Retail and Commercial Leasing

Entering into a retail or commercial lease is a significant legal and financial commitment. Whether you are a landlord securing long term income or a tenant establishing or expanding a business, a lease sets the framework for rights, obligations, and risk for years to come.

Retail and commercial leasing is governed by a combination of legislation, contract law, and market practice. Understanding how these elements interact is essential to avoiding disputes and protecting your position.

Retail leases apply to premises used primarily for the sale of goods or services directly to the public, such as shops, cafés, restaurants, and franchises. These leases are regulated by the Retail Shop Leases Act 1994 (Qld) (the Act), which provides significant statutory protections for tenants, including mandatory disclosure, restrictions on certain lease terms, and access to formal dispute resolution.

Commercial leases apply to premises such as offices, warehouses, industrial sites, and professional suites. These leases are not governed by the Act and rely largely on negotiated contract terms and general property law. While both lease types share common features, retail tenants benefit from stronger legislative safeguards.

Every well drafted lease should clearly define the premises, permitted use, lease term, and rent structure. It should also address outgoings, rent review mechanisms, security arrangements, repair and maintenance obligations, and the parties’ rights if something goes wrong.

For tenants, clarity around fit-out responsibilities, make-good obligations, and assignment rights is critical. For landlords, certainty around rent recovery, default remedies, and reinstatement at lease end protects the value of the property.

Retail leasing in Queensland is highly regulated at the offer stage. A landlord must provide a compliant disclosure statement and a draft lease at least seven (7) days before the tenant enters a binding commitment (e.g., signing). This disclosure outlines rent, outgoings, fit-out requirements, incentives, and other key commercial terms.

As of 1 August 2025, landlord’s must ensure they are using the updated Form 7 Lessor Disclosure Statement to remain compliant with current regulations. Failure to comply with disclosure obligations can give tenants termination rights and expose landlords to disputes. While commercial leases do not have the same statutory disclosure regime, full and transparent disclosure remains best practice and reduces the risk of later disagreement.

Rent provisions must be carefully drafted to reflect commercial reality. Leases often include annual rent reviews based on CPI, fixed increases, or market reviews at option periods. Any rent-free periods, fit-out contributions, or other incentives must be clearly documented to be enforceable.

Outgoings are another common source of dispute. Tenants are often required to pay their proportion of council rates, insurance, body corporate fees, and maintenance costs. The lease should specify exactly which outgoings are recoverable and how they are calculated. It is important to note that in retail leases, a landlord is strictly prohibited from recovering land tax from the tenant.

Business needs change over time, making assignment or subleasing an important consideration. Retail tenants generally have statutory rights to assign their lease, subject to reasonable conditions. Commercial lease rights depend on the contract wording. The Property Law Act 2023 (Qld) has introduced a new “One Month” rule: once a tenant formally requests consent for an assignment or sublease, a landlord must generally provide a “Decision Notice” within one month.

The lease should clearly outline the process for assignment, timeframes for consent, and any requirement for guarantees or financial information. Poorly drafted assignment clauses can severely limit a tenant’s ability to sell or restructure a business.

At the end of a lease, tenants are often required to “make good” the premises by removing fit-out, repairing damage, and restoring the property to an agreed condition. Make-good obligations can be costly and are a frequent source of dispute.

Clear drafting at the outset, supported by condition reports and legal advice, helps avoid uncertainty and unexpected expenses when the lease ends. Parties should be aware that the limitation period for bringing an action under a lease executed as a deed has been reduced from 12 years to 6 years for all deeds entered into from 1 August 2025.

Retail lease disputes are subject to mandatory dispute resolution processes under the Act, with mediation and determination commonly handled through Queensland Civil and Administrative Tribunal (QCAT). Commercial lease disputes are typically resolved through negotiation, mediation, or court proceedings, depending on the lease terms.

A well drafted lease will specify dispute resolution procedures and may include alternative dispute resolution mechanisms to avoid costly litigation.