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As a startup or small business owner, you might be looking for a space for you and your team to work. In 2025, with the evolving business landscape and changing work models, finding the right space is more important than ever.
But, how long should the duration of your lease be?
Landlords often prefer their tenants to sign long-term leases as it provides greater financial security for them. However, with flexible modern work arrangements and evolving market trends, both options have unique advantages.
Depending on your commercial situation, you need to consider whether the term proposed by the landlord is the best option for you. Make sure you compare it with current market offerings and seek up-to-date advice- you can check out our commercial leases services for more insights.
As a small business or startup owner, uncertainties about the future growth of your company are common. Being tied up in a long-term lease might not offer you the flexibility you need in 2025, especially when market rents and business models are subject to rapid change.
So, what are the key things to consider when deciding the length of your commercial lease?
What Is A Commercial Lease Agreement?
Before diving into the terms of your lease, it’s important to understand what type of lease you are entering into. A commercial lease is essentially a contract between a landlord and a business that is renting the landlord’s commercial property.
Commercial properties can include office spaces, warehouses, storage facilities, and other non-residential properties. With many businesses now opting for hybrid working solutions, there is a growing trend towards more flexible lease terms.
Commercial leases can be quite complex because you need to negotiate terms to secure the best deal for your business. Without informed legal advice-perhaps by consulting our contract review and redraft services-there’s a risk of agreeing to conditions that may not be in your best interest.
Not having a clear and updated understanding of commercial leases might have you bound by onerous terms that could hamper your business growth.
Things To Consider Before You Sign A Lease…
Before signing your commercial lease, it’s important that you review the document thoroughly and understand every clause. In today’s market, even subtle details may have major implications on your flexibility and long-term costs.
1. Actually Go And See The Property
This may seem like common sense, but you’d be surprised at the number of business owners who rely solely on online images for “inspecting” a property. Visiting the site in person allows you to assess the condition, location, and suitability of the space firsthand.
Ensure that the property aligns with your business needs, and consider any future modifications you might require. For additional tips on choosing the right business space, you might find our business set-up guides useful.
2. Do Some Research About Market Rent
After inspecting the space, assess whether the proposed rent aligns with current market rates in 2025. The rental market can shift rapidly with economic factors and changes in demand across cities in Australia.
If you’re new to commercial leasing, consult industry experts or seek advice from your network. You might also explore our article on what constitutes a contract to better understand negotiation fundamentals.
This proactive research will enable you to negotiate effectively and avoid unexpected rent escalations or extra costs during your lease term.
3. Read The Lease Contract!
The lease contract will outline every clause that governs your relationship with the landlord, from maintenance responsibilities to modification rights. It’s essential to read every detail to understand your obligations fully.
Important aspects such as repair and maintenance responsibilities, options for improvements, termination requirements, and additional costs are all covered in the contract. We recommend utilising our contract review service to ensure nothing is overlooked.
One of the most critical clauses to pay attention to is the lease duration, as you will be legally bound for the agreed term. In 2025, with market conditions rapidly changing, take extra care when committing to a lease length.
So, what should you consider when setting the length of your commercial lease?
Long-Term Or Short-Term?
Deciding between a long-term or short-term lease largely depends on your business goals and growth prospects. A short-term lease offers flexibility and less financial burden if you’re in a period of rapid change.
The main benefit of a short-term lease is the adaptability it provides-ideal for startups and businesses still finding their footing. With shorter commitments, you can adjust based on performance and market trends without being locked in.
However, a notable disadvantage of short-term leases is the potential instability. With no predetermined renewal clause, you may need to renegotiate or even relocate frequently, which can disrupt your operations and market presence.
A long-term lease might be more suitable if your business already has a stable foundation. Such leases offer the advantage of fixed terms, providing certainty for budgeting and the ability to build a solid reputation at a set location.
Additionally, long-term arrangements allow you to plan ahead with confidence, as lease terms are less likely to change if the property is well-managed. It’s a balancing act between the certainty of fixed costs and the flexibility to adapt, so review your business plan carefully before deciding.
What Are Commercial Lease Options?
Whether you opt for a short-term or long-term lease, you’ll often encounter discussions about lease options. A lease option clause gives you the possibility to renew on similar terms as the original lease, offering peace of mind amid uncertainty.
Options are advantageous because they let you secure the same terms without committing upfront. If extending your lease is important for your business strategy, ensure your contract includes an explicit option clause-something we frequently discuss in our service agreement consultations.
The option exercise period is also critical; typically, you must notify your landlord of your intent to renew between 9 and 3 months before your lease expires. Don’t let this deadline slip by!
Have You Considered Co-working?
If your business isn’t yet ready for its own dedicated workspace, co-working spaces continue to be a popular and flexible alternative in 2025. These shared office environments offer not only desk areas and meeting rooms but also additional facilities like printing, copying, and even wellness programs.
For instance, we at Sprintlaw lease a private office at The Commons, enjoying the flexibility of a monthly membership at a fraction of the cost of a traditional lease. This approach is increasingly common as businesses seek to minimise overheads while enjoying first-class amenities.
Instead of entering a full lease agreement, co-working spaces typically require you to sign a “desk licensing agreement” – a simpler contract that grants you access to facilities under specified conditions. This option is especially valuable if you’re testing the waters or expect rapid changes in your business needs. You can also refer to our business structure guides for further support on business setup decisions.
What To Take Away…
Choosing the length of your commercial lease depends on your future business plans and the level of flexibility you require. In 2025, with a dynamic market and innovative leasing options available, informed decisions are more crucial than ever.
As the owner of a small business or startup, the initial leasing decisions you make can significantly impact your long-term success. Whether you opt for a short-term arrangement for its flexibility or a long-term lease for stability, be sure to negotiate and understand every term before signing.
It can be a challenging decision, which is why knowing exactly what terms to negotiate-and when-is key. If you need expert guidance on determining the ideal lease length or negotiating contract clauses, don’t hesitate to contact us. Our team is here to help you navigate the complexities of commercial leasing in today’s market.
Furthermore, recent trends indicate that landlords are offering more innovative options such as break clauses and flexible renewal terms to adapt to the changing work environment. Keeping up with these developments can give your business a competitive edge. For additional insights into lease negotiations, check out our related services on lease contract reviews and other legal compliance guides available on our website.
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