Commercial lease renewals: a practical checklist for property owners

A commercial lease renewal is an opportunity to review how the whole arrangement works. Rent matters, but so do the lease term, incentives, operating costs, maintenance responsibilities and the tenant’s plans.

For owners of offices, shops and industrial property, preparation starts with the existing lease and a clear record of the property’s performance.

Start with the dates and the document

Ask your manager and solicitor to identify the expiry date, any option provisions, relevant notice windows and the rent review process. An option exercise and a negotiated new lease are different processes; do not assume the same steps apply.

Create a diary well ahead of the first contractual deadline. That gives you time to understand the tenant’s intentions and consider alternatives without relying on a last-minute conversation.

Build a property-specific rent comparison

Compare premises with similar location, size, condition and permitted use. For industrial property, consider clearance, loading access, yard space, power and the office-to-warehouse mix. For offices, access, fit-out and parking can change the comparison.

Request evidence of agreed transactions where available. Separate those results from advertised rents, and record any incentives that affect the comparison. Avoid treating a broad vacancy statistic as proof of what your individual property should achieve.

Compare the whole commercial offer

A nominally higher rent may come with a larger rent-free period or a contribution to works. Put competing proposals on the same basis: term, rent, incentives, owner contributions and expected vacancy.

For a simple illustration, $60,000 annual base rent over three years totals $180,000 before reviews. A $10,000 incentive reduces that amount to $170,000 before other costs. This is a simplified comparison, not a valuation; timing, GST, reviews and other lease terms require separate assessment.

Review outgoings and condition

Clarify what costs the lease allocates to each party, what disclosure is required and whether the proposed treatment is lawful. Outgoings are distinct from the base rent and deserve their own review. The NSW Small Business Commissioner explains leasing costs and outgoings.

Walk through the premises and document existing condition, agreed works and any unresolved maintenance. Ask your solicitor to review repair and make-good provisions rather than relying on a verbal understanding.

Confirm the applicable leasing rules

Retail and other commercial premises can fall under different legal frameworks. The NSW Retail Tenancy Guide outlines that distinction and recommends independent professional advice.

Owners with properties in different states should arrange a jurisdiction-specific review. A clause or process used for one property may not suit another.

Leave the negotiation with a clear record

Summarise agreed terms, outstanding issues, approval responsibilities and the documentation required. Have the final agreement professionally prepared and checked.

This is a general planning checklist, not legal or valuation advice.