Lease clause guide
Demolition and relocation clauses: what they cost a tenant
What is a demolition clause in a commercial lease?
A demolition clause lets the landlord terminate early to redevelop, usually on six to twelve months' notice. It caps the value of every inducement you negotiated, because unamortised TI and moving cost land on the tenant unless the clause says otherwise.
01In detail
Treat a demolition clause as a shortening of the term for economic purposes. If a ten-year lease can be ended in year three, the TI allowance is amortised over three years of certainty, not ten, and the effective rent calculation changes accordingly.
Three protections matter more than deleting the clause, which landlords rarely accept in redevelopment corridors: a notice period long enough to relocate, reimbursement of unamortised leasehold improvements, and a hard blackout period during which the clause cannot be exercised.
Run the lease engine twice — once on the stated term, once on the blackout period — and compare the occupancy cost. The difference is the real price of the clause, and it is the number to negotiate against.
02Questions
Frequently asked
Are demolition clauses enforceable?
Generally yes, as written. Courts read them strictly against the drafting party, which is why notice and compensation wording matters more than the existence of the clause.
What compensation is standard?
Unamortised tenant improvement cost is the common floor. Moving costs and a rent-free overlap in the new premises are negotiable additions.
03Other guides
- Net vs gross lease: what you actually pay
- How a TMI gross-up works and when it is fair
- CAM caps: controllable costs, cumulative vs non-cumulative
Not advice — Leaselor is a data publisher. We do not broker, arrange, or transact, and nothing here is an offer or professional advice. Figures are indicative benchmarks for comparison and must be confirmed with a licensed professional before you rely on them. About Leaselor