Property Lease Lawyer

Whether you’re launching a startup, expanding an existing business, or relocating your operations, commercial leasing is a significant decision that can impact your financial stability and business success. Unlike residential leases, commercial lease agreements are more complex, less regulated, and often negotiated to suit the specific needs of both landlords and tenants. Understanding the ins and outs of commercial leasing is essential before committing to any agreement.

In this article, we’ll explore what commercial leasing involves, key terms you need to know, and tips for securing the right lease for your business.

What Is Commercial Leasing?

Commercial leasing is the process of renting a property or space for business purposes. These spaces may include office buildings, retail shops, warehouses, industrial facilities, or hospitality venues. Leasing is a popular alternative to purchasing commercial property, offering businesses greater flexibility and lower upfront costs.

Depending on the lease type and terms, the tenant may be responsible for some or all of the property’s operating expenses in addition to rent.

Types of Commercial Leases

There are several types of commercial leases, and understanding each is crucial to negotiating favourable terms.

1. Gross Lease (Full-Service Lease)

In a gross lease, the landlord covers most, if not all, property-related expenses such as utilities, insurance, and maintenance. The tenant pays a single fixed rent amount.

2. Net Lease

In a net lease, the tenant pays a base rent plus additional costs like property taxes, insurance, and maintenance. Variations include:

• Single Net Lease (N)
• Double Net Lease (NN)
• Triple Net Lease (NNN) — where tenants cover nearly all costs

3. Modified Gross Lease

A hybrid lease where both parties share expenses. Tenants may pay base rent plus selected outgoings like utilities.

4. Percentage Lease

Common in retail, the tenant pays base rent plus a percentage of business profits. This model aligns landlord and tenant success.

Key Terms to Understand in a Commercial Lease

Before signing, ensure you understand the following commercial leasing terms:

• Lease Term: Length of the lease, often ranging from 3 to 10 years.
• Rent Increases: Usually annually and may be based on CPI or fixed amounts.
• Outgoings: Expenses like council rates, utilities, insurance, and maintenance.
• Fit-Out Responsibilities: Who pays for and owns any alterations or improvements.
• Make Good Clause: Outlines the condition in which the premises must be returned.
• Option to Renew: Allows tenants to extend the lease at the end of the initial term.
• Subletting and Assignment: Determines if the lease can be transferred or sublet.

Things to Consider Before Signing a Commercial Lease

1. Location, Location, Location

Your business’s success is often tied to its location. Ensure the leased property:

• Is accessible to customers and suppliers
• Has suitable zoning for your business type
• Meets foot traffic and visibility needs (especially for retail)
• Is close to public transport and parking

2. Understand the Full Cost

Rent is only one part of the total cost of commercial leasing. Ask for a full breakdown of:

• Base rent
• Outgoings
• Maintenance fees
• Utilities and other charges

Get everything in writing to avoid surprises later.

3. Negotiate Terms

Unlike residential leases, commercial leases are negotiable. Work with a property lawyer or commercial real estate agent to negotiate favourable terms. Don’t accept the first offer—consider:

• Lower rent
• Rent-free periods
• Fit-out contributions
• Flexible lease terms

4. Legal Review Is Essential

Always have your lease reviewed by a legal professional with commercial property experience. They can identify potential pitfalls, ensure compliance with relevant laws, and help protect your interests.

5. Plan for Growth or Exit

Consider how the lease supports your future plans. Does it allow for business expansion or relocation? Are there penalties for early termination? Look for flexibility without excessive risk.

Benefits of Commercial Leasing

• Lower upfront costs compared to buying property
• Greater flexibility to relocate or expand
• No responsibility for property ownership risks
• Potential to negotiate custom lease terms

Final Thoughts

Commercial leasing is a major commitment, and making the right choice can set your business up for long-term success. Whether you’re leasing a retail store, office suite, or warehouse, understanding lease types, costs, and legal obligations is critical. Take your time, seek expert advice, and negotiate a lease that works for your business today—and into the future.