Queensland Commercial Leases: Key Clauses & Outgoings

Unlike residential renting where landlords must use the state-mandated Form 18a, commercial property owners in Queensland draft their own highly customized, 40-to-100 page lease contracts.

While the "Freedom of Contract" principle is dominant, a poorly drafted lease can leave an institutional landlord vulnerable to millions of dollars in unrecoverable maintenance costs or unenforceable rent escalations.

Disclaimer: This guide provides general legal information for educational purposes only and does not constitute legal advice. Commercial lease drafting in Queensland is highly complex. Always consult a licensed commercial real estate solicitor for advice specific to your situation. Information last verified: March 2026.

Structuring the Rent (Gross vs. Net Leases)

The most critical aspect of drafting a Queensland commercial lease is defining the structure of the rent, particularly regarding operating expenses (known in Australia as "Outgoings").

Gross Leases

The tenant is quoted a single, all-inclusive rental figure (e.g., $100,000 per annum). Out of that $100,000, the landlord is entirely responsible for paying all property taxes, council water rates, building insurance premiums, and strata/body corporate fees.

• Risk: If the local Queensland council raises property taxes significantly, or if commercial property insurance premiums spike due to a cyclone, the landlord's profit margin shrinks because they cannot pass those precise hikes onto the tenant mid-lease.

Net Leases (Outgoings Recovery)

The vastly preferred structure for institutional landlords in Australia is a Net Lease. The tenant pays a smaller "Base Rent," plus 100% of the building's "Outgoings."

In a multi-tenant property (like an industrial park or shopping center), each tenant pays their pro-rata share of the Outgoings based on their exact lettable square meterage.

A strong outgoings clause must explicitly itemize exactly what the landlord can recover:

• Council Rates and Water charges.
• Land Tax (A highly contentious point: under the Retail Shop Leases Act, a landlord cannot recover land tax from a retail tenant. However, they can recover land tax from a non-retail commercial tenant if specifically written into the lease).
• Building insurance premiums (including plate glass).
• Common area electricity, gardening, security, and cleaning.
• Management fees.

Make Good Obligations

The "Make Good" or "Reinstatement" clause dictates the condition the property must be in when the tenant hands back the keys.

Commercial tenants frequently gut a space to install specialized fit-outs (e.g., commercial exhaust hoods, dropped ceilings, or heavy machinery bolted to the concrete slab). A robust clause must compel the tenant to strip the entire fit-out out and return the space to a "bare shell" or "base building condition" at their own expense before the final day of the lease.

If the lease is silent, ambiguity over who owns the installed fixtures leads to incredibly messy post-lease litigation.

Assignment and Subleasing

Commercial tenants frequently wish to sell their business midway through a 10-year lease, which requires "assigning" the lease to the new business buyer.

The lease must state that the tenant cannot assign or sublease the premises without the prior written consent of the landlord.

This ensures the landlord retains veto power if the incoming tenant is financially unstable. If the lease falls under the Retail Shop Leases Act, there is a strict statutory process for how landlords must evaluate an assignment request (they must generally evaluate the buyer's retail skills and financial standing within a tight statutory timeframe and cannot unreasonably withhold consent).

Mastering Outgoings Reconciliation

If you manage a commercial property with a Net Lease structure, you must perform an annual "Outgoings Reconciliation," comparing the estimated outgoings you billed the tenant with the actual invoices you received from the council and insurers over the year. Landager automatically aggregates all logged vendor and utility invoices, instantly generating a mathematically perfect, auditable Outgoings Reconciliation statement ready to serve to your commercial tenants.

Back to Queensland Commercial Landlord-Tenant Laws Overview.