Negotiating a commercial lease is fundamentally different to buying or selling residential property. Commercial leases are longer, more complex, less regulated and typically more negotiable than residential leases. Understanding the key terms before you sign can save you tens of thousands of dollars over the life of the lease.

Key Terms in a Commercial Lease

• Net rent vs gross rent: Net rent means the tenant pays the base rent plus outgoings (rates, insurance, maintenance). Gross rent means all costs are included in one payment. Always clarify which structure applies.
• Lease term and options: How long is the initial lease? Do you have options to renew, and on what terms? Options should be exercised in writing within the notice period or they lapse.
• Rent reviews: How is rent reviewed? CPI, fixed percentage, market review or a combination? Understand how each works before signing.
• Make-good obligations: What are you required to do at the end of the lease? Make-good clauses can be expensive — negotiate them carefully before signing.
• Fitout contributions: In a tenant’s market, landlords often offer fitout contributions, rent-free periods or reduced rent in the early years. Always ask.
• Assignment and subletting: Can you assign the lease to a buyer if you sell your business? This is critical for business owners.

Common Mistakes in Commercial Lease Negotiation

• Signing a net lease without understanding what outgoings are included
• Not negotiating a rent-free period at the start of the lease
• Missing the option exercise deadline and losing the right to renew
• Not getting make-good obligations in writing before fitting out the space
• Signing a lease with personal guarantees without fully understanding the exposure

How a Property Advisor Can Help

Collings Property Advisory provides commercial lease negotiation support for tenants and landlords. Our fixed-fee service at $4,500 + GST covers lease review, term negotiation, comparable market rent analysis and strategy advice — so you sign a lease that works for your business, not just the landlord’s agent.

FAQs — Commercial Lease Negotiation

Are commercial leases regulated in Australia?

Commercial leases are regulated differently to residential leases and vary significantly by state. The Retail Leases Act applies to retail premises in each state, providing some baseline protections. For non-retail commercial premises, the lease terms are almost entirely negotiable.

Can I negotiate rent in a commercial lease?

Yes. Commercial rent is negotiable, especially at lease commencement and at market review. In a tenant’s market, significant discounts, rent-free periods and fitout contributions are common. In a landlord’s market, you may have less leverage but there is always room to negotiate on secondary terms.

Do I need a lawyer for a commercial lease?

Yes, always. A solicitor should review any commercial lease before you sign. A property advisor can help you understand the commercial terms and negotiation strategy before the lawyers get involved — saving you time and money on legal fees.

Need help negotiating your commercial lease? Contact Collings Property Advisory — $4,500 + GST, fixed fee.