Commercial Lease Advice: What To Check Before You Sign

Signing a commercial lease is a big milestone for any small business. It often means you’re ready to put down roots, open your doors, and start (or scale) your day-to-day operations.

But it’s also one of the easiest ways to lock in long-term risk if the lease isn’t right for you. The rent might look affordable today, the fit-out might seem manageable, and the agent might tell you the “standard terms” are fine - but commercial leases can contain clauses that significantly affect your cashflow, flexibility, and ability to exit later.

This article gives practical commercial lease advice from a small business perspective: what to check, what to ask, and what you can often negotiate before you sign. It’s designed to help you walk into lease discussions with more clarity (and fewer nasty surprises).

Note: This article is general information only and not legal advice. Commercial leasing laws and your rights can differ depending on your state or territory and the type of premises, so it’s a good idea to get advice tailored to your situation.

Why Getting Commercial Lease Advice Early Matters

A commercial lease isn’t just paperwork - it’s the legal foundation of where and how you’ll operate. If the terms are one-sided (or simply don’t match your business model), you can end up with:

• unexpected outgoings and increases in rent,
• restrictions that stop you from running your business the way you planned,
• limited rights to renew (even if you’ve built strong goodwill at the location),
• costly “make good” obligations at the end of the lease, or
• difficulty exiting the lease if your circumstances change.

Commercial leasing is also different from residential renting. Many of the “consumer-style” protections people expect don’t apply in the same way, and the contract terms carry a lot of weight.

Getting commercial lease advice before you sign helps you identify:

• what you’re actually committing to (and for how long),
• what the lease is silent on (which can matter just as much), and
• what is negotiable (often more than you think).

What Type Of Lease Are You Signing (And What Laws Apply)?

Before you dive into clauses, it helps to confirm what kind of lease you’re dealing with. Commercial leases generally fall into a few broad categories, and the legal framework can affect disclosure requirements, timelines, and negotiation leverage.

Retail Lease Vs Commercial Lease

If you’re leasing premises for a shopfront, café, beauty clinic, gym, or similar customer-facing business, you may be covered by retail leasing laws in your state or territory (depending on factors like the type of business, the premises, and in some jurisdictions, turnover thresholds). These rules can impact things like disclosure statements, rent review rules, and certain protections for tenants.

If it’s not a “retail lease” (for example, a warehouse, office, industrial premises, or some specialised uses), you may have fewer statutory protections and more of the relationship will be governed purely by the contract.

Lease Vs Licence

Sometimes arrangements are structured as a “licence” (common in shared workspaces, pop-ups, or short-term occupancy). A licence can be more flexible, but it can also give you fewer rights than a lease.

If you’re operating from shared premises or a less traditional setup, a Property Licence Agreement can be relevant - and it’s worth getting advice on whether the arrangement suits your needs (and whether it’s truly a licence in practice).

What Exactly Is Being Leased?

Make sure the lease clearly identifies the “premises” (including any storage rooms, car parks, outdoor areas, signage space, or loading zones you’ll rely on). If it’s not written into the lease, it’s much harder to enforce later.

The Core Commercial Lease Terms To Check Before You Sign

If you only have time to focus on a handful of items, these are the clauses that tend to have the biggest long-term impact for small businesses.

1. The Term, Options, And Flexibility

Check:

• Lease term: Is it 1, 3, 5, or 10 years?
• Option to renew: Do you have the right to extend the lease, or is it at the landlord’s discretion?
• How options are exercised: There’s usually a strict notice window and method (miss it and you may lose the option).
• Break clause: Can you end the lease early, and what does it cost?

For many small businesses, the “best” term is not necessarily the longest. A shorter initial term with an option to renew can balance stability and flexibility.

2. Rent, GST, And Rent Review Clauses

Rent is never just a weekly figure. Confirm:

• Base rent: Is it quoted per square metre or as a fixed amount?
• GST: Is rent inclusive or exclusive of GST?
• Rent review method: CPI, fixed percentage, market review, or a mix?
• Timing of reviews: annually, at option, or both?

Market reviews deserve special attention. In some leases, “market rent” can only go up (ratchet clauses), meaning even if the market drops, your rent may not.

3. Outgoings And Hidden Costs

Outgoings are often where budgets get blown. They can include council rates, water charges, strata fees, insurance, repairs and maintenance, security, cleaning of common areas, and management fees.

Ask for:

• a clear list of outgoings you must pay,
• how they are calculated and recovered,
• whether you’ll receive regular statements, and
• any caps or exclusions (where possible).

If you’re in a retail or shopping centre environment, outgoings can be substantial and may change from year to year.

4. Permitted Use (And What You Actually Need To Do)

The “permitted use” clause describes what you’re allowed to do in the premises. This is more important than many business owners realise.

Ideally, your permitted use should be broad enough to cover:

• your current business activities,
• reasonable pivots (new product lines, updated services, expanded offerings), and
• ancillary uses (like online order fulfilment, training, consultations, storage, or minor manufacturing - if relevant).

If your permitted use is too narrow, you may be in breach simply by evolving your business.

5. Repairs, Maintenance, And Who Pays For What

Leases often push responsibility for maintenance and repairs onto the tenant - sometimes more than you’d expect.

Check who pays for:

• air conditioning servicing and replacement,
• plumbing and electrical faults,
• fire safety equipment and compliance checks,
• grease traps (for food businesses),
• structural repairs (ideally landlord responsibility, but leases vary).

Even if the landlord “says” something is covered, it’s the lease wording that counts.

6. Make Good Obligations At The End

“Make good” clauses can be one of the most expensive surprises at the end of a lease.

They may require you to:

• remove your fit-out and signage,
• repair damage,
• repaint, recarpet, or return the premises to a specified condition, or
• restore the premises to “base building” condition (which can be significant).

Try to clarify what “make good” means in your lease and whether a condition report or agreed scope can be documented upfront.

7. Security Deposits, Bank Guarantees, And Personal Guarantees

Landlords commonly request security, such as:

• a cash bond,
• a bank guarantee, and/or
• a personal guarantee from directors (if you’re trading through a company).

For small businesses, personal guarantees are a major risk point because they can put personal assets on the line if the business can’t meet lease obligations.

If a personal guarantee is proposed, it’s worth getting advice on:

• the scope of the guarantee (is it unlimited?),
• whether it can be limited in time or amount, and
• what triggers enforcement.

Negotiation Points Small Businesses Often Miss

Commercial leases are negotiable. Not everything will move, but many terms can - especially if the landlord wants your tenancy and you negotiate before committing.

Fit-Out Clauses And Incentives

If you’re investing in a fit-out, check:

• who owns the fit-out during the lease and at the end,
• whether landlord consent is required (and how quickly it must be given),
• whether there are fit-out guidelines you must follow, and
• whether there are incentives (rent-free periods, landlord contribution, reduced rent for initial months).

Also confirm whether you need approvals beyond landlord consent (for example, strata approvals or council permits), and build enough time into your plan before opening.

Assignment And Subleasing (Your Exit Options)

If your business outgrows the space or needs to relocate, a key question is: can you assign the lease (transfer it to a new tenant) or sublease?

Check:

• whether assignment/sublease is allowed,
• what conditions apply (landlord consent, financial checks, legal costs),
• whether you remain liable after assignment, and
• what happens if the landlord refuses consent.

Even if you don’t plan to leave early, having workable exit pathways can be crucial risk management.

Exclusivity (If You Need It)

If you’re in a centre with multiple tenants, you might want an exclusivity clause that prevents the landlord leasing nearby premises to a direct competitor.

Exclusivity is not always available, but it can matter for businesses like cafés, salons, medical practices, and niche retail.

Signage And Visibility

Check whether you’re allowed to install signage and where. Signage rights often affect foot traffic and sales, especially in shopping precincts or buildings where signage is controlled by body corporate rules.

Trading Hours And Access

Ensure you can access the premises when you need to. This includes:

• early morning/late night access,
• delivery hours and loading dock access,
• security rules (alarms, keys, swipe access), and
• any mandatory trading hours (common in retail environments).

Due Diligence Checklist: What To Confirm Outside The Lease Document

Good commercial lease advice goes beyond the lease clauses themselves. You also want to confirm that the location works legally and practically for your business.

Zoning, Approvals, And Compliance

Before signing, confirm the premises can legally be used for your business under planning and zoning rules. If you need specific approvals (for example, food business registrations or council permits), check whether they already exist, whether they’re transferable, and how long approvals may take.

Building Condition And Services

Consider whether the premises is fit for purpose, including:

• power supply and three-phase power (if needed),
• internet availability,
• ventilation and extraction (especially for food businesses),
• accessibility, bathrooms, and safety requirements,
• existing defects and condition reporting.

Insurance Requirements

Leases often require the tenant to maintain certain insurance policies (like public liability insurance). Make sure you understand what’s required, what level of cover is specified, and whether the landlord needs to be noted as an interested party.

Who Your Contract Is Actually With

It sounds basic, but it matters: confirm the landlord entity and your tenant entity are correct and consistent across the documents.

If you’re signing through a company, your company should generally be the tenant (not you personally), and signing should be handled properly. If you’re dealing with signature formalities, it can also help to understand section 127 signing requirements for companies.

How Sprintlaw Can Help With Commercial Lease Advice (And What To Do Next)

For many small businesses, the biggest risk isn’t the rent - it’s signing a lease that doesn’t match your business reality. The good news is that many issues can be identified (and often negotiated) before you commit.

Depending on your situation, you may benefit from:

• a plain-English review of your lease and disclosure documents,
• advice on key risk areas and what to negotiate,
• help with drafting amendments or a side deed, and
• ongoing support for related contracts you may need as you set up operations.

If your arrangement involves a transfer of an existing lease (for example, you’re taking over premises from another business), a Deed of Assignment of Lease may be part of the process.

And once you’re in the space, it’s common to need supporting legal documents to run smoothly - for example, if you’re engaging contractors to do fit-out works, or bringing on staff. An Employment Contract can help set clear expectations from day one.

If you’re collecting customer details through bookings, memberships, mailing lists, or an online store connected to your premises, having a Privacy Policy in place is often part of operating responsibly.

Finally, if you’re negotiating documents before a lease is finalised (like incentives, scope of works, or agreed terms), you may see early-stage documents used to capture the deal points - sometimes in a Heads of Agreement.

Key Takeaways

• Good commercial lease advice starts with understanding what you’re signing - including whether it’s a retail lease, a commercial lease, or a licence arrangement (which can vary by state or territory and the premises).
• Before you sign, check the big-ticket clauses: term and options, rent reviews, outgoings, permitted use, repairs and maintenance, make good, and security/personal guarantees.
• Many lease terms are negotiable, especially around fit-out incentives, assignment/subleasing, exclusivity, signage, and access.
• Do your due diligence outside the lease document as well - zoning, approvals, building condition, insurance requirements, and ensuring the correct entities are signing.
• Getting commercial lease advice early can help you avoid costly surprises and set up a lease that supports your business growth rather than restricting it.

If you’d like help reviewing or negotiating your lease, reach out to Sprintlaw at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.