More and more sophisticated investors are
considering commercial real estate as a viable investment strategy.
They have usually built a substantial asset base and are now
looking for more cash flow in their investments.
Often, they buy smaller properties– such as a shop, strata
office or perhaps an industrial warehouse – because the entry-level price for
larger commercial premises is quite high.
Retail or not?
Many commercial leases are considered to be retail in nature (even
if the premises is not a typical shop) because the tenant’s business is
providing goods and services.
That means those leases are covered by their own legislation, the retail Leases Act 2003(Act), which can
be a little tricky for the uninitiated to understand.
The Act imposes obligations on both parties but protects the
tenant more if they are covered by the ACT.
For example, landlords can’t pass on certain costs to tenants in a
retail lease, things like legal costs for preparation of the lease, land
tax(which can be substantial for commercial property), or costs
relating to essential safety measures.
And owners must provide prospective retail tenants with a
Disclosure Statement which outlines important information about the lease and
the occupancy costs including outgoings.
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Friday, 23 July 2021