Case Study: Premise Defit & Lease Reinstatement - Caci Clinic Auckland
Exiting your Lease
Cost-effective premises defit and lease reinstatement
Caci Clinic Auckland had been at its premises for nine years. With the reconfiguration of Auckland’s Viaduct and the subsequent change in traffic patterns, the franchisee decided to exit the premises on lease expiry and relocate to improve accessibility and visibility.
Marcus and Proactive Property Group were engaged to:
- Manage the premises defit and lease reinstatement.
- Negotiate the lease on the new premises.
What is lease reinstatement?
The reinstatement standard outlines the steps required to return premises to the original condition at lease commencement, excluding reasonable fair wear and tear.
Most leases obligate a tenant to reinstate the premises by removing all installed items such as partitions, racking, HVAC, lighting, signage, etc. Additionally, you must patch, plaster and paint the walls, and return floors and ceilings to their original condition.
However, this is often a subjective (and sometimes expensive) standard depending upon:
- Your lease obligations – I once encountered a lease requiring a total repaint internally and externally plus new carpet, with no fair wear and tear exemption in addition to the usual obligations.
- How well you have maintained the premises during your occupation.
- Whether or not you and your landlord can agree on the reinstatement standard.
Lease Reinstatement Actions Taken:
We built a programme to align the premises defit and lease reinstatement with the lease expiry deadline and the date of completion of the new premises fit-out and issue of its certificate of public use.
Often premise defits and lease reinstatements are left until the last minute with no time before the lease expiry date to complete the work.
The following action was to determine the scope of the defit work and reinstatement. As the lease had no Premises Condition Report and the franchisee had taken an assignment of lease, there were no apparent records of the state and condition of the premises at lease commencement. We obtained building records to establish the base build configuration at lease commencement.
Once we established the extent of the tenant’s fitout, we defined the scope of the defit work and reinstatement required based on the tenant’s work undertaken and the lease reinstatement requirements.
The next step was determining whether the scope of defit work and reinstatement required a building consent or consent exemption.
As the Caci fitout had a dropped ceiling and additional sprinkler and fire alarm system installations, we engaged a fire engineer to establish whether or not the reinstatement of the sprinkler systems were subject to building consent or whether Council notification was sufficient.
If building consent is required, additional time needs to be built into the programme to accommodate the time to compile building consent documentation and Council processing and granting the building consent.
In this instance, Council notification was deemed sufficient by the fire engineer and accepted by the landlord.
Throughout the planning and scoping phase of the de-fit and reinstatement work, we proactively engaged and consulted with the landlord’s property manager over the scope of work and timeframes involved.
In parallel with the planning and scoping phase of the defit and reinstatement work, we negotiated the commercial terms for a lease of new premises in the Viaduct for Caci Auckland.
Once the commercial terms were agreed upon, we reviewed the draft Agreement to Lease, negotiated its terms, and coordinated its execution.
Louise Donaldson, the Caci franchisee, lodged the new clinic design and building consent.
Because Covid 19 lockdown restrictions impacted the new clinic building consent and subsequent fit-out, we negotiated lease extensions on the current premises. We adjusted the programme so that Caci Auckland could relocate from its existing premises to its new premises seamlessly and with minimal downtime and inconvenience to its clients while providing a de-fit and reinstatement window before lease expiry.
After the clinic’s relocation, the old site was reinstated to its original condition.
- partitioning, flooring, ceiling, HVAC systems, plumbing and electrical fit-out removed
- fire alarms and sprinklers reconfigured back to a base build configuration
- lighting at specified lux levels reinstated
- construction damage to the base build walls repaired.
We organised final inspections with the landlord’s building manager, and the premises was formally handed back to the landlord on lease expiry.
We then recovered lease bonds from the landlord.
The Client Outcome:
Terminating a lease and relocating can be stressful, time-consuming and costly.
In this instance, Proactive Property Group delivered a:
- Cost-effective premises defit and lease reinstatement while managing landlord expectations.
- Seamless transition from the old premises to the new site by coordinating the lease extensions with the timing of the new premises consenting and fit-out and subsequent de-fit and reinstatement work programme
- A smooth and frictionless handing back of the old premises to the landlord with minimal disagreements regarding the standard of reinstatement
Louise Donaldson, the franchisee, was free to focus on running her clinic and managing the logistical challenge of organising the move from the old premises to the new location.
“Marcus saved us time and money by coordinating the premises defit and lease reinstatement with the opening of our new premises.
He was very effective at managing our landlord’s lease reinstatement expectations and negotiating lease extensions to adjust to our revised new premises fitout schedule while managing our lease costs.
Marcus provided practical advice and solutions to ensure that our premise defit and lease reinstatement risks were mitigated quickly whilst project managing contractors and consultants to deliver to schedule.
I would definitely recommend Marcus to anyone that engages his services and will definitely make use of Marcus’s services in future.”
Caci Clinic Wynyard Quarter
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