A commercial lease is not like a residential tenancy. There's no standard form, fewer automatic protections, and everything is negotiable — but only before you sign.
Here's what you need to understand before you put pen to paper.
Face Rent vs What You Actually Pay
The rent advertised is called the face rent. What you actually pay — once rent-free periods and other incentives are factored in — is called the effective rent.
In Melbourne's current western suburbs market, incentives of 15–25% of total lease value are common. A warehouse advertised at $150/m² may cost you $120/m² in real terms once a rent-free period is negotiated.
Always compare effective rent, not face rent.
Who Pays for What? (Outgoings)
In most commercial leases here, you pay net rent plus outgoings. Outgoings cover council rates, insurance, property management fees, and sometimes land tax.
On a 600m² warehouse, outgoings can add $15,000–$25,000 per year on top of your rent. Get the estimated outgoings schedule in writing before you sign.
What You Can Negotiate
Most tenants don't push hard enough. Here's what's genuinely on the table:
- Rent-free period (2–6 months on most lease terms)
- Landlord works before you move in
- Fit-out contribution (cash toward your shopfit or office buildout)
- Rent review mechanism (fixed % increases are better than CPI in a volatile economy)
- Make good obligations (what you're required to do when you leave)
- Personal guarantee (limit it to 3–6 months of rent, not the full lease term)
Retail Leases vs Commercial Leases
If you're opening a shop, café, or any business that serves the public, the Retail Leases Act 2003 (Victoria) gives you extra protections — including a minimum 5-year term and limits on what outgoings landlords can charge you.
Offices, warehouses, and showrooms don't get these protections. In those cases, what's in the lease is what you're bound by.
The One Thing That Trips Most Tenants Up
Missing your option to renew deadline. This date is fixed in your lease — usually 3–6 months before expiry. Miss it and you lose your right to stay. Set a diary reminder the day you sign.
→ Need help negotiating specific lease terms? See our lease negotiation guide.
→ Looking for space? Industrial | Retail | Office