Lease Contract – Commercial Lease or Retail Lease?

Primarily in Australia, a lease contract is likely to be divided into 2 categories:

1. Commercial leases and

2. Retail leases.

Definition – Commercial leases and Retail leases

Commercial leases are premises located individually and operate independently with other adjacent premises. For instance, an office building or a warehouse. While retail leases are sites which are located in a collection of shops that normally offer products or services directly to the public and belong to one corporate body such as shopping centers or community centers.

Key features

Commercial Lease

With commercial lease, the lease contract normally outline:

• The premises size
• The usage
• The base rent
• The outgoing: which depends on each location. Outgoings are a cost contribution to the Landlord to pay for council rates, rubbish collections and other tax and charges. But in some cases, there is no outgoing involvement.
• Lease terms including commencement date and expiry date.
• Option to renew: this may be concluded based on the mutual discussion between the parties prior to entering into the contract. If the renew option is available, the lease should outline the methodology as to how the intention should be communicated and the auction date.

On the other hand, retail leases are much more complex. Besides the above mentioned items, we may also look at:

Retail Leases

• Rent: the rent in retail leases could be base rent, semi gross or gross rent.
• Outgoing: almost included in the lease and should always be calculated to your monthly payment.
• Marketing levy: apart from the base rent and outgoing, marketing levy is the tenant contribution to the landlord to promote the corporate body which may be a shopping center or a community mall to attract more visitors which helps generate more business.
• The usage: different with commercial lease, the usage clause in a retail lease is strictly adhered to and may lead to a breach of a contract if such clause is not worded carefully.
• Refurbishment and fit out: as a part of the whole, you may be required to update your shopfront as per the lease set out to maintain the appearance of the shop during the lease terms.
• Design cost: before opening, you probably want to do the fit out of the shop. Bear in mind that all structure changes of the site must be approved by the Retail Design Manager prior to commencing any works.

Conclusion

Before entering into a lease, it is crucial to know what type of lease you are entering. This will allow you to match the use of that location to the best advantage of your business needs. The Lease process may involve more than just signing a Lease document.

Contact us today for assistance with the Lease process to get commercial or retail property for lease in Surry hills.