• 7 mins read
When investing in Australian commercial property, it’s crucial to distinguish between commercial and retail leases, as they have distinct characteristics affecting landlords and tenants.
Here are some of the most important characteristics:
Commercial Leases:
- Property Types: Covers a range of business uses excluding retail (e.g., industrial, warehouses).
- Term: Typically, 3 to 10 years.
- Flexibility: More negotiable terms, including rent reviews and renewal options.
- Rent Structure: Fixed or variable.
- Outgoings: Paid by tenants, covering maintenance, insurance, and Land Taxes.
- Improvements: Tenants often have more freedom to modify spaces.
- Regulation: Varies by state or territory.
Retail Leases:
- Property Types: Specifically for retail activities (e.g., shops, restaurants).
- Term: Usually, 1 to 5 years.
- Regulation: More stringent to protect smaller businesses.
- Rent Structure: Fixed or variable.
- Outgoings: Limited to property-related costs, clearly disclosed by landlords excluding costs such as Land Tax.
- Improvements: Requires landlord consent.
- Regulation: Governed by the state’s Retail Leases Act, including mandatory disclosures and cooling-off periods.
Summary of Differences:
- Regulatory Framework: Retail leases are more regulated to protect tenants.
- Lease Duration: Commercial leases are generally longer and more flexible.
Understanding these differences helps both landlords and tenants make informed decisions, ensuring their lease agreements align with their business objectives and legal requirements.
If you would like to discover more about how best to manage your asset, the experienced team at TPA are available to answer your questions, Contact Us today to find out more.
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