With the rapidly growing global economy, Australia’s major cities are seeing an influx of business opportunities, giving those considering renting an office in a new location a real chance of profiting. Navigating an office lease can be difficult in this current economic landscape where business transactions move at lightning speed and it can be difficult to keep up. While the Australian economy is looking to grow and improve, savvy business owners looking for new office space will find there a high demand for leases, as some of the major business districts see increases in occupancy levels.
Business owners can operate their business from the country’s major CBD’s or opt to move their operations downtown. However, in the current Australian real estate landscape, those looking to rent office space should prepare to avoid making mistakes that could make running any business difficult. Traps related to not understanding zoning laws from not understanding rental laws can turn a great idea into a disaster quickly.
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To avoid mishaps related to leasing an office, read the following tips below on leasing an office in Australia.
Read the Fine Details of the Lease
Before leasing an office in Australia, research as much information as you can on the various terms that can drastically change the lease. Escalation clauses, for example, will explain exactly how much the rent will increase from year-to-year. This increase can be anywhere from 3-5% or the rate of inflation.
Review the stipulations upon breaking or closing out the lease. Make sure to understand the penalties for not finishing out the contract, and make sure to understand the various fit-out options if applicable to your business. Usually, fit-outs are at the owner’s expense, but with a long-term lease, you might be able to get the landlord to pick up some of the expense.
Know the Appropriate Business Designation
Typically, buildings fall under three major categorizations, highly maintained, luxurious high-rises, second-tier buildings and government buildings. This information is important because the type of building almost always determines the cost, but more significantly, when choosing a building to house your business make sure it is appropriate for the type of business you are opening.
For example, there are two types of leases, a standard commercial lease and a retail one. Commercial leases are for businesses that are going to be housed in a warehouse, an industrial site or an office in a commercial building with no retail activity. Retail leases are for businesses that are usually housed in shopping centres and are set up to sell goods.
Those looking to open a business in Australia should be aware of these designations because there are distinct differences in the two. One major distinction is related to the disclosure of information, which mandates that landlords provide information to the lessee seven days before entering into a lease (everywhere except South Australia). Also, it’s important to be aware that most states in Australia do not allow landlords to charge lessees for lease preparation expenses.
Know the Law and Understand Your Lease
When entering a contract agreement, having a lawyer with you to ensure everything is above board, is always a good idea. However, if you do not have loads of cash to fork over to your lawyer, make sure to understand the law as it relates to contract agreements between renters and landlords. Know your rights and responsibilities, in addition to knowing what laws govern retail and commercial leasing contracts.
When opening a place of business or relocating, proprietors have so much to consider before signing a lease. A business owner who is armed with information can leverage a better agreement than one who walks into any contract without understanding the many options available. Ultimately, an informed business owner is a prepared entrepreneur.
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