The email arrives from the agent: "Please find attached the REIQ Commercial Tenancy Agreement for your new premises." It comes with a reference schedule to fill in and a stack of standard terms, and you are being asked to sign it within the week. For most Queensland small businesses leasing a warehouse, office, showroom or workshop, this is the moment the deal stops being an idea and becomes a contract.
The REIQ Commercial Tenancy Agreement is a standard-form lease published by the Real Estate Institute of Queensland and widely used by agents and landlords as the starting point for leasing non-retail commercial premises. It binds the lessor and the lessee to the full set of rights and obligations of the tenancy: rent, outgoings, permitted use, repairs, insurance, make good, options and assignment. It is a template, not a finished deal, and the first question is not which clause to negotiate but whether this document is even the right one for the premises. Queensland draws a bright line between commercial and retail leases, and the two are governed very differently.
Confirm the use first: retail or commercial
Retail shop leases in Queensland are regulated by the Retail Shop Leases Act 1994 (Qld) (the Retail Shop Leases Act), which imposes disclosure obligations and tenant protections that do not apply to ordinary commercial leases. A retail shop is premises in a retail shopping centre, or premises used wholly or predominantly for carrying on a retail business (s 5B of the Act). A lease of a retail shop with a floor area of more than 1,000 m² falls outside the Act (s 5A), and so do leases of premises such as theme park or flea market stalls.
Why the classification matters in practice:
- Disclosure: If the premises are a retail shop, the lessor must give you a draft lease and a disclosure statement at least 7 days before you enter into the lease (s 21B of the Act), and you must give the lessor a lessee's disclosure statement at least 7 days before entering (s 22A).
- Rent reviews: Under a retail lease each review must use a single basis chosen from a prescribed list, and rent cannot be reviewed more than once a year, other than in the first year (s 27 of the Act).
- Outgoings: Your liability for retail outgoings is capped and conditional on the lease specifying them, and the lessor must provide estimates and audited annual statements (ss 37, 38C of the Act).
- Disputes: Retail tenancy disputes can be heard by QCAT, subject to limits on the amount in dispute (s 103 of the Act).
None of this applies to a genuinely commercial lease, which is governed by the contract itself and the general law. So before you negotiate anything, confirm the use. If the premises sit in a shopping centre or the use is predominantly retail, the REIQ commercial form may not be the right vehicle, and the retail protections change your negotiating position entirely. The agent may not have turned their mind to it, so it is worth checking yourself.
The clauses that decide your costs and your exit
The REIQ form is standard, but the schedule and the marked-up clauses are yours to negotiate. Work through these in order of commercial weight.
Term, options and the start date
The term, the option periods and the mechanics of exercising an option set the timeline of your whole occupancy. The drafting choice that matters most is what happens if the premises are not ready on the start date: if the landlord's works or approvals run late, does the start date move automatically, and does rent only begin when the premises are practically fit for your use?
- If you have a fit-out period, confirm whether rent is waived or reduced during it.
- Diarise the option exercise window. Under a retail shop lease the lessor must tell you the option date in writing between 2 and 6 months before it arrives (s 46 of the Retail Shop Leases Act), but under a commercial lease you get no such reminder; miss the deadline and the option is gone.
- Consider a soft start clause under which rent accrues only once key services are connected and the premises are ready for trade.
Rent and rent review
Rent reviews come in three standard forms: fixed percentage, index-based (usually CPI) and market. Fixed and index reviews are predictable. Market reviews are where tenants get caught, because a market review clause can produce a large increase and, if the drafting is one-sided, the rent may only ever go up.
- For retail leases the Act already limits the mechanics: each review must use a single basis chosen from market rent, a published index, a fixed percentage, a fixed amount or turnover (s 27 of the Act), and if the parties cannot agree market rent within a month of the review date a specialist retail valuer decides (s 28).
- For commercial leases there is no statutory framework, so the clause is the whole protection. If you want a floor, ask for the review to be stated as no less than the rent payable immediately before the review, and for a mechanism to appoint an independent valuer if the parties cannot agree.
- Consider capping index-based increases if you are worried about CPI spikes over a long term.
Outgoings
Outgoings are frequently the largest hidden cost in a lease and the clause where the REIQ form needs the most scrutiny. The trap is an open-ended definition: if the lease lets the landlord pass through all costs of owning and operating the building, capital works can arrive disguised as maintenance.
- Get the schedule to list exactly what is included and what is excluded, including any administration or management fee.
- Confirm how estimates and year-end reconciliations work, and whether you have a right to inspect the landlord's records.
- For retail leases the Act caps your exposure: you are not liable for outgoings unless the lease specifies what they are, how they are determined and apportioned, and how they are recovered (s 37 of the Act); your share of apportionable outgoings cannot exceed your area's proportion of the building (s 38); and you can withhold payments if the lessor does not provide an outgoings estimate or audited annual statement (s 38C). Commercial tenants have none of these statutory rights, so negotiate caps, exclusions and audit rights into the lease itself.
Permitted use and alterations
The permitted use recorded in the schedule decides what you can lawfully do at the premises, and it does double duty: it feeds into the retail or commercial classification, and it is the baseline for change-of-use consent and make good. The drafting error to avoid is describing the use too narrowly, so that a foreseeable activity such as training, storage, light assembly or click-and-collect becomes a breach.
- If your use may evolve, ask for a use clause broad enough to cover current and foreseeable operations.
- Under the Property Law Act 2023 (Qld), where a lease requires the lessor's consent to a change of use, consent cannot be unreasonably withheld (s 142), but the practical protection is a use description you do not need to renegotiate.
- Alterations clauses should say when landlord consent is needed, what standards apply, and who owns the fit-out at the end of the term.
Repairs, maintenance and make good
Split the building in your mind: the base building (structure, roof, air-conditioning, lifts, fire services) is the landlord's, and the fit-out is yours. The REIQ form allocates these obligations in the schedule, and the two traps are ambiguity about who maintains base building services and a make good clause that requires the premises to be returned as new.
- Negotiate the make good standard so it reflects the condition at handover, with a schedule of condition and photos taken when you move in.
- If you installed the fit-out, decide whether you can leave it, remove it, or receive a payment in lieu of removal.
- Clarify whether you are responsible for major replacements, such as a new air-conditioning plant, or only routine maintenance of your own fit-out.
Assignment, subletting and change of control
If you sell the business during the term, you will usually need to assign the lease to the buyer, and the assignment clause decides how hard that is. Under s 142 of the Property Law Act 2023 (Qld), where a lease requires the lessor's consent to an assignment, sublease or other dealing, the lessor must not unreasonably withhold consent, must respond within one month of receiving full particulars, and must give reasons; if they do not, the tenant can apply to the court. The section applies despite any agreement to the contrary, so it is a genuine floor.
- The lease may still impose reasonable conditions on assignment, such as financial information about the incoming tenant, fresh security, or a deed of assignment.
- If you give a director's or personal guarantee, try to negotiate a cap and a release mechanism that operates on assignment.
- Retail leases add a disclosure layer: on assignment, the lessor must give the prospective assignee a disclosure statement and a copy of the lease, and the assignee must give the lessor a disclosure statement (s 22C of the Retail Shop Leases Act).
Security, guarantees and insurance
Landlords commonly ask for a bank guarantee, a cash bond or a director's guarantee, and each has a different cost to you. A bank guarantee ties up cash or bank facilities but stays at arm's length; a cash bond is dead money; and a personal guarantee reaches into your personal assets.
- Negotiate the form and amount of security, and push for a reduction or release as the lease performs.
- Check the insurance requirements against your broker's advice, including who arranges building insurance and whether you are asked to insure the landlord's property.
Default, early termination and relocation
The default clause sets the stakes for any rent dispute. Look for the grace period for non-payment, the notices required before the landlord can terminate, and any right to remedy the breach. Avoid provisions that make termination automatic on any breach, and watch penalty interest rates.
- If a relocation or demolition clause is included, common where the landlord plans redevelopment, negotiate reasonable notice and compensation for your fit-out and moving costs.
- If you want an exit, ask for a break clause: a right to end the lease on notice, usually after a set period and on payment of a sum or with no outstanding defaults.
Situational clauses worth asking for
These do not belong in every lease, but each earns its place in specific circumstances:
- Break clause: worth asking for if you are committing to a long term but your business is young or your space needs are uncertain.
- Fit-out contribution or rent-free period: the natural ask where you are taking the premises in shell condition and funding the works.
- Signage rights: essential if the premises are your shopfront or your brand depends on external signage; specify the locations.
- Make good waiver or payment in lieu: valuable where the landlord intends to redevelop after you leave and has no use for a reinstated fit-out.
- Special conditions for hazardous materials, data cabling or loading: matters the standard form does not contemplate, and which otherwise become disputes about who pays.
How an Artificer Legal lawyer would review the REIQ draft
When we review an REIQ Commercial Tenancy Agreement for a tenant, the first step is not clause-by-clause markup but classification. We confirm whether the premises and the proposed use make it a retail shop lease under the Retail Shop Leases Act 1994 (Qld), because that determines which statutory protections overlay the document. We then work through the draft in order of commercial weight: the heads of agreement first, to catch gaps between what was promised and what the lease says; then outgoings, make good and rent review, the three clauses where cost concentrates; then assignment, security and option mechanics, the clauses that decide your ability to move. For landlords, the same review runs in reverse: we check that the form is adequate for the tenancy rather than a bespoke lease, and that the schedule properly protects the building and the rent.
The clause that decides more than it appears to
If there is one drafting choice that decides how this document performs, it is the permitted use recorded in the schedule. It feeds into whether the lease is retail or commercial and therefore which statutory regime applies; it sets the boundary for change-of-use consent under s 142 of the Property Law Act 2023 (Qld); and it is the reference point for make good, since the premises must usually be returned in a condition consistent with the permitted use. Describe the use too narrowly and a business that grows into new activities is in breach; describe it too loosely and the landlord's risk profile changes. It is the clause most worth spending time on before the lease is signed.
An REIQ Commercial Tenancy Agreement is a solid starting point for a Queensland commercial lease, but it is a template: check whether the premises are a retail shop before you negotiate, then focus your attention on rent review mechanics, outgoings definitions, make good, assignment consent and option timing, which are where disputes and costs actually arise. If the term, including options, runs long enough, ask whether the lease should be registered on title with Titles Queensland so your leasehold interest is recorded and protected against later purchasers; a lawyer can confirm whether the lease is in registrable form. Get the use right and the schedule precise, and the standard form can serve a small business well for years.