Commercial Lease Calculator — Australia 2026
Comparing lease options? See the true cost.
Model the real cost of an Australian commercial lease across retail, office, or industrial space. Include rent escalations, outgoings, GST, incentives, make-good exposure, and affordability against business revenue.
Australia Commercial Lease Notes
Australian commercial leases often turn on outgoings recovery, GST treatment, annual fixed increases, and make-good obligations at the end of term. A rent-free incentive can look generous until you add fitout spend and restoration costs.
This version is tailored to Australian leasing practice, where retail and industrial tenants frequently compare net rent, outgoings, bond size, and make-good exposure before signing heads of agreement.
Australian version note: this commercial lease keeps the calculation anchored to AUD amounts, local product names, Australian tax language, and the way banks, employers, agencies, or advisers usually describe the inputs.
Local cues stay visible where they matter: ATO, PAYG, superannuation, Medicare levy, stamp duty, kilometres, comparison rate, APRA, Centrelink, GST, and Australian-dollar results are not rewritten into overseas vocabulary.
Use the output as an Australian estimate first, then sanity-check it against local quotes, lender criteria, government thresholds, state rules, or professional advice before relying on the number.
Always engage a commercial lawyer and tenant advocate before signing a commercial lease. This calculator provides estimates for planning purposes only.
Gross vs net vs semi-gross commercial leases in Australia
The three structures you will encounter
Australian commercial and retail leases fall into three broad rent structures. The differences matter because they determine who pays for building outgoings, and who wears the risk of cost inflation over the term.
| Lease type | Tenant pays | Landlord pays | Common use |
|---|---|---|---|
| Gross | Fixed rent only | All outgoings (rates, insurance, management) | Older CBD office, strata shopping centres |
| Semi-gross | Rent + increases in outgoings above a base year | Base-year outgoings | Most Sydney / Melbourne A-grade offices |
| Net | Rent + all outgoings, proportionally | Structure and capital works | Industrial, standalone retail, neighbourhood shopping |
Read 'net' carefully
A 'net' lease may be single-net (tenant pays rates only), double-net (rates + insurance), or triple-net (rates + insurance + maintenance). The Australian market uses 'net' loosely — always check the outgoings schedule in the lease itself. For a retail tenant, the Retail Leases Act in your state restricts what outgoings can be passed through (see card below).
Typical commercial lease outgoings breakdown
Outgoings typically add 15–35% to gross occupancy cost
Outgoings are the costs of running the building that a net lease passes through to the tenant — usually a significant add-on to the headline rent. They are invoiced periodically on an estimated basis with an annual reconciliation. The tenant proportion is normally calculated by lettable area (tenancy NLA ÷ building NLA).
| Outgoing | Typical share of total | Notes |
|---|---|---|
| Council rates | 15–20% | Varies heavily by LGA |
| Water & sewerage | 5–10% | Sydney Water, SA Water, etc. |
| Land tax | 10–25% | Retail: often not passable (see below) |
| Building insurance | 5–10% | Cyclone-exposed regions higher |
| Cleaning | 10–15% | Common areas |
| Property management | 5–10% | Typically 3–5% of rent |
| Lifts, HVAC, fire services | 15–25% | Larger share in high-rise |
| Security | 5–10% | CBD buildings only |
The outgoings estimate vs actual reconciliation
At the start of each year the landlord provides an estimate; at year-end an audited statement reconciles actual spend, and the tenant receives a credit or additional invoice. Retail tenants have an automatic right to request an audit under the Retail Leases Act in most states. Disputing inflated management fees or capital-upgrade costs disguised as 'maintenance' is a common source of negotiation.
State-based Retail Leases Acts and tenant protections
Retail vs commercial: a critical distinction
Retail leases are regulated under state-specific legislation that overrides many clauses a landlord might otherwise enforce. Whether your premises is 'retail' depends on use (listed retail classes such as hospitality, hairdressers, shops), shopping-centre context, and sometimes floor area. Non-retail commercial tenants (offices, industrial) do not get these protections.
| Jurisdiction | Legislation | Min term | Disclosure statement required |
|---|---|---|---|
| NSW | Retail Leases Act 1994 | 5 years (incl. options) | Yes, 7+ days before signing |
| VIC | Retail Leases Act 2003 | 5 years | Yes, 14+ days before signing |
| QLD | Retail Shop Leases Act 1994 | None | Yes, 7+ days before signing |
| WA | Commercial Tenancy (Retail Shops) Agreements Act 1985 | 5 years | Yes |
| SA | Retail and Commercial Leases Act 1995 | 5 years | Yes |
Common protections
Across most retail jurisdictions, a landlord cannot: charge the tenant for the landlord's legal fees on the initial lease; pass through land tax in NSW/VIC; demand turnover rent without disclosure; or conduct unconscionable rent reviews. Most states cap the tenant's contribution to fit-out incentive clawbacks if the tenant leaves early. The NSW Small Business Commissioner and the VIC Small Business Commission run free dispute mediation services before matters escalate to the tribunal (NCAT in NSW, VCAT in Victoria).
Australian commercial market rents by city and grade 2026
CBD office — net face rents per square metre
Face rents below are approximate gross-equivalent net annual rents per m² NLA sourced from JLL, CBRE, Colliers and Knight Frank 2024 Q4 / 2025 Q1 research. They exclude incentives, which remain elevated post-COVID — typical Sydney A-grade incentive packages run 30–40% of gross face rent.
| Market | Premium $/m² | A-grade $/m² | B-grade $/m² |
|---|---|---|---|
| Sydney CBD | $1,450 | $1,150 | $820 |
| Melbourne CBD | $790 | $620 | $470 |
| Brisbane CBD | $820 | $680 | $540 |
| Perth CBD | $740 | $580 | $430 |
| Adelaide CBD | $540 | $440 | $340 |
Suburban and industrial
Suburban A-grade offices (North Sydney, Parramatta, Richmond) typically sit at 55–70% of CBD A-grade net face rents. Prime industrial in Sydney's Outer West (Eastern Creek, Kemps Creek) now commands $180–$230/m² net for modern logistics — up from $110/m² pre-2020 on the back of e-commerce demand. Neighbourhood retail strips vary hugely: Chapel Street $1,200–$2,000/m² net, an equivalent Brisbane suburban strip $400–$650/m².
Make-good obligations at end of lease
Standard vs strict make-good
'Make-good' is the tenant's obligation to return the premises to a defined state at end of lease. There are two common Australian formulations: Standard make-good returns the premises in the condition documented at lease commencement (the condition report), allowing for fair wear and tear. Strict make-good (sometimes called 'base-building' make-good) requires the tenant to remove all fit-out, partitions, cabling, signage and carpet — leaving a clear base-building shell. Strict make-good on a 500 m² office can cost $60,000–$120,000; on a large retail tenancy, much more.
Negotiating a cap or a cash settlement
Tenants should push for one of: (a) a capped make-good obligation ($X per m²), (b) a cash settlement alternative that lets the landlord absorb make-good in an outgoing refurbishment, or (c) a 'back-to-grey' clause that allows the fit-out to remain if the incoming tenant accepts it. Where the landlord intends to refurbish anyway, insisting on strict make-good has been held to be unconscionable by tribunals in some cases.
Condition report and dilapidations
A dated, photographed condition report signed at commencement is the single most valuable make-good evidence. Without it, disputes fall back to the lease wording alone — often favouring the landlord. The Property Council of Australia publishes industry guides on fair make-good clauses; small business commissioners run free mediation services for disputes.
Where these figures come from
Business figures on this page are drawn from the Australian Taxation Office (business tax, GST, PAYG), Business.gov.au (the federal business registration hub), Fair Work (employer obligations), and ASIC (company and director rules).
- Company tax rate (25% / 30%) — ATO — Company tax rates.
- GST rules (10%) — ATO — GST.
- PAYG withholding & employer obligations — ATO — PAYG withholding.
- Business registration (ABN/ACN) — Business.gov.au.
- Employer pay & award obligations — Fair Work Ombudsman.
- Company & director rules — ASIC — Companies.
Last checked: July 2026. Rates and thresholds are reviewed against the source of record each November, when annual adjustments for the following tax year are published.
Select the question that matches where you are right now.
The total cost shows the full commitment over your lease term — base rent plus outgoings, compounded by annual rent reviews. The year-by-year chart shows how the gross rent escalates each year. The bond is a significant upfront cash requirement on top of the total lease cost.
The base rent figure in your lease is the net rent. Your actual outgoings are on top of this. Always compare commercial leases on a gross basis: add estimated outgoings to base rent for each year. Outgoings can vary significantly — request three years of audited actuals from the landlord, not just the landlord's budget estimate.
A 3% annual rent review seems small but compounds over time. Starting at $60,000/yr: Year 2 = $61,800, Year 3 = $63,654, Year 5 = $69,551. Over 5 years, you pay 5.3% more total rent than if rent stayed flat. At 5%/yr, the compounding effect is more significant. The year-by-year schedule chart makes this visible — the bars grow each year.
The bond (typically 3–6 months rent) must be funded before you open. It is not a cost — it is returned at lease end — but it locks up working capital for the full lease term. A 6-month bond on $60,000/yr = $30,000 tied up for 3 years. Factor this into your startup capital requirement. A bank guarantee avoids cash lockup but incurs a bank fee (typically 1–2% of the guarantee amount per year).
Rent-free periods and fitout contributions directly reduce your effective cost. Switch to Standard mode to enter these and see their impact on total cost and net annual rent.
A 3-month rent-free period on a $60,000/yr lease over 3 years: saves $15,000 upfront, effective annual rent = ($180,000 − $15,000) ÷ 3 = $55,000/yr. A fitout contribution of $50,000 over 3 years: effective annual saving = $16,667/yr. Combined, the effective net annual cost could be $38,333/yr vs the headline $60,000. Always calculate effective rent to compare incentive packages across different premises.
A fitout contribution received from a landlord is typically treated as assessable income — you must pay income tax on it. It may offset the capital cost of your fitout, but the tax treatment depends on how the contribution is structured. Always seek advice from your accountant on the tax treatment of any fitout incentive before finalising the deal. The gross contribution is rarely the net benefit after tax.
A rent-free period typically means rent is free — but outgoings are usually still payable. On a $12,000/yr outgoings lease, a 3-month rent-free still costs $3,000 in outgoings during the free period. The saving is on rent only, not on the total gross cost. This is an important distinction when comparing rent-free periods: some leases offer "full incentive" (rent + outgoings free) vs "rent only free." Confirm which applies in the Heads of Agreement before proceeding.
Whether a lease is affordable depends on your business type and revenue. The rent-to-revenue ratio is the most reliable affordability indicator.
Retail businesses should not pay more than 10% of gross revenue in rent and outgoings. At $72,000/yr gross rent, you need $720,000/yr in revenue to stay within this threshold. This is a planning metric, not a guarantee of viability — margins vary significantly. A high-margin business (jewellery, luxury goods) may tolerate 12–15%. A low-margin business (newsagency, convenience) may need to be under 7%.
The monthly rent cost is a fixed outflow regardless of your revenue. In slow months, this is the most painful cost in the business. Before signing, model your monthly cashflow at 60%, 80%, and 100% of projected revenue — confirm you can service the rent obligation through slow periods without running out of cash. Many businesses fail in the first year due to inadequate working capital to cover fixed rent during ramp-up.
Day-one cash requirement = bond + first month rent + fitout costs + equipment + stock + 3 months operating reserve. For a $60,000/yr lease: bond $30,000 + month 1 $6,000 + fitout (self-funded, $50,000) + 3 months reserve ($18,000) = $104,000 minimum before opening. This is why commercial leases are often the largest single capital requirement when starting a business. Model this carefully before committing.
In 2025, vacancy rates in CBD and suburban commercial markets give tenants more leverage than in previous years. Here is how to use it.
Before instructing lawyers, reach commercial agreement on key terms via a Heads of Agreement (HOA): base rent, rent-free period, fitout contribution, bond amount, review mechanism, option terms, and make-good provisions. The HOA is non-binding but sets expectations. Lawyers then document the agreed terms — reversing negotiated terms after lawyers are engaged is difficult and expensive.
Priority negotiation points: (1) Rent review mechanism — CPI or 3% fixed, whichever is lower; (2) Break clause at the midpoint of the term; (3) Assignment and subletting rights without requiring landlord consent; (4) Make-good limited to "fair wear and tear" with a monetary cap; (5) Personal guarantee cap — negotiate a dollar limit, not an unlimited guarantee; (6) Outgoings cap or exclusions (land tax, capital works).
A commercial lawyer review of the lease is essential — typically $1,500–$4,000 for a standard lease. This cost is trivial relative to a $227,000 three-year commitment. A specialist commercial tenant advocate can also negotiate on your behalf — often resulting in better incentives and lease terms than self-negotiation achieves. Many tenant advocates work on a no-win-no-fee or fixed-fee basis for smaller tenancies. The single most important thing you can do before signing is to get independent legal advice from a commercial lease specialist.