Glossary: Common Australian Commercial Leasing Terms

A quick reference for key terms you’ll encounter in the leasing process.

Term	Meaning
Base Rent	The agreed rental amount payable before outgoings or incentives.
Outgoings	Operating expenses recoverable from the tenant, such as council rates, water, insurance, fire compliance, and sometimes land tax (varies by state).
Net Rent	Rent payable excluding outgoings. Tenant pays rent + outgoings separately.
Gross Rent	Rent that includes outgoings — landlord pays the expenses from the gross amount.
Net Effective Rent (NER)	The average rent over the lease term after incentives are applied. Used to measure deal value.
Incentives	Benefits offered to attract tenants—may include rent-free periods, fit-out contributions, or reduced rent terms.
CPI Rent Review	Rent increase linked to inflation. In Australia, this typically follows the Consumer Price Index (CPI) published by the Australian Bureau of Statistics.
Market Review	Rent review based on current market conditions rather than fixed or CPI-based growth.
Option Period / Option Term	The tenant’s right to extend the lease for an additional period under pre-agreed terms.
Make Good Clause	A clause requiring the tenant to return the property to an agreed condition at lease end — often “base building” or “original condition.”
Zoning	Local council land-use classification that determines permitted business activities (e.g., retail, industrial, office, medical).
Fit-Out	Modifications or additions made by the tenant (e.g., walls, flooring, shelving, power upgrades). Who pays — and who owns it — must be clearly defined in the lease.
Security Deposit / Bond	Held as protection against unpaid rent or damage. Typically 2–6 months’ rent depending on tenant strength and length of lease.
Heads of Agreement (HOA) / Letter of Offer (LOO)	A non-binding document setting out the agreed terms before drafting the formal lease.
Landlord Disclosure Statement	A mandatory document (under Retail Leases legislation in most states) outlining key lease details before signing.
Permitted Use	The specific business activity the tenant is legally allowed to operate under the lease.
Essential Safety Measures (ESM)	Mandatory safety compliance items (fire systems, extinguishers, exit lighting, etc.) — landlord responsibility unless stated otherwise.
Disclaimer: The author and publisher of this blog are not responsible for any actions taken based on the information provided herein. No attorney-client or fiduciary relationship is created by your use of this site. Commercial real estate involves significant legal and financial risks; please seek professional representation to ensure compliance with local and federal regulations.