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Lease Agreement
17 Mar 18

Am I Ready To Sign A Commercial Lease

Location, Location, Location

Yes, we’ve all heard that phrase, but it can be critical when choosing a commercial lease. Some factors such as being around a corner, in a side street, on the ‘wrong’ side of a divided highway, at the back of a complex or in an arcade can all impact significantly on the ease of access and visibility to customers.


Have you negotiated a ‘fair and reasonable’ rental? There are many websites dedicated to the leasing of commercial and industrial tenancies and viewing them for a better understanding of how far your dollar will go and true market rental is advised. Generally, for retail space you will pay more for a better location though not for a better presented property whereas for industrial the price varies for the age of the building, level of amenity and access to major feeder routes. Do your homework and talk to several agents about specific locations.

It's Not Just Rental

The monthly rent is not all there is to pay. In most situations there will be rent, bond (between 1-6 months’ rent), recoverable outgoings (rates, insurances, owner’s corp. levies, aircon. services, fire services plus gardening etc. During negotiations ask for a detailed list of outgoings to factor into your equations. An additional 10% on top of all rent and outgoings for GST may also apply plus your own costs i.e. power, phone, electricity, maintenance and insurances.

How Long Should I Commit To The Lease?

Am I ready to sign for 1 year or can I commit to 4-5 years? So many factors come into play when considering this - viability of the business type, level of competition, being a first-time operator plus external factors i.e. proposed roadworks, rezoning etc. Do your homework! Once you have signed, you’re obligated.

Okay – So Now Can I Sign?

There are times when a prospective tenant will be uncertain about committing to either the scale of a monthly rental or being tied to a long-term lease so although it is ultimately a tenants’ own decision to proceed it is advisable that the applicant seek further advice from an accountant, legal representative, suppliers, Business Victoria and industry professionals as to the expected viability of their business. Without being pessimistic, there is more harm than good for a tenant to sign into a lease and then become financially ruined in a short space of time.

At First National Neilson Partners Commercial we always look forward to seeing another successful business operator so please be smart, be wise, do your homework and always seek legal and financial advice.

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