The lease your landlord’s solicitor sends you is not a starting point for a fair negotiation. It is a finished document designed to protect one party. That party is not you.
Most business owners understand this in theory. In practice, they sign leases with terms they don’t fully understand, obligations they haven’t priced, and exit clauses that haven’t been properly considered because they found the right premises, they want to move in, and the momentum of the deal carries them past the detail.
That detail is where the risk lives.
What you’re actually agreeing to
A commercial lease is a long-form contract that governs your occupation of a premises for years, sometimes decades. It covers what you pay, how that rent moves over time, what you’re responsible for maintaining, what the landlord can require of you at the end, and under what conditions either party can exit.
None of those things are standard. Every clause is negotiable before you sign. Almost none of them are negotiable after.
The clauses that matter most and what to look for in each
Rent and rent review mechanism
The headline rent is what most tenants focus on. The rent review clause is where the real risk sits.
There are three common mechanisms: fixed percentage increases, CPI-linked reviews, and market reviews. Fixed and CPI reviews are generally more predictable. Market reviews where the rent is reset to whatever the current market rate is at a point in time can result in significant jumps in a rising market, and the methodology used to determine “market” is often contested.
If a market review is in the lease, understand how it works, who determines the market rate, and whether there is a ratchet clause preventing the rent from falling even if the market has softened. A ratchet clause in a market review is a one-way mechanism that protects the landlord entirely. It should be pushed back on.
Outgoings
Outgoings are the operating costs of the building rates, insurance, management fees, maintenance of common areas that landlords pass through to tenants. What’s included in outgoings, how they’re calculated, and whether they’re capped, are all negotiable.
Before you sign, get the actual outgoings history for the property for the last two to three years. Estimated outgoings on a disclosure statement can be materially different from what you’ll actually pay. And if the lease allows the landlord to include capital expenditure items in outgoings building upgrades, major plant replacement that needs to come out.
Permitted use
The lease will specify what you’re permitted to use the premises for. This clause matters in two directions: it needs to be broad enough to cover your actual business operations and any reasonable evolution of them, and it affects what you can do with the lease if you ever need to assign it or sublet.
A permitted use clause that’s too narrow locks you into a very specific use and makes the lease harder to exit. Push for language that covers your current operations and gives you room to move.
Assignment and subletting
If your business changes you sell it, you restructure, you want to bring in a partner your ability to assign the lease or sublet part of the premises is critical. Most leases require landlord consent for assignment. What matters is whether that consent can be unreasonably withheld and what conditions the landlord can impose on a new tenant.
Understand this clause before you sign. It’s invisible until you need it, and then it’s the only thing that matters.
Lease term and options
Options to renew give you the right but not the obligation to extend the lease at the end of the initial term. They’re a form of security. The question is how the rent is set on exercise of the option, and what the notice period is.
Miss the option notice window and you lose the right entirely, regardless of how long you’ve been a good tenant. Diary the dates. Then diary them again.
Make good obligations
Make good is the requirement to return the premises to a specified condition at the end of the lease. This can mean anything from repainting walls to removing structural fitout, reinstating services, and returning the space to its original configuration.
The scope of make good obligations is frequently underestimated at the start of a lease and aggressively enforced at the end. Before you sign, walk through the make good clause with your solicitor and understand what it will cost to comply. Then negotiate the scope. In many cases, landlords will accept a cash contribution in lieu of make good, or agree to a narrower definition of the tenant’s obligations. That conversation is far easier before you sign than after.
Demolition and redevelopment clauses
Some leases particularly in older buildings or in areas subject to development activity contain clauses that allow the landlord to terminate the lease if they intend to redevelop. The protections tenants have in this scenario vary significantly depending on how the clause is drafted.
If this clause appears in your lease, understand the notice period, what compensation (if any) is provided, and what your obligations are in that scenario. If the clause is broad and the notice period is short, that’s a material risk for any business that can’t relocate quickly.
The negotiation itself
Commercial lease negotiation is not the same as negotiating a purchase price. You’re not negotiating a single number you’re working through a document with interdependent clauses, where movement on one term often has implications for others.
The landlord’s solicitor drafted the lease. They know it. If you’re reading it for the first time during the negotiation, you’re already behind.
The right process is: get the lease before you finalize terms, review it with a solicitor and ideally a tenant advocate who knows commercial leasing, identify the clauses that need to move, and go back to the landlord with a clear and reasoned counter-position. This is not adversarial it’s commercial. Good landlords expect it. Landlords who won’t negotiate material terms at all are telling you something worth hearing.
What a tenant advocate does in this process
A tenant advocate represents you, not the landlord. That sounds obvious, but it’s worth saying: agents who “help” tenants find space are generally paid by the landlord through the transaction. Their financial incentive is to complete the deal, not to protect your position within it.
A tenant advocate’s job is to run the market assessment, negotiate the commercial terms, and work alongside your solicitor on the legal terms. It’s to make sure the lease you sign reflects the balance of the market at the time, not the balance of power that the standard landlord-drafted document assumes.
If you’re entering into a commercial lease negotiation and you don’t have someone in your corner who has done this before, you’re negotiating against a professional on the other side of the table without one.
A Property Mapping Session is the place to start whether you’re entering a new lease, approaching a renewal, or trying to understand a lease you’ve been offered.
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