Walking into your first commercial lease in Australia without a clear picture of what you’re signing can cost you thousands before you even open for business. Most new tenants focus on the monthly rent figure and miss the surrounding costs—outgoings, fit-out obligations, make-good clauses, and the legal differences between retail and commercial premises that vary by state. Here’s what you actually need to know.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
These numbers alone tell you that renting business premises is not a single transaction—it’s a layered process shaped by state laws, lease type, and your business structure. The difference between a retail shop in a shopping centre and a standalone warehouse can mean entirely different legal protections, cost obligations, and negotiation room. Understanding your rights as a commercial leaseholder is the first step, but the real work happens before you put pen to paper.
One term you’ll hear early in the process is Heads of Agreement. This is the document that records the key commercial terms of your proposed lease before the full legal lease is drafted. It’s not legally binding in every detail, but it sets the framework for everything that follows.
What I tend to notice is that tenants who invest time in getting the Heads of Agreement right save themselves the most grief later. The landlord’s standard lease draft will always favour the landlord, so the commercial terms you negotiate upfront are your best leverage.
Total occupancy costs and what drives them
Most first-time tenants budget for the base rent and forget the rest. The real cost of occupying a business premises includes outgoings—rates, taxes, cleaning, air conditioning, security, and marketing levies—plus energy, fit-out, insurance, and the eventual make-good obligation. In shopping centres, outgoings can include centre promotion funds and special levies. The Queensland Government small business leasing guide notes that energy costs in particular can spike during hot months and vary with building age, energy rating, and fit-out design.
Here’s a breakdown of the main cost categories a tenant can expect to cover:
→ Scroll right to see all columns
| Cost category | What it covers | Who typically pays |
|---|---|---|
| Base rent | Fixed monthly charge for the premises | Tenant |
| Outgoings | Council rates, land tax, cleaning, security, utilities, marketing | Tenant (pro-rata share) |
| Fit-out | Interior modifications, fixtures, signage, shelving | Tenant (unless landlord contributes) |
| Insurance | Public liability, plate glass, contents, business interruption | Tenant |
| Make-good | Restoring premises to original condition at lease end | Tenant |
The biggest trap for new tenants is the make-good clause. Returning the premises to its pre-lease condition can cost tens of thousands, especially if you’ve installed a commercial kitchen, custom shelving, or partitioned walls. A landlord may require you to remove all fit-out and repair any damage, including wear and tear that exceeds what the lease defines as acceptable. One scenario I see often: a café owner spends $60,000 on a fit-out, then at lease end faces a $30,000 make-good bill to strip it all out and repaint.
Common mistakes when renting business premises in Australia
Confusing retail and commercial lease protections
Not every business lease is covered by a Retail Leases Act. In New South Wales, the Retail Leases Act 1994 applies only to premises under 1,000 square metres that sell or supply goods and services to the public, or are located in a shopping centre. If you’re leasing a warehouse for storage or a light industrial unit, you may not get the same mandatory disclosure, minimum term, or dispute resolution protections. The mistake is assuming you’re covered when you’re not. Check your state’s definition of “retail shop” before you negotiate.
Skipping the zoning and permitted use check
Council approval for your specific business activity is the tenant’s responsibility. The Queensland Government guide is clear: regardless of what the agent or landlord tells you, you must verify that the premises are zoned for your intended use. A gym, a micro-brewery, and a mechanics workshop all have different planning requirements. If you sign a lease and then discover the council won’t permit your business, you’re still on the hook for the rent.
Not reviewing the Heads of Agreement with a lawyer
Once you sign the Heads of Agreement, the landlord’s solicitor drafts the full lease. If you haven’t negotiated key terms—rent review formula, outgoings caps, make-good scope, assignment rights, and break clauses—you’ll be trying to change the lease after the commercial terms are already set. The cost of a legal review at this stage is small compared to the cost of a bad clause you’ll live with for years. If you need a quick steer on specific clauses, services like JustAnswer Real Estate Law can connect you with a property lawyer for a targeted question without a full retainer.
Underestimating the cost of outgoings and energy
Outgoings are often quoted as an estimate, but the actual amount can vary. In a shopping centre, outgoings might include air conditioning, security, cleaning, and a centre marketing fund. Energy costs depend on the building’s age, energy rating, and whether the wiring is part of an embedded network. The NSW Small Business Commission notes that if your premises is in an embedded network, your energy costs may be higher than a standard retail tariff. Always ask for the last 12 months of outgoings statements and energy bills before you sign.
How to lease a commercial property in Australia from start to finish
Research, shortlist, and inspect with your business needs in mind
Start by mapping your space requirements: size, layout, storage, access, loading dock, customer parking, and proximity to suppliers. Look at total occupancy cost, not just the base rent. Sprintlaw’s commercial leasing guide recommends inspecting in person to check building condition, compliance features like fire exits and accessibility, and whether the premises can accommodate future growth. Ask about the previous tenant’s use and any known defects.
Negotiate the Heads of Agreement with a clear list of priorities
This is where you lock in the commercial terms that matter most. Cover the rent review formula (fixed percentage, CPI, or market review), the term and any renewal options, rent-free periods or fit-out contributions, caps on outgoings, signage rights, and whether you can sublet or assign the lease. Make the offer “subject to satisfactory lease review” so you can walk away if the full lease contains unacceptable terms. For a retail lease, confirm the landlord has provided a disclosure statement and the required information brochure—these are mandatory under state retail leasing laws.
Review the lease, carry out due diligence, and arrange approvals
Once the draft lease arrives, have a lawyer review every clause. Pay special attention to repair and maintenance responsibilities, make-good obligations, default and termination rights, and any restrictions on permitted use. Check planning and zoning with your local council to confirm your business activity is allowed. Apply for any required permits, licences, or fit-out approvals. Arrange the insurance policies the lease requires—typically public liability, plate glass, and contents insurance. If you’re a company or trust, the landlord may ask for a director’s personal guarantee, which means you’re personally liable for the lease obligations.
Sign, register, and manage the transition
Once everything checks out, sign the deed of lease, pay the security deposit or provide a bank guarantee, and arrange the first rent payment. In NSW, if the lease term (including options) exceeds three years, you must register it with NSW Land Registry Services within three months. Take possession only after the lease is properly executed and any conditions—such as council approval or fit-out completion—are met. Keep a record of the premises condition at move-in to avoid disputes at move-out.
What to know about the Brisbane 2032 Olympics and lease timing
If you’re leasing in Queensland, the Queensland Government advises planning your lease expiry and renewal options around the 2032 Olympic and Paralympic Games. Major events can push up market rent and reduce availability in key locations. Aligning your lease term to avoid a market review or expiry near the event can save you from a sharp rent increase or a difficult search for new premises.
Frequently asked questions about renting business premises in Australia
What is the difference between a retail lease and a commercial lease? ▾
How long does a commercial lease typically last in Australia? ▾
What is a make-good clause and why does it matter? ▾
Can I sublet my commercial premises in Australia? ▾
What happens if I need to end my lease early? ▾
Do I need a lawyer to review a commercial lease? ▾
Planning your lease around future market shifts
The most consequential decision in your first commercial lease isn’t the rent amount—it’s the alignment between your lease term, your business growth plan, and upcoming market events. State-specific retail leasing laws, the Brisbane 2032 Olympics, and changes to embedded network energy costs are all factors that can shift your occupancy costs years after you sign. The tenants who come out ahead are the ones who treat the lease as a multi-year business commitment, not a short-term space booking. Flexible lease terms can make a significant difference in how well your business adapts to changing conditions.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read Commercial Rent Negotiation Secrets Every AU Entrepreneur Needs To Know.
Sources and Further Reading
Understanding Rent-Free Periods When Renting Commercial Space — A practical guide to negotiating and using rent-free periods effectively in your commercial lease.
Location, Location, Rent: Finding The Perfect Commercial Space In Australia — How to balance location, cost, and lease terms when choosing your business premises.
Sprintlaw (2024). Lease of Commercial Properties: Essential Legal Tips. 🔗
Sprintlaw (2024). Commercial Lease Requirements: What Australian Businesses Must Know. 🔗
Queensland Government (2024). Signing a Business Premises Lease. 🔗
Victorian Small Business Commission (2024). Lease a Business Premises. 🔗
NSW Small Business Commissioner (2024). Retail Tenancy Guide. 🔗
Victorian Government (2024). Set Up Your Premises. 🔗
