Can You Renovate a Leased Commercial Property? What Tenants Need to Know

By Nik Kokotovich, Founder and MD

In most cases, you can renovate a leased commercial property, but not on your own terms and not without safeguards.

Whether you are planning a new fitout, refurbishing an existing tenancy or reconfiguring space for growth, the real question is not ‘can I renovate?’ but ‘how do I renovate without breaching my lease, upsetting my landlord or disrupting trading?’

The starting point is always your lease, followed by clear landlord approval, an understanding of who pays and who owns the improvements, and a plan for compliance and make-good. From there, delivery becomes a project management exercise.

This guide walks commercial tenants through what to consider before renovating leased premises, and how a commercial contractor like BSG can help you do it the right way.

Table of contents

1. Can you renovate a property you lease? The short answer
2. What your commercial lease says about renovations
3. Getting landlord approval for renovations
4. Who pays, and who owns the improvements?
5. Make-good obligations explained
6. Compliance and approvals for tenant renovations
7. Renovating without disrupting your business
8. How BSG helps tenants renovate leased premises
9. Conclusion
10. FAQs

Can you renovate a property you lease? The short answer

In commercial settings, the short answer is usually yes: you can renovate leased premises, but only within the boundaries set by your lease and subject to landlord approval.

What ‘renovate’ really means in a lease

There is a big difference between:

• Minor cosmetic changes such as paint, loose furniture and non-fixed décor
• Non-structural alterations and tenant fitouts that change layouts and services
• Structural alterations that impact the base building

Most commercial leases allow some level of tenant fitout and refurbishment, but the lease controls how far you can go, what you must obtain approval for and what must be removed or reinstated at the end of the term.

If you are planning a full tenancy fitout, it can help to read this alongside a broader guide on what a commercial fitout is and, for owners, our guide to renovating a commercial building.

What your commercial lease says about renovations

Before you touch the tenancy, you need to know what your lease does and does not allow.

Typical lease clauses that affect renovations

Most commercial leases include clauses covering:

• Alterations or variations
• Permitted versus prohibited works
• Approval mechanisms and processes
• Repair versus improvement obligations

These clauses set the boundaries for any renovation or tenant fitout. They can:

• Require landlord consent for almost all works beyond basic cosmetic changes
• Limit what you can do to base building elements, such as structure and core services
• Specify standards, materials or contractors the landlord will accept

Written consent is critical. Verbal agreements or informal emails rarely stand up if there is a later dispute about what was or was not approved. In many leases, unapproved works can be treated as a breach.

Because every lease is different, it is important to read your specific document and, where necessary, seek professional advice. The guidance here is general, not legal advice.

Getting landlord approval for renovations

Even when the lease allows alterations, landlord approval is almost always required for commercial tenant renovations.

What landlords want to see

Landlords will generally want to understand:

• What you plan to change and why
• How the works may affect the building structure and services
• Whether the design is in keeping with the asset and other tenancies
• How works will be managed in a live environment

In multi-tenant buildings and centres, building management or the body corporate may also need to sign off, particularly where common areas, services or shared plant are affected.

A typical approval process

A typical approval process will include:

• Preparing drawings and a scope of works for review
• Submitting these to the landlord or centre management for design approval
• Addressing any comments or required changes
• Receiving written consent before works start

Landlords cannot always refuse works, but they can usually impose reasonable conditions and timing requirements, especially where building safety, services or other tenants are affected. Exactly what counts as ‘reasonable’ will depend on your lease, your jurisdiction and the specific works.

An experienced commercial fitout contractor can help you prepare information in the format landlords and building managers expect, and can often deal directly with their representatives on technical points.

Who pays, and who owns the improvements?

Commercial tenant renovations almost always raise questions about cost and ownership.

Leasehold improvements and payment models

In commercial practice, ‘leasehold improvements’ refers to changes a tenant makes to the premises that will typically remain in place at the end of the lease. Examples include internal walls, fixed joinery and services modifications.

Payment arrangements vary. Common models include:

• Tenant-funded works, where you pay for the fitout, subject to landlord approval
• Landlord contributions or incentives, where the landlord contributes a fitout allowance or rent incentive and you deliver the works
• Landlord delivered works, where the landlord provides a base level of fitout and recovers cost through rent

Who owns what at lease end

Who owns leasehold improvements at the end of the term is a commercial question, not just a legal one. In many leases, improvements become the property of the landlord once installed, even if you funded them, while you may still be responsible for make-good.

Fixtures fixed to the premises are usually treated differently from fittings such as loose furniture and equipment, which remain yours. How this is handled in your lease will influence both your renovation decisions and your exit strategy.

The key is to understand these points before you invest heavily in fitout, so there are no surprises about what stays, what goes and what you might be required to remove or reinstate.

Make-good obligations explained

Make-good is the obligation at the end of a lease to return the premises to a specified condition. It is one of the most overlooked parts of tenant renovation planning.

How make-good shapes renovation decisions

Typical make-good clauses might require you to:

• Remove your fitout or certain alterations
• Repair any damage caused by works or occupation
• Repaint and recarpet to a nominated standard
• Reinstate to a base building or original condition

The exact requirement depends on how your lease is drafted. Some make-good clauses are light; others can be expensive to satisfy if you have invested heavily in custom fitout without planning for exit.

Renovation decisions directly affect make-good costs. For example, cutting into slabs, making major services relocations or installing highly bespoke finishes can all increase the cost and complexity of reinstatement.

The safest approach is to:

• Read and understand make-good clauses before you design your fitout
• Factor potential exit costs into your renovation budget and lease negotiations
• Design with exit in mind, especially where you expect to move at the lease end

BSG regularly delivers both tenant renovations and end-of-lease make-good works, so we see both ends of the lifecycle. Early planning nearly always reduces the total cost of occupation.

Compliance and approvals for tenant renovations

Regardless of who owns the building, your renovations still need to comply with Australian building and safety requirements.

Key compliance areas

Key compliance considerations include:

• NCC – the National Construction Code sets minimum standards for building work, including structural adequacy, fire safety, health and amenity
• Work health and safety – WHS duties apply to both construction and ongoing occupation
• Accessibility – obligations supported by standards such as AS 1428 may be triggered if you change layouts, entries or amenities
• Approvals – building approvals, construction certificates or planning approvals may be required for certain works, especially structural changes or changes of use

Compliance applies even when you are only the tenant. Authorities and certifiers will focus on what is being built and how it affects the safety and performance of the building, not just who holds the title.

In larger commercial assets, landlords and building managers often have their own compliance procedures that sit on top of statutory requirements. An experienced commercial contractor will factor both sets of requirements into design and delivery.

Renovating without disrupting your business

For many commercial tenants, the biggest fear is disruption to trading and operations while renovations are underway.

Staging around live operations

Minimising disruption is largely a question of staging and coordination. Practical strategies include:

• Working after hours or on weekends for noisy or high-impact tasks
• Staging works by zone, so parts of the tenancy can remain operational
• Sequencing demolition, construction and fitout so critical areas are brought back online first
• Coordinating deliveries, waste and access with centre management or building management

In occupied tenancies, safety and communication are as important as construction techniques. Staff and customers need clear information about temporary access changes, noisy periods and any restrictions.

BSG has delivered office and retail refurbishments, tenant fitouts and make-good projects in live environments where neighbours remained open throughout. That experience helps shape programmes that protect trading as far as reasonably possible.

How BSG helps tenants renovate leased premises

BSG approaches tenant renovations from a project delivery perspective, not just as a set of isolated trades.

Support before works begin

From the start, we help tenants:

• Interpret the scope allowed under their lease in practical terms
• Prepare information for landlord and centre management approvals
• Coordinate compliance with NCC, accessibility and building requirements
• Plan staging to minimise disruption in live environments

Integrated delivery and oversight

On the delivery side, BSG provides:

• Integrated demolition, construction, services and fitout
• One point of accountability across tenancy works and, where needed, base building interfaces
• Director-level oversight on business-critical and complex projects

Because BSG focuses on commercial only work – tenancy works and commercial building projects in live environments – we are used to balancing landlord expectations, lease constraints, compliance and trading requirements in a single programme.

For many commercial tenants, that combination of guidance, project management and delivery is what turns a complicated leasehold improvement into a manageable, low drama project.

Conclusion

You can usually renovate a leased commercial property, but success depends less on the idea of ‘renovating’ and more on how you manage the details.

The tenants who get the best outcomes are those who:

• Read their lease early and understand alteration and make-good clauses
• Secure clear, written landlord approval before works begin
• Clarify who pays, who owns the improvements and what happens at lease end
• Treat compliance and approvals as design inputs, not a final hurdle
• Use one experienced commercial contractor to coordinate the whole project

If you are planning a tenant fitout, refurbishment or broader leasehold improvement, it is worth getting practical, project-focused advice before you commit to plans or sign off on scope.

To talk through your tenancy renovation and how to deliver it with less disruption and more control, contact BSG to arrange a confidential discussion about your tenancy works or upcoming commercial fitout.

FAQs

Can you renovate a commercial property you are leasing?

In most commercial leases, you can renovate or fit out leased premises, provided you comply with the lease and obtain landlord approval. The scope of what is allowed and what needs consent will be set out in your specific lease document.

Do I need landlord permission to renovate leased premises?

Almost always, yes. Most leases require you to obtain written landlord approval for anything beyond very minor cosmetic changes. In multi-tenant buildings and centres, building management or the body corporate may also need to approve your plans.

Who pays for renovations on a leased commercial property?

Payment arrangements vary. Commonly, tenants fund their own leasehold improvements, sometimes with landlord contributions or incentives. Who owns those improvements at the end of the lease, and what must be removed or reinstated, depends on your lease and any negotiated terms.

What are leasehold improvements?

Leasehold improvements are works a tenant carries out to the premises, such as partitions, fixed joinery or services modifications, that are intended to remain with the property. They are different from loose fittings and equipment, which generally remain the tenant’s property.

What is make-good in a commercial lease?

Make-good is your obligation at the end of the lease to return the premises to a specified condition. That might mean removing your fitout, repairing damage and reinstating to a base building or original condition. Make-good requirements should be understood before you renovate, as your works can increase exit costs.

Do tenant renovations need council or building approval?

Some do. Approvals may be required for structural works, changes of use, certain services changes and other building work. In addition, building approvals and certifications under the NCC may be needed regardless of whether planning approval is triggered. Your contractor and certifier can help map what applies to your project.

Can BSG manage the whole project for commercial tenant renovations?

Yes. BSG manages commercial tenant renovations end-to-end, from interpreting scope and assisting with landlord approvals through to construction, compliance and handover, integrating tenancy works with commercial building considerations where required.