Are these good retail commercial lease terms?

Discussion in 'Commercial Property' started by Phong Dang, 23rd Jan, 2021.

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  1. Phong Dang

    Phong Dang New Member

    Joined:
    22nd Jan, 2021
    Posts:
    1
    Location:
    Brisbane
    Hello everyone, I am in Brisbane and pretty new to commercial property market. At the moment, I am seeking a location for my first beauty business. I am looking at an under construction local shopping centre of 1 supermaket (Woolworths) and 9 retail shops. When it comes to dealing with the Landlord about lease terms. Below are some key term and fees of a 66m2 shop:
    • Term 5 Years
    • Base Rent $48,000 plus GST annually
    • Rent Review 3% annually
    • Out Goings $6,309.60 plus GST annually
    • Marketing Levy 3% of base rent + $7,500 annually
    • Percentage rent 5% when tenant's sale exceed $960,000 annually
    • It is the Landlord's policy not to grant Tenants with options to renew the Lease
    • Opening promotion levy $3,000 plus GST
    • Tenancy coordination fee $2,500 plus GST
    • Design review fee $2,500 plus GST
    • Bank guarantee 4 month rent
    • Fit out centribution $48,000 plus GST
    • Incentives of 3 month half rent
    The above term and fees for just a small shopping centre do not look very right I reckon. In my opinion, dispite a good fit out contribution of $48,000 and 3 month half rent, all these terms and fees are a big disadvantage for tenants because there are too many fees to it. Moreover, the term
    "It is the Landlord's policy not to grant Tenants with options to renew the Lease" makes this lease less attractive. I am a newbie in the large commercial property world and need some of your professional advice. My question is what a good retail lease for tenants should look like and what fees should be and should not be included. If anyone here in this forum have experience please not hesitate to give me some advice. Much appreciated !
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    27,255
    Location:
    Sydney or NSW or Australia
    Avoid unless you have deep pockets as a first time retailer.

    Get a good retail advocate on board.
     
    SmileSydney, Sackie and Beano like this.