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Don't sign an industrial lease until you know what's negotiable

A plain English guide for business owners about to lease a warehouse or factory across Melbourne's west, before the agreement lands on your desk for signing.

Don't sign an industrial lease until you know what's negotiable

You've found the shed. It ticks the boxes on size, access and location, and the agent has emailed through heads of terms. Before you sign anything, understand this. Almost every clause in that document was drafted to protect the landlord first. That doesn't make it unfair, it just means the terms in your favour usually have to be asked for. Nobody hands them to you.

The lease you're handed is a starting point, not a final offer

Industrial leases in the west are rarely as fixed as they look on paper. Rent, incentives, make good obligations and review structures are all points of discussion, especially once you know what typically moves and what doesn't. Landlords with a vacant shed sitting empty want a good tenant locked in more than they want to win every clause.

A lease you never negotiated is a lease written entirely for someone else's benefit.

What to push on before you commit

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Rent review structureFixed annual increases are common in industrial leases, but the percentage and whether it's fixed or CPI linked is worth clarifying and comparing against current market norms.
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IncentivesRent free periods, fit out contributions and lease breaks are more common in a softer market and worth asking about even if not initially offered.
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Make good obligationsGet specific about what condition you must return the premises in, especially if you plan to install racking, mezzanine floors or heavy plant.
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Options to renewA further term option gives you security without locking you into buying if the site outgrows you, but the option rent mechanism needs to be clear from day one.
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OutgoingsConfirm exactly what's included, land tax, council rates, insurance and body corporate fees can shift a headline rent figure significantly once outgoings are added.
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Assignment and sublettingIf your business might restructure, merge or downsize, make sure the lease allows you to assign or sublet without unreasonable landlord refusal.

The terms you never asked to change are the ones that cost you most in year three.

Physical and operational details that matter more than people expect

Think beyond square metreage. Power capacity, hardstand condition, clearance height, container access and the number of roller doors all affect how your business actually operates day to day. If your operation depends on B double access or three phase power, get it written into the lease, not just promised verbally by the leasing agent.

Common mistakes tenants make before signing

Accepting the first draftTreating heads of terms as final rather than a negotiation opening point.
Ignoring make good costsSigning without understanding what it will cost to hand the premises back in the required condition.
Skipping legal reviewRelying on a real estate agent's summary instead of having a commercial lawyer review the full document.
Underestimating outgoingsFocusing only on base rent and being surprised by the true occupancy cost later.
No exit strategyLocking into a long term with no options or break clauses if the business changes direction.

Get advice before you sign, not after

A good industrial lease protects your operation as much as it protects the landlord's asset. Local market knowledge matters here. Understanding what's genuinely negotiable in the current western Melbourne and Geelong corridor market versus what's standard practice can save real money over a five or ten year term. This is general property guidance, always have a commercial lawyer review the final lease document before signing.

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Manny Singh
Manny Singh
Director (OIEC), Fairmont Property Group

Fairmont only sells and leases industrial property across Melbourne's western corridor and Geelong. That focus is deliberate. It means we know the buyers who are active right now and what they are prepared to pay.