Leasing a commercial property for the first time

My hobby/ side business started form my garage, moved onto a 120 sqm shed and now I am looking at a 265sqm warehouse and small office space. Can add mezz floor as the ceiling is quite high.

Its my first time renting a commercial property. Looking at a 3 year Lease in QLD plus the outgoings
I have only dealt with residential previously.
Its in the Brendale area of North Brisbane
Advice for a newbie commercial renter appreciated.
Cheers

 

Get a commercial lawyer to review the lease contract with you. It'll be pricey, but might only need it as a once off to understand it all and then you should be ok after that.

The main difference from resi, is that what's in the contract goes. With resi really have to conform to a tight template and not much is allowed to he written outside of that. Commercial is very 'open'.

Its important to understand:
- When rent will increase and by how much and under what conditions
- What bills, repairs, improvements, fitout, signage, cleaning, security etc each party is responsible for
- when and how lease will end, what options are available to end or renew it.
- whether there's other conditions on it like times it can be used, uses that are permitted there, responsibility to returning things back to how they were at the start, etc

 

@Hysteria - in a commercial lease EVERYTHING IS NEGOTIABLE (within limits).

Agent may be asking for a net lease but will accept gross (only pay water usage), you may be asked to pay the lessor's legal fees, rent reviews are agreed in the lease it may be fixed % or CPI or CPI with a ratchet and many other things to consider.

Lawyers add very little to the commerciality of a lease in most instances and you may be better off with a commercial buyers agent if they're experienced in this area. It becomes very expensive to amend a contract by negotiating at $750/hr X 2 for lawyers to agree not to change something.

Contrary to @D.T. never sign a lease without a legal review (even if it is a 3 year lease).

 

Not contrary, that's exactly what I recommend.

 

Well done on the business growth, sounds like it’s progress very nicely.
This is the exact same progression we went through just over 10 years ago.
We then moved 2 more times shortly after that and will move again this year to a 1,800sqm building.
Growth is good, but just make sure you have options if you grow faster than expected because being cramped for space stunts further growth.

 

Congrats on the growth.

My guys will do your lease fixed for $1200 ( or $2k for retail shop leases).

 

In Sydney Alot of properties (commercial) it was up to the lessee to prepare the lease.
We went the a standard lease up to. 3 years with no option it was free.
I didn' t heart to pay lease prep fee.
Tbh a huge over priced. The lawyers have templates and cut and paste terms.
Prices are BS.

 

Hysteria
What is your main question? Are you self managing and looking at how to do it? Looking for a commercial PM?

I would love to offer some advice if I know what your plans are.

I love commercial property and find it easier than residential. But you need to be a bit more proactive at early stages.

 

Have a read of below for lots of food for thought/talking points for negotiation on the lease

Could I get a little advice about renting a commercial property as a tenant.

 

I read through some of your posts Ace.
I'm doing a similar thing with the gym equipment. I started off manufacturing some of my own equipment and racks in the garage at home . Just started importing some equipment as well now.

 

Shhhhhh! Don't let the genie out of the bottle.

 

I am looking at a 2 year lease with another 2 year option. The agent has presented me with a contract that shows gross rent.
I would like to add some more power points (15amp) and also a partition wall down the middle of the building so I can have a display area ones side and storage opposite side.
Is this something you can try to negotiate on a commercial property or is it at your expense?

 

Generally fitout is at your expense, you can sometimes negotiate some fitout contributions in lieu of rent free periods or an increased rent. But on a 2+2 you would be best just getting a decent rent free period (depending on demand for the tenancy and how long its been vacant, negotiate on this hard) and use the rent free funds to pay for your fitout.

 

How did you go ?
Any feedback