Commercial and Retail Leases

No matter if you are a Landlord or a Tenant entering into a commercial or retail lease, we are experts in leasing and can assist you with your commercial or retail lease

COMMERCIAL AND RETAIL LEASES

A commercial lease is a contract between a Landlord and a Tenant for the rental of commercial property. A retail lease is both a commercial lease, and a lease related to retail premises. There are specific additional statutory requirements for a retail lease. Before preparing or entering into a commercial or retail lease, it is important to obtain advice, to ensure that the lease contract defines the rights and responsibilities of each party, reflects the agreed commercial terms, and complies with the statutory requirements.

Term Of Lease And Option To Renew

The duration of the lease is important when negotiating a commercial lease. Negotiate flexibility into the term and options of the lease to suit your requirements. Usually there will be a clause which provides an opportunity for you to renew your lease between three and six months before the end of your lease.

Rent And Reviews

Rent and rent reviews are negotiated between the Landlord and the Tenant. In New South Wales, although the rent and rate of increase is not regulated, there is regulation under the Retail Leases Act, which will have a bearing on rent and rent reviews. The timing and basis of rent reviews must be set out in the lease for each rent review period, and the requirements for retail leases must be followed.

Outgoings

Rent for a commercial lease may be inclusive of outgoing costs such as water rates, land tax, management fees, strata or other levies and council tax. The lease document will identify the type of outgoings for which you will be liable.

In relation to a retail lease, the Landlord must provide a Disclosure Statement to the Tenant at least 7 days prior to entering into the lease, and if a Landlord wishes to recover outgoings from the tenant, the Landlord must properly disclose those outgoings in the Disclosure Statement and the lease.

Bond/Guarantee

Generally, a Landlord will require the Tenant to lodge a bond (either in cash or the form of a bank guarantee). It is also common for a Landlord to require a personal guarantee from directors, if a tenant is a company. In relation to commercial leases, the Landlord is not required to lodge the cash bond or other security with any statutory body, and may keep those funds in its own bank account. In relation to a retail lease, there are specific requirements related to cash bonds.

Fixtures And Fit-out

Unless otherwise agreed, tenants generally pay the cost of installing shop fixtures and fittings. It is common for Landlords to agree to provide a contribution to the fitout as a commercial incentive in both commercial and retail leases. It is important to make sure the agreement between the Landlord and the Tenant for this contribution is properly documented. When the lease has ended, tenants usually remove the fit-out and return the shop to the condition it was in before the lease began. This is called “make good”. Check that your lease agreement contains an inventory of the landlord’s fixtures and fittings (if any) and your right to install and remove fixtures.

Maintenance

The lease should clearly outline what repairs and maintenance the tenant is responsible for and what is the obligation of the landlord. Often the tenant is responsible for general repairs and maintenance. The lease should clearly outline what the landlord is responsible for such as the roof, common areas like gardens and hallways and air-conditioning.

Refurbishment

Make sure that the lease clearly sets out the nature, extent and timing of the refurbishment.

The above are just some of the main issues to consider when considering entering into a commercial or retail lease. There are many more matters that need to be considered. It is wise to obtain legal advice from our team before making a commitment to a commercial or retail lease.

Commercial and Retail Leases