Restoration is a Dirty Word
I was with a tenant this week looking at 9,000 square feet near Grand Central. On a tour together we identified a space that worked well for their current needs. As I inquired about future growth plans they said they expected to double their employee count in the next 5 years.
They shared one of the reasons the space worked was because it was configured in a way to allow them to put up walls to build offices in the open area in the future.
It became very clear that I had to negotiate a restoration clause not be included in the lease. Why?
Given their intention to potentially make changes, it was important to ensure that they would not have to pay for the construction to remove their modifications at the end of the lease.
Imagine if you spent one hundred thousand dollars to modify your office space only to find out you then had to spend another hundred thousand dollars years later to return the space to its configuration from your possession date.
A Restoration Clause legally obligates a tenant to restore, at the landlord’s request, the premises back to the condition it was in before possession of the space by the tenant.
Why does the landlord like this in a lease?
It enables them to save money on configuring a space for the next potential tenants’ needs. Example: Space with 4 offices and open space for 20. Tenant builds an additional 6 Offices. And as we know with more tenants requiring more open space and fewer offices the landlord will most likely have a tenant who needs a similar configuration.well the restoration clause enables the landlord to have work done at someone else’s expense rather than their own pocket. A win for them. Lose for you.
Protect yourself by having the restoration clause removed.