You've inspected the shed, done the numbers on freight access and ceiling height, and you're ready to move your business in. But the lease sitting on your desk right now was drafted by the landlord's solicitor to protect the landlord. If you sign it as is, you could be locking in costs and conditions that hurt you for years.
Industrial leases in the western corridor are rarely as simple as a monthly rent figure. There are outgoings, make good obligations, rent reviews, and options that all need to be understood and, where possible, negotiated before you commit.
Know what you're actually paying for
The headline rent is only part of the story. Outgoings such as land tax, insurance, council rates and common area costs can add a meaningful amount to your annual occupancy cost, and in the west these figures vary a lot from one industrial estate to the next.
A lease with a lower rent but poorly capped outgoings can end up costing more than one with a higher rent and clear terms.
Ask for a detailed outgoings estimate in writing and, where you can, negotiate a cap on annual increases so you're not exposed to surprise bills.
The make good clause that catches tenants out
Make good is the condition you leave the premises in when your lease ends. For an industrial tenant who has installed racking, mezzanines, offices or specialised fitout, this can be a serious and unexpected cost if it's not negotiated upfront.
Read the make good clause twice. Then read it again with your solicitor before you sign.
Many tenants assume make good simply means a clean sweep. In practice it can mean stripping out structural changes, repainting, and reinstating the warehouse to its original condition, all at your expense.
Rent reviews and options, get these right from day one
Rent reviews determine how your costs grow over the life of the lease. Fixed annual increases give certainty but can outpace the market over a longer term, while market reviews can swing in either direction depending on conditions in the western industrial corridor at the time.
Options to renew protect your business from having to relocate at short notice, but they need to be drafted with clear notice periods and rent setting mechanisms, or they can become a source of dispute rather than security.
What to negotiate before you commit
Mistakes tenants make before signing
None of this is financial, tax or legal advice. Fairmont Property Group is a property agency, not a licensed financial adviser or law firm, and every lease should be reviewed by your own solicitor and, where relevant, your accountant before you sign.
Get the right advice before the ink dries
A good industrial lease protects your business for the length of your occupancy. A poorly negotiated one can quietly erode your margins year after year. Taking the time to negotiate the right terms now, with the right people around you, is far cheaper than trying to fix problems once you've already signed.
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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.