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Commercial property underpins business success

Commercial leases provide long-term stability and success for many businesses, but only if they have been effectively negotiated and properly drafted.

The upshot is that commercial real estate is important, whether you’re a lessee, lessor, a real estate developer, or looking to buy commercial property.

We understand that commercial property issues can significantly affect a business. We’re commercial property specialists with years of valuable expertise. You’re in safe hands with us.

Commercial real estate for lease

Of all the decisions that a small business owner may make, entering into a commercial lease may have the greatest overhead and potential risk.

Whether you’re a landlord or tenant, you make a significant decision when you decide to rent a commercial property. This is because of the liability that is often attached to a lease.

For example, if a small business enters into a five-year lease but then fails within the first year, it may still be liable for rent for the balance of the lease term.

A landlord must try to mitigate its loss, for example by finding another tenant for the property. If no new tenant is found, the outstanding rent for the balance of the term may be financially crippling for the small business.

Similarly, if no tenant will accept the property for the same rent, the difference in rent may also cause significant issues.

Make good clauses

Business owners must also consider the requirements of any make good clauses in the lease.

Make good clauses set out the requirements for the condition of the property at the end of a lease. They’re often very specific. Make good clauses can lead to plenty of extra expenses for tenants, so it’s important to consider their requirements. For example, the tenant may be required to paint the property, install new carpet or remove fixtures.

It’s essential to have legal advice before signing a lease, to identify any risks or financial exposure if something goes wrong.

Whether you’re a landlord or tenant, you should also agree with the other party about the condition of the property before the lease is signed. You may need a condition report from a licensed professional.

We’re experts in all aspects of property leasing, whether you’re a landlord or tenant, and at whatever stage of the leasing process. We can also arrange condition reports and any other professional services.

Get in touch to find out more

Renewing a lease

Many businesses depend on location as a key part of their marketing strategy.

Many leases are for a fixed term of five years, with rights of renewal. The term of the renewal period can be negotiated between the parties.

For example, a beachfront café relies on passing foot and bike traffic to generate the bulk of its daily business. So if a lease expires and the option to renew is not exercised, or not properly exercised, the business may lose the right to renew the lease which can have devastating consequences. If the café suddenly finds itself without premises and must relocate to a few streets back from the beach, its customer numbers may dramatically reduce.

To avoid this type of scenario, lease renewals must be conducted strictly by the terms of the lease. Both landlord and tenant need to be aware of their renewal obligations.

Both parties must understand that:

  • If the tenant is in breach of any of the terms of the lease, the landlord is not obliged to renew
  • The tenant must give the landlord written notice that they wish to renew, by the terms of the current lease and strictly within the timeframe set out in the lease
  • If the tenant doesn’t give the landlord written notice of their desire to renew the lease, the landlord isn’t obliged to renew
  • Some leases automatically renew unless the tenant gives written notice that they don’t wish to renew the lease. It’s important that you understand the renewal terms of your own lease

We’ll provide you with advice about renewal terms before you enter into the lease, and at any time during the lease. Contact us for more information.

Buying a commercial property

Buying a commercial property is a big financial decision.

You’ll need to conduct due diligence and risk management, including an assessment of the state of the property, the types of businesses that are most likely to be interested in leasing the property, as well as the ease or difficulty of attracting those tenants. You’ll also need to weigh up likely rental income against any liabilities such as mortgage repayments.

If you want to lease the property to a business, you should have:

  • A good understanding of your obligations as a landlord
  • An accurate picture of the condition of the property and whether any improvements are necessary before you can lease it
  • Comprehensive legal advice, including drafting a leasing agreement

We know commercial property.

We’ll help you out with tailored legal advice. For more information, see our Conveyancing page.

Commercial property development

Whether you’re rebuilding or renovating, commercial property development is an area with its own unique laws and requirements.

It’s not just about understanding how the law applies to your development plans; it’s also about knowing council by-laws and development requirements and understanding how local government operates. This knowledge helps to ensure that proposed developments progress efficiently, which minimises your expenses and maximises rental potential.

We’ll help you navigate the commercial development process. Contact us to find out more.

Why Choose DBH?

We’re experts in South Australian commercial property law.

Full range of commercial property services

Expert legal team

Outstanding leasing experience

Honest, effective and straightforward advice

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Commercial Property team

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