So you own a commercial property in Mount Gambier. If you’re a new landlord, you might not be aware of five key aspects of being a commercial landlord. In this article, we run through these essentials that ensure your investment is profitable and you and your tenant can work together with your property manager for benefits on all sides.
What you need to be aware of as a commercial landlord
Commercial leasing and tenancies can be complex. However, if you keep these issues in mind, you should be on your way to happy tenants who will lease for longer.
1. Comprehensive commercial lease
Leasing for commercial properties is trickier than a simple residential lease. So make sure you and your property manager check your lease for accuracy. Your lease should cover the rent, the length of the lease (and any options), responsibilities (such as who pays for building maintenance or internal fitout), costs (who is responsible for outgoings) and, importantly, the correct address. This isn’t an issue for an industrial space but can be more of one in, say, a shopping centre.
2. Excellent communication
While the lease should cover who is responsible for what, you or your property manager needs to sit with the prospective tenant and get clear understanding of who will pay rates, taxes, levies, water and electricity or gas. Once your property manager has negotiated payment from the tenant for outgoings, you and your property manager need to ensure that these responsibilities are clearly outlined in your lease.
3. Fitout versus structural change
Your new tenant also needs to understand the difference between a fitout and any structural changes to your commercial property. In commercial leases, the tenant is responsible for fit-out costs whereas the owner must give approval (and generally pay for) any required structural changes to the property.
4. Make-good clause in your lease agreement
We outline clearly to the new tenant what is allowable under the lease in terms of fit-out. Commercial tenants are normally required to return the property to its original condition when they leave the tenancy. This can be expensive and your lease needs to specify the extent of the make-good. We try to encourage tenants to minimise new fit-out ‒ not just for environmental reasons but also to help them think ahead to future costs. Offices, for example, generally can be used almost ‘as is’ without needing too much extra work.
5. Your rights as a commercial property owner
Each state in Australia has different laws governing commercial tenancies. In South Australia, for example, we have the Retail and Commercial Leases Act 1995 that covers commercial retail tenancies. As a commercial property owner, you need to ensure that your lease is compliant with any relevant legislation.
Good tenants mean steady income
When you, your tenant and your property manager work together, we all ensure that your tenant can remain in business without stress, and your business ‒ renting a commercial property ‒ gives you the returns you’re after. Great communication is key to achieving the win-win goal.
Can we help with your Mount Gambier commercial property?
Call Herbert Commercial on 08 87 250 500 for a complimentary annual investment portfolio assessment. From this assessment, feedback may warrant the need to seek Herbert Commercial’s advice and expertise with formulating a plan to action restructuring or renegotiating the best lease scenario moving forward. We’re here to help.
As the only dedicated commercial property agency in Mount Gambier, we have a network with and are sought after by national commercial agencies as a trusted extension to their services. Our wealth of commercial knowledge of the Mount Gambier market extends to the broader commercial market, meaning we can ensure you achieve your commercial property goals.