How to Maximise Your Lease Renewal with a Strategic Office Refurbishment

Why Combine Office Refurbishment with Lease Renewal?

For many tenants, lease renewal is treated as a purely administrative process, sign on for another term and carry on. But this mindset overlooks a major opportunity: using a lease renewal fitout as a powerful lever to unlock value.

Combining an office refurbishment with lease renewal creates advantages that go far beyond aesthetics:

• Enhanced employee experience
  A redesigned office can dramatically improve team satisfaction and productivity, especially when tailored to support hybrid work or specific operational needs.
• Increased negotiation leverage
  Landlords are more open to providing concessions, such as extended terms or rental discounts, when tenants commit to upgrading the space and increasing its long-term value.
• Stronger return on investment
  Integrating a tenant office upgrade with a longer lease term ensures the investment in design and construction pays off over time.
• Alignment with business strategy
  Many businesses evolve faster than their leases. A well-planned office renovation before lease renewal allows your space to catch up with your team's workflow, culture, and technology.

By combining both initiatives, tenants position themselves not just as occupants but as partners in the property's future. And that changes the conversation entirely.

Read also: 21 Office Design Decorating Ideas to Transform Your Workspace

Timing is Everything: Plan 12-24 Months Ahead

One of the most common mistakes businesses make is leaving lease renewal and refurbishment planning until it's too late. The reality is that aligning a commercial lease extension with a tailored office upgrade requires time, coordination, and foresight.

We recommend beginning the process 12 to 24 months before lease expiry, especially if you're planning a significant tenant office upgrade. This timeframe gives you enough room to:

• Audit your current space and define future needs
• Engage consultants and designers to scope the refurbishment
• Obtain landlord approvals for works
• Negotiate terms like rent abatements, lease length, and landlord incentives for refurbishment

It also allows you to integrate construction timelines, especially if you're completing the fitout in a live environment, without disrupting business operations.

For organisations seeking to implement an office refurbishment lease renewal, early planning not only reduces stress but also puts you in a far stronger position to secure favourable terms.

Read also: 6 Types of Collaboration Spaces Every Hybrid Office Needs

Key Lease Clauses to Negotiate During Refurbishment

When planning an office refurbishment lease renewal, it's critical to align your fitout goals with lease terms that protect your investment. Refurbishment can increase the value of a property, but if your lease isn't structured correctly, you may be funding improvements you don't fully benefit from.

Here are the top clauses tenants should review and negotiate:

1. Fitout Contribution or Landlord Incentives

Many landlords are open to providing capital contributions or rent-free periods when tenants commit to long-term improvements. Be clear on:

• Whether the incentive is a lump sum or a rental credit
• What types of work can it be applied to
• Whether the incentive is conditional on a minimum lease term

This is your chance to secure landlord incentives for refurbishment, don't leave it on the table.

2. Make-Good Obligations

If you're upgrading the space, make sure your lease doesn't require you to restore it to its original (outdated) condition later. Negotiate a fit-out-for-make-good offset, especially in multi-term renewals.

3. Rent Abatement During Construction

If access is restricted or noisy works disrupt operations, you may be entitled to temporary rent relief while the upgrade is in progress, particularly in occupied refurbishments.

4. Term Alignment with Investment

If you're investing heavily, push for a lease length that allows you to recoup the cost. A 3-year term may not justify a high-spec upgrade, whereas a 5-7 year commercial lease extension offers greater ROI.

5. Compliance and Responsibility

Clarify who is responsible for compliance upgrades triggered by the refurbishment, such as fire exits, DDA access, and HVAC. Ensure obligations are fair and reflect the scope of work.

Read also: Construction Cost Management for Office Fit-Outs

Landlord vs Tenant Contributions: Who Pays for the Upgrade?

One of the most critical and often misunderstood aspects of an office refurbishment lease renewal is who funds the fitout. While many tenants assume the responsibility falls entirely on them, that's not always the case.

Landlords often have a vested interest in improving their property. A quality fitout enhances the asset's market appeal, reduces vacancy risk, and increases long-term rental value. For this reason, smart tenants can negotiate a range of landlord incentives for refurbishment, including:

• Fitout contributions (either cash or rental offsets)
• Rent-free periods during construction or lease commencement
• Base-build upgrades (like lighting, ceilings, or services) to support your office design
• Shared costs for compliance works triggered by the renovation

Meanwhile, tenants usually cover design and works specific to their brand or operations, such as custom joinery, meeting rooms, or IT infrastructure. This is where a clearly scoped plan is essential: separating landlord vs. tenant works reduces ambiguity and speeds up approval.

By aligning your lease renewal fitout strategy with a clear financial breakdown, both parties benefit, and your business walks away with a space that supports performance and growth.

Read also: Office Fit-Out vs Refurbishment: What's the Right for Your Workspace?

Legal Traps to Avoid

Combining a lease renewal fitout with a commercial property agreement offers significant upside, but it also entails legal complexity. Overlooking critical lease terms or misinterpreting your obligations can lead to costly missteps, especially when capital works are involved.

Here are key legal pitfalls to avoid:

1. Exercising Renewal Without Reviewing the Lease

Don't assume your existing terms are suitable for your upgrade. Before exercising a renewal option, review clauses related to make-good, rent escalation, and building compliance and ensure your tenant office upgrade doesn't inadvertently trigger new obligations.

2. Ambiguous Fitout Ownership

If your lease doesn't specify who owns the improvements, you could lose the right to claim depreciation or reuse items in future negotiations. Always document ownership of fitout assets, and whether the landlord has a right to retain or remove them.

3. Unclear Incentive Agreements

Verbal promises don't count. Ensure all landlord incentives for refurbishment, such as contributions, rent abatements, or approvals, are clearly set out in the lease or a formal deed of variation.

4. Compliance Responsibility

If your office renovation before lease renewal requires fire upgrades, disabled access improvements, or air conditioning changes, clarify whether these are tenant- or landlord-funded. Without clear terms, you may end up covering more than expected.

5. Misaligned Lease Term

Don't make the mistake of funding a $300,000 upgrade on a 3-year lease. Structure your commercial lease extension to align with your investment, ideally with renewal options that provide long-term security.

At Stemar Group, we often collaborate directly with clients' legal advisors to ensure lease terms align with construction scope and protect both the project and your position as tenant.

Case Study of Successful Lease Renewal with Refurbishment Projects

At Stemar Group, we've helped a wide range of Australian businesses turn their lease expiries into opportunities, not just to stay put, but to upgrade their workplace and secure better lease terms in the process.

Here are two real-world examples of how an integrated office refurbishment lease renewal strategy delivered results:

Case Study 1: National Consulting Firm - Sydney CBD

Challenge: A mid-sized consulting firm faced the end of their 5-year lease in a dated office that no longer reflected their brand or supported hybrid work. The business was hesitant to relocate but needed a modern space to attract top talent.

Solution: We designed a future-focused workplace with flexible work zones, enhanced acoustic treatment, and upgraded meeting spaces. While planning the refurbishment, the firm negotiated a 5-year commercial lease extension with their landlord, including:

• A $150,000 fitout contribution
• A 3-month rent-free period
• Agreement to share compliance upgrade costs

Outcome: The business avoided relocation, achieved a workplace aligned with its future, and secured a financially viable lease package.

Case Study 2: HealthTech Startup - Melbourne Fringe Suburb

Challenge: A growing startup needed a tenant office upgrade to accommodate a hybrid team and support investor presentations. However, the lease had no renewal clause and was due to expire in under 10 months.

Solution: We quickly scoped a refurbishment tied to a new lease proposal and helped prepare documentation that demonstrated value to the landlord. This led to a renegotiated 4-year lease that included:

• $40,000 in landlord-funded works
• New end-of-trip facilities
• Waiver of make-good clauses from the previous lease

Outcome: The startup remained in its desired location, improved brand perception with clients, and avoided costly downtime.

These examples highlight that combining office renovation with lease renewal is more than a design decision, it's a strategic business move that can influence financial terms, workplace culture, and long-term growth.

How to Choose the Right Refurbishment Partner During Lease Review

When planning an office refurbishment lease renewal, choosing the right fitout partner is just as critical as negotiating the right lease terms. The wrong provider could overlook vital legal or compliance issues, delay construction timelines, or miss the opportunity to align the space with your commercial goals.

Here's what to look for in a refurbishment partner when your lease is on the line:

1. Lease-Savvy Construction Knowledge

Look for a partner who understands lease structures, particularly make-good clauses, fitout contributions, and landlord approval workflows. A refurbishment isn't just about walls and furniture, it's about aligning physical upgrades with your legal and financial interests.

2. End-to-End Delivery Capability

A true partner should manage your project from initial design through to construction handover. With a design-and-construct model, you gain a single point of accountability. Ideal for fast turnarounds during critical lease timelines.

3. Experience in Occupied Refurbishments

If your team is staying on-site during work, your partner must be experienced in staged construction, after-hours work, and business continuity planning. This ensures minimal disruption and maintains productivity throughout the tenant office upgrade.

4. Familiarity with Landlord Approvals

A refurbishment often requires landlord consent for structural or service changes. A good partner will anticipate these needs, prepare documentation, and engage early to avoid delays.

At Stemar Group, we've supported dozens of tenants through complex lease negotiations and space upgrades, bridging the gap between legal, commercial, and construction requirements. We're not just builders; we're strategic partners focused on helping your business thrive in its next chapter.

What If There's No Option for Lease Renewal?

Not every tenant has a formal renewal option written into their lease. If that's your situation, don't assume the opportunity is lost. In fact, a well-planned office refurbishment proposal can become your strongest case for securing a new lease on favourable terms, even when a renewal isn't guaranteed.

Many tenants choose to refurbish instead of relocate, not just for convenience, but because it delivers real strategic benefits.

This shows how a well-timed office upgrade can influence both lease outcomes and long-term business performance.

Here's how to position your business:

Propose a Value-Adding Upgrade

Landlords are motivated by long-term occupancy and property value. Presenting a tenant office upgrade plan, especially one that includes workplace improvements, sustainability upgrades, or shared amenity enhancements, can incentivise them to offer a new lease agreement.

Understand the Landlord's Position

If your building has vacancies or the landlord is seeking to enhance the asset's profile, your office renovation before lease renewal can become a negotiation tool rather than just a construction project.

Prepare a Plan B

Even if negotiations stall, your fitout design and budget planning will still serve you. It enables a quicker relocation if needed, you'll already know what you need, how much space you require, and what works best for your team.

At Stemar Group, we help tenants navigate uncertain lease conditions by building a strong business case for landlords and designing spaces that support negotiation leverage, no matter what your current lease says.

Book Your Free Office Refurbishment Consultation Today

At Stemar Group, we don't handle leases, we transform spaces. Our expert team delivers high-impact office refurbishments that align with your next lease term, your business goals, and your team's evolving needs.

Whether you've secured a new lease or are still exploring your options, we'll help you turn your next chapter into a space your people love.

Whether you're renewing, renegotiating, or relocating, our integrated team delivers smart, strategic office refurbishments that unlock value at every stage of your lease journey.

Book your free session today, and let's explore how to make your lease renewal work for your future.