the tenant pays an agreed sum rather than carrying out physical reinstatement works, is a common outcome, and typically achieves a significant reduction in the effective cost of make-good.
CRCPG’s approach to make-good: We assess your make-good obligations as part of the initial lease review and address them explicitly within the negotiation strategy, whether that is seeking a cash-in-lieu settlement, negotiating a reduced scope, or phasing works to avoid rent overlap. Make-good is managed as a financial outcome, not an afterthought.
Lease expiry checklist
What to have in order before your lease expires.
Lease documentation
Know exactly what your lease says
- Confirm your lease expiry date and any option periods
- Identify the option exercise date and notice requirements
- Review make-good obligations and reinstatement standard
- Check rent review mechanism and upcoming review dates
- Identify any permitted use restrictions
- Review assignment, subletting, and hold-over provisions
- Confirm outgoings obligations and any existing caps
- Check any landlord consent requirements relevant to relocation
Market assessment
Understand what the market offers
- Commission an independent current market rental assessment
- Identify three to five credible relocation alternatives
Obtain indicative terms from - alternative buildings
- Assess incentive packages available in the current market
- Review vacancy rates in your target precinct
- Understand which buildings have upcoming incentive deadlines
- Model total occupancy cost across at least two scenarios
- Consider off-market opportunities through an advisor
Business requirements
Align property to business strategy
- Confirm headcount projections for the next lease term
- Review hybrid work policy and its space implications
- Assess whether current floor plate and layout remain appropriate
- Identify any expansion or contraction needs over the term
- Consider location requirements — staff, clients, transport
- Review ESG and sustainability commitments (NABERS rating)
- Confirm technology and infrastructure requirements
- Engage key internal stakeholders — HR, IT, Finance, Board
Negotiation preparation
Position your organisation to negotiate
- Engage an independent tenant advisor with no landlord relationships
- Establish your preferred outcome and acceptable alternatives
- Confirm your timeline and decision-making authority
- Brief your legal advisors on the likely lease documentation requirements
- Develop a negotiation strategy with financial modelling
- Prepare for formal Heads of Agreement discussions
- Understand the landlord’s vacancy and incentive position
- Do not disclose your preferred outcome to the landlord’s agent
Make-good and delivery
Plan the physical transition
- Obtain a make-good cost estimate from a qualified quantity surveyor
- Review base-build documentation from lease commencement
- Assess cash-in-lieu settlement opportunity with landlord
- Confirm make-good programme to avoid rent overlap
- Appoint fitout design and project management team
- Establish realistic programme for fitout delivery
- Plan staff communication and change management
- Coordinate IT, telephony, and services relocation
Governance and sign-off
Manage internal process and approval
- Confirm the internal approval process for a lease commitment
- Identify board or committee level decision requirements
- Establish a project team with clear accountability
- Engage solicitors familiar with commercial lease documentation
- Obtain independent financial modelling for board presentation
- Set a decision timeline with sufficient review and approval time
- Ensure audit and governance requirements are met
- Document all negotiation history and correspondence
How advisory fees work
In most cases, the cost of independent advice is zero to the tenant.
One of the most common reasons organisations do not engage independent tenant advice is a concern about cost. In practice, advisory fees are structured to be absorbed within the savings and incentives negotiated, meaning the net cost to the tenant organisation is typically zero, and the net benefit is material.
There are several ways to structure an advisory engagement. CRCPG is transparent about how we are remunerated, and we will always recommend the structure that best serves your organisation’s interests.
Fee absorbed by landlord incentives
In many market conditions, advisory fees can be structured so that they are absorbed by the landlord as part of the negotiated incentive package. Your organisation achieves a better outcome and pays nothing additional.
Fee as a share of documented savings
Where a fee is payable by the tenant, it is structured as a percentage of the measurable saving achieved against your current lease or market benchmark, aligning our interests directly with yours.
Agreed fixed fee for defined scope
For specific advisory mandates or where certainty is required, a fixed fee can be agreed upfront for a clearly defined scope of work, providing budget certainty with full independence.
Our position
We will always tell you how we are paid, before you engage us.
CR Commercial Property Group holds its own real estate licence and operates independently of any franchise, parent agency, or third-party affiliation. We do not receive referral fees, commissions from landlords, or incentives from fitout contractors.
Before any engagement, we will explain clearly how our fee is structured, what it covers, and how it is likely to compare to the saving or outcome we expect to achieve. If an engagement is unlikely to deliver meaningful value, we will tell you.
The right time to have that conversation is before the pressure of expiry begins, when your organisation still has time, options, and leverage.
A note on timing
The value of independent advice compounds with time. An advisor engaged 24 months before expiry has far more options, and far more leverage, than one engaged at 6 months. The earlier we are engaged, the more we can achieve for you, and the more the advisory cost is absorbed within the outcome rather than the budget.
Ready to start?
Before you commit to your next lease, get
the right advice.
Whether your lease expires in six months or three years, the best time to engage is now. A 30-minute strategy call costs nothing, and gives you a clear picture of your position, your options, and what the market currently supports.