Queensland Commercial Rent Reviews: Retail vs. Non-Retail

Unlike the rigid 12-month restriction imposed on the residential sector, commercial rent increases (commonly referred to as "rent reviews" or "escalation clauses" in Australia) are dictated by the terms of the lease.

However, in Queensland, you must first determine if the lease falls under the heavily regulated Retail Shop Leases Act 1994 (RSLA).

Disclaimer: This guide provides general legal information for educational purposes only and does not constitute legal advice. Commercial real estate in Queensland relies heavily on precise lease drafting regarding rent reviews. Always consult a licensed commercial property solicitor for advice specific to your situation. Information last verified: March 2026.

Non-Retail Rent Reviews (Freedom of Contract)

If the commercial real estate is a non-retail premises (e.g., a standalone manufacturing warehouse or an independent medical clinic), the rent review mechanism is bound purely by the Property Law Act 1974 (Qld) and the common law doctrine of Freedom of Contract.

In these leases, a landlord can draft highly advantageous, aggressive rent review structures:

• Multiple Review Methods: The lease can state rent increases by the higher of "5% fixed OR the CPI."
• Ratchet Clauses: A landlord can legally include a "ratchet clause," stipulating that if a Market Rent Review determines the property's market value has dropped, the rent simply stays flat rather than decreasing.

Retail Rent Reviews (RSLA Restrictions)

If the lease is classified as a "Retail Shop" located inside a shopping center, or a premises wholly used to carry on a retail business, the RSLA imposes severe consumer-protection limitations on rent reviews.

1. The Single Basis Rule

Under Section 27 of the RSLA, a retail shop lease must only specify a single basis on which the rent is to be reviewed on each review date.

You cannot state that rent will increase "by CPI or 4%, whichever is greater." You must pick one specific method per review date (e.g., Year 2 = CPI, Year 3 = 4% Fixed, Year 4 = Market Review). The only exception is during the first year of the lease when the tenant is granted variable rent concessions or rent-free periods.

2. The Ban on Ratchet Clauses

Under Section 36A of the RSLA, ratchet clauses are explicitly prohibited and void.

If a retail lease dictates a "Current Market Rent" review at the midpoint of a 5-year lease, and the appointed valuer determines that retail demand has slumped and the market rent is now 10% lower than the tenant was previously paying, the rent must legally decrease. A landlord cannot enforce a clause stating "rent shall not be less than the rent payable in the preceding year."

3. Market Rent Valuation Disputes

If a retail lease calls for a Market Rent review and the landlord and tenant cannot agree on the new figure, the RSLA provides a strict dispute resolution mechanism. A Specialist Retail Valuer must be appointed (often by the President of the Australian Property Institute) to determine the rent.

The landlord cannot unilaterally impose their own valuer's high figure on the retail tenant.

Navigating Complex Escalations

Managing a mixed commercial portfolio in Queensland—where the industrial sheds possess compound 4% fixed escalators with ratchets, and the retail bays require single-basis CPI escalations with mandatory 7-day outgoings disclosures—is an administrative headache. Landager centralizes these disparate lease formulas, flagging RSLA exclusions and auto-generating mathematically perfect rent review notices based precisely on that specific unit's contractual and statutory allowances.

Back to Queensland Commercial Landlord-Tenant Laws Overview.