What happens to fixtures when closing a restaurant? A thorough explanation of the differences between 'inuki' (as-is) and skeleton handovers
When closing a restaurant, how you handle the interior and kitchen equipment can change the amount of money you have left by millions of yen.
In conclusion, if you choose an 'inuki' (as-is) handover (fixture transfer), you can save on removal costs while receiving a fixture transfer fee. A skeleton handover incurs removal costs of 1 to 3 million yen.
In this article, we will explain the differences between 'inuki' and skeleton handovers, their respective pros and cons, and which one you should choose, based on our track record of over 300 fixture transfers in Nagoya.
What is the difference between 'inuki' and skeleton?
When vacating a restaurant, there are two main options.
A skeleton handoveris a method of returning the property in a state where all interiors, equipment, and fixtures have been removed, leaving only the concrete structure (skeleton state).
An 'inuki' (as-is) handoveris a method of passing on the interior, equipment, and fixtures in their current state to the next tenant. The act of selling fixtures to the next tenant is called a 'fixture transfer'.
Which handover method is used is determined by the contents of the lease agreement and negotiations with the landlord.
Pros and cons of a skeleton handover
Pros
You can reliably fulfill your obligation to restore the property to its original state
If the lease agreement explicitly states an 'obligation to restore to original state,' a skeleton handover is the standard. Since you are returning the property as agreed, it is less likely to cause trouble with the landlord.
It does not limit the business type of the next tenant
If the property is in a skeleton state, it can accommodate any type of business for the next tenant. This makes it easier for the landlord to find the next tenant.
Cons
Removal costs range from 1 to 3 million yen
High construction costs are incurred for the removal of kitchen equipment, interiors, ducts, air conditioning, etc. Depending on the scale and condition of the equipment, the market price in Nagoya is roughly 1 to 2 million yen for 20 to 30 tsubo.
You cannot receive a fixture transfer fee
Because you are disposing of all the interiors and equipment you went to the trouble of installing, their asset value becomes zero.
Pros and cons of an 'inuki' (as-is) handover (fixture transfer)
Advantages
No removal costs
Since you vacate the premises while leaving the interior and equipment intact, no removal work is required. Compared to a skeleton return, this can save you between 1 million and 3 million yen.
You can receive a transfer fee for fixtures
You can generate cash income by having the next tenant purchase your fixtures. The average market price in Nagoya is approximately 2 million yen (based on VELETA's transaction data).
You can operate until the very last minute
Because there is no need to close the shop for removal work, you can maximize your sales right up until the closing date.
Peace of mind if you are attached to your equipment
Instead of disposing of the equipment and interior you have used for many years, you can have the next tenant make use of them.
Disadvantages
Landlord's consent is required
Unless otherwise specified in the lease agreement, an 'inuki' (as-is) return requires the landlord's permission. You also need to confirm whether the landlord intends to rent the space out as a restaurant again.
The next tenant may not be found
Depending on the condition of the fixtures and the location, it may take time to find a buyer.
Leased items cannot be transferred
If your kitchen equipment includes leased items, they cannot be transferred as part of the fixtures. You must check with the leasing company in advance.
Which should you choose? Key points for decision-making
Please check the following three points to make your decision.
① What is written in the lease agreement?
Check the details of the 'obligation to restore to original condition.' Even if it is explicitly stated that the property must be returned in a 'skeleton state,' there are cases where you can negotiate with the landlord to change it to an 'inuki' (as-is) return.
(2) Whether the landlord permits an 'inuki' (fixtures included) transfer
If the landlord wants the next tenant to operate as a restaurant as well, they often welcome an 'inuki' transfer. We recommend consulting with your landlord first.
(3) Condition and age of the fixtures
If the business has been operating for less than 5 years and the equipment is in good condition, there is a high possibility that the fixtures still hold value. If more than 8 years have passed, the value tends to decrease.
Estimated amount obtainable through an 'inuki' transfer
These are the median values for fixture transfer fees by area, based on VELETA's transaction data (over 300 cases in Nagoya City).
| Area | Median Fixture Transfer Fee |
|---|---|
| Naka Ward / Meito Ward | 2.5 to 3.8 million yen |
| Nakamura Ward / Chikusa Ward | 1.9 to 2.4 million yen |
| Tenpaku Ward / Kita Ward | 1.4 to 1.5 million yen |
Considering the difference from removal costs, choosing an 'inuki' exit can result in an economic benefit of 2 to 5 million yen.
First, check the value of your fixtures
If you are considering an 'inuki' transfer, it is important to first understand how much your salon or store's fixtures can be sold for.
VELETA provides a tool that allows you to instantly calculate the estimated fixture transfer fee for free just by entering the address, rent, and equipment details.
👉 Know it in 1 second: AI Fixture Transfer Valuation | VELETA
Summary
A 'skeleton' exit incurs removal costs of 1 to 3 million yen, and you cannot receive a fixture transfer fee
An 'inuki' exit (fixture transfer) means zero removal costs + you can receive a fixture transfer fee
Landlord permission and confirmation of the contract are prerequisites
The average fixture transfer fee in Nagoya is approximately 2 million yen
We recommend first understanding the value of your fixtures using our free AI valuation tool
👉 Related article: What is the market price for fixture transfer fees in Nagoya? Explained with 300 transaction data points
VELETA Co., Ltd. | Oasis Sakae Bldg 4F, 1-9-29 Higashisakura, Higashi-ku, Nagoya | TEL 052-950-3075
Specializing in real estate brokerage, fixture transfers for restaurants and beauty salons, and 'inuki' property brokerage