Table of content
- What is a commercial lease
- What services do commercial leasing lawyers provide?
- What is the difference between a retail and a commercial lease?
- What is a Retail Shop Lease?
- How are retail tenants protected by state-based legislation in Queensland?
- What are the different types of commercial leases Australia?
- How long is a commercial lease Australia?
- How do I terminate a commercial lease in Australia?
- How much does it cost to break a lease Qld?
- Can a landlord refuse to renew a commercial lease?
- What does “option for lease renewal” mean?
- How can a tenant exercise their Option?
- What happens if there is no Option for lease renewal?
- What is the concept of ADR in commercial disputes?
- How can disputes be effectively managed?
- What are the three main types of ADR processes?
- GM Law commercial leasing
What is a commercial lease in QLD?
A commercial lease in Australia is a legal agreement between a landlord and a tenant, in which the tenant is renting commercial property, such as office space, retail space, or industrial property. The lease outlines the terms and conditions of the rental agreement, including the amount of rent to be paid, the length of the lease, and any other obligations or responsibilities of the landlord and tenant.
Commercial leases in Australia are governed by state and territory laws, which set out specific rules and requirements for landlords and tenants. In general, commercial leases in Australia are more complex than residential leases, as they often involve larger amounts of money and more detailed provisions.
Specifically, this article is more focused on the features of the Brisbane commercial lease.
Commercial leases may include additional clauses related to the use of the property, maintenance and repair responsibilities, security deposits, insurance requirements, and termination or renewal options. It’s important to understand that there are commercial and retail leases in Australia. Or retail and non-retail leases.
What services do Queensland commercial lawyers provide?
Commercial leasing attorneys offer a specialised range of services for landlords or tenants entering into a commercial agreement.
A lawyer for a commercial lease will advise on issues relating to the terms of a commercial and business-premise lease and will provide you with expertise to help the process of commercial rental run smoothly and effectively.
For tenants, commercial leasing lawyers will:
- Review your lease before you sign it, to ensure that your rights are protected
- Help you negotiate aspects of your lease and pre-let arrangements to get the best possible terms and conditions
- Provide you with necessary advice to resolve any leasing matters
- Help you renew existing leases
- Help you review your rent
- Help you terminate your lease
- Help you obtain approvals
- Ensure all obligations are complied with
- Provide lease dispute resolution
Commercial lease landlord obligations a leasing lawyer can help with:
- Draft your lease so that it protects your interests
- Provide you with necessary advice to resolve any leasing matters
- Help you negotiate aspects of your lease and pre-let arrangements to get the best possible terms and conditions
- Help you renew existing leases
- Help you manage the legal aspects of your commercial investment property
- Help you maximise the return from leasing premises
- Enforce breaches of the lease
- Help recover possessions and remove unauthorised occupants
- Coordinate insurance and bank guarantees
- Ensure all obligations are complied with
- Help you obtain approvals
- Assign the lease
- Provide lease dispute resolution
What is the difference between a retail and a commercial lease?
Retail shop leases in QLD are utilized in situations where goods or services are sold, often within a group of five or more stores, typically found in shopping centers. In contrast, a commercial lease is used for premises such as office, industrial, or warehouse space.
As commercial leases are not protected by legislation, lessees will have to negotiate more extensively. In contrast, retail tenants are protected under state-based legislation. While commercial tenants don’t have such protection, they can negotiate with the landlord regarding who should bear the preparation costs. Queensland commercial lawyers can be integral to protecting your rights in these situations.
Furthermore, in a retail lease, a disclosure statement must be provided along with the lease during negotiation. However, in a commercial lease, this statement is provided afterward. It is also important to set up a proper commercial lease bond in QLD, which a lawyer can help with.
Note: If you came to this page because you were looking for a solicitor for a commercial lease in Brisbane, you can contact us here.
What is a Retail Shop Lease?
As per the Retail Shop Leases Act, a retail shop is defined as premises that either
- are located in a retail shopping center or
- are predominantly or wholly used for conducting one or more retail businesses.
The term retail business is specifically defined by law by many criteria such as:
- the floor area should be of less than 1,000m2;
- this should not be a perpetual lease;
- this should be not a premise in a theme or amusement park or on a flea market, etc.
The legislation outlines a comprehensive list of shops that may qualify as retail leases. 
Retail Shopping Center is another term that should be thoroughly examined. Retail Shopping Center refers to a group of premises that possess the following characteristics:
- The primary use of premises: At least five businesses within the premises must be wholly or mainly involved in retail activities.
- Ownership of premises: The premises should be either owned by one individual, leased by a single lessor, or belong to a single community titles scheme.
- Location of premises: The premises should either be located within one building or multiple adjoining buildings that are separated by common areas, roads, or areas owned by the same owner.
- Promotion or holding out of premises: The premises must be marketed or generally perceived as a shopping center, shopping mall, shopping court, or shopping arcade.
How are retail tenants protected by state-based legislation in Queensland?
If a lease is categorized as a retail shop lease, it will fall under the coverage of the Retail Shop Leases Act 1994 (Qld) (the “Act”). This means that the tenant can avail the benefits and protections provided under the Act, which include:
- Restrictions on the landlord for outgoings;
- Prohibition on landlords passing land tax expenses to tenants;
- Regulations on rent review mechanisms; and
- The potential entitlement of tenants to an early determination of current market rent if they have the option to renew or extend the lease, which allows new rent to be determined before exercising the option to renew.
You can find the full list of provisions here. However, even on the website of the Government of Queensland, these provisions are briefly indicated, since such nuances are usually discussed at the commercial lease solicitors level.
What are the different types of commercial leases in Australia?
Commercial leases in Australia can be based on seven types:
- Single Net Lease
- Double Net Lease
- Triple Net Lease
- Bondable Net Lease
- Full Service Gross Lease
- Modified Gross Lease
- Percentage Lease
The rental terms of the commercial lease can be influenced by the bargaining positions of the landlord and tenant, as well as the size, demand for premises, and strength of the market.
How long is a commercial lease Australia?
There are certain leases that have a duration of one month, and this is especially common in the case of smaller commercial properties. On the other hand, there are leases that span 30 or more years. Generally, commercial leases in Australia are entered into for 3 to 25 years, which includes an initial term and options for the tenant to renew the lease.
For instance, a 25-year lease would usually consist of an initial term of 5 to 10 years followed by successive options of 5 to 10 years each.
How do I terminate a commercial lease in Australia?
If you intend to terminate your commercial lease, it is not as simple as just returning the keys to the landlord and walking away. Due to the unpredictability of business, you may have various reasons for wanting to terminate the agreement. Here are some scenarios on how to break a lease in QLD:
- Surrender the Lease: Request your landlord to agree to a surrender of the lease, which ends the lease early. However, this may require you to pay a surrender fee to compensate for breaking the lease agreement. A formal deed of surrender must be documented and signed by both parties. This deed will contain important information such as preconditions, ‘make good’ requirements, security deposit information, cost payment requirements, and release of legal responsibilities.
- Early Termination Clause: Some leases may contain an early termination clause, which is rare but can be negotiated before signing the lease. It may include costs associated with ending the lease early, such as legal costs or payment of rent while the landlord finds a new commercial tenant.
- Assignment of Lease: Transferring your lease to a new tenant is known as assigning a lease. This requires the landlord’s consent and may require a deed of assignment and a deed of consent to an assignment. Legal costs for consenting to the assignment of the commercial lease may be borne by the tenant.
- Subletting the Premises: Subletting all or a part of the premises to a subtenant can reduce costs, but the landlord’s consent is required. This option does not release the tenant from legal responsibilities under the lease, and a formal sublease document is required.
- Licensing: Licensing the premises allows sharing of parts of the premises with the other party, but it does not release the tenant from legal responsibilities under the lease. The landlord’s consent is required, and legal costs associated with consenting to a license may be borne by the tenant.
One way or another, in most cases, you will need a commercial lease lawyer to help make things go smoothly.
How much does it cost to break a lease in Queensland?
Breaking a commercial lease is possible, but you probably have to cover certain expenses like the cost of finding a new tenant (usually one week’s rent plus GST), any advertising expenses, and compensation for any rent lost until a new tenant is found or the lease agreement ends.
In cases where the tenant or property manager/owner is facing severe financial or health difficulties, they can apply to QCAT for an emergency order to end the agreement. Nonetheless, even if the agreement is terminated, QCAT may still require compensation to be paid.
Can a landlord refuse to renew a commercial lease?
If the tenant’s contract includes an option for lease renewal, the landlord is obligated to renew the lease in circumstances where the tenant gives the appropriate notice prescribed by the terms of the lease that they elect to renew. In case a Queensland Retail Shop Lease lacks a renewal option, the Landlord is obliged to provide written notice to the tenant. The notice should be given at least two months before the option date, but not more than six months before it. Otherwise, the landlord could be fined up to 40 penalty units, which amounts to $5,338 as of July 1, 2020.
Disputes may arise if the tenant fails to properly exercise their option or if there is a market rent review associated with the lease renewal. Certain leases are designed to renew themselves automatically after a specific time period unless either party provides prior notification to the other.
In the end, it all depends on how you negotiate a commercial lease.
What does “Option for lease renewal” mean?
An option to renew refers to the right of the tenant to request the landlord to grant them a new lease once the current lease expires. These options are commonly included in commercial and retail leases to provide the tenant with security for their business premises, without committing them to a long-term agreement that may not suit their future needs or circumstances.
Including option, clauses can make properties more appealing to potential tenants and buyers of the tenant’s business. The Option clause typically states that the new lease will have the same conditions as the previous one, except for a rent review, which will follow a rent review process specified in the lease.
Leases frequently contain multiple consecutive options that come after the initial term.
How can a tenant exercise their Option?
To make an Option enforceable, the tenant must follow the process and timeframe specified in the lease. Usually, leases mandate that Options be exercised within 3-6 months before the lease expires. As a result, tenants need to be well-organized and have the option dates noted in their calendars if they plan to exercise the Option.
If the tenant decides to exercise their Option to renew, the new lease terms, including the rent, will be based on the conditions specified in the existing lease.
It is important for tenants to recognize that exercising the Option implies committing to paying the newly calculated rent.
What happens if there is no Option for lease renewal?
When a lease lacks the Option to renew, the landlord can request that the tenant leave the premises once the lease expires.
If the parties intend to extend the lease, many leases permit a brief “holding over” phase. In some cases, tenants stay under the same conditions for a few months, while the parties negotiate the terms of the new lease. It is essential for your commercial lease solicitor to prepare a new lease if the parties are going to prolong their agreement.
What is the concept of ADR in commercial disputes?
ADR stands for Alternative Dispute Resolution, which is a process where an independent third party helps individuals to resolve their disputes without the need for judicial determinations such as court decisions.
How can disputes be effectively managed?
Dispute management involves identifying and addressing disputes promptly and sensitively. Effective strategies for managing disputes include assessing disputes to determine appropriate responses and resolving them in a timely manner.
What are the three main types of ADR processes?
The three main types of ADR processes are facilitative, advisory, and determinative.
- Facilitative processes involve a dispute resolution practitioner assisting parties to identify the disputed issues and reach an agreement.
- Advisory processes involve a practitioner providing advice on the dispute and possible outcomes.
- Determinative processes involve a practitioner making a determination after evaluating the dispute, which may include formal evidence from the parties.
GM Law commercial leasing services
Our team has extensive expertise in all aspects of retail and commercial leases. We provide a tailored service that involves getting to know you and your business to guarantee that the lease agreement negotiated meets your long-term needs and optimizes your interests. We will provide guidance on your rights and obligations and can provide support if a dispute arises.
You can contact us via email or call 1300 185 636 and describe your issue.
