In a sale and leaseback the sale price gets almost all the attention, and the lease gets a fraction of the scrutiny it deserves. That's the wrong way around. The price is settled in a day; the lease governs your occupancy, your costs and your security for the next ten or twenty years. Here are the terms that genuinely matter — and where to focus your energy before you sign.
Security of tenure is everything
The whole point of a sale and leaseback is that you continue to operate from the same site. You've almost certainly built something valuable at that location — relationships, trained staff, refined workflow, customer proximity, fixed infrastructure. The lease is what protects all of it, and without strong tenure the rest of the deal means little.
Lease length and renewal options are the foundations. A strong initial term — long enough to see out a full planning horizon for the business — combined with meaningful options to renew gives you genuine, bankable security. Short terms, or options that are easy for the landlord to frustrate, quietly undermine the entire structure and can leave you exposed to relocation just when you can least afford it.
Rent review mechanisms
How rent is reviewed over the term is critically important and routinely underestimated at signing. A review mechanism that felt fair on day one can become punishing if it diverges from what the market actually does over a long lease.
Fixed annual increases offer certainty but can run ahead of the market in a low-growth environment, leaving you over-rented. Market rent reviews at regular intervals are fair in principle, but the methodology is everything: how is market rent determined, who decides if there's a dispute, and is there a ratchet provision that stops rent ever falling even when the market softens? A ratchet that only allows rent to rise, never fall, is a material risk on a long lease and deserves close attention before you agree to it.
Outgoings treatment
Industrial leases in Queensland are typically structured as gross or net, and the difference in your exposure is significant. In a net lease, the tenant pays most or all outgoings — rates, insurance, maintenance and the like — on top of the rent. In a gross lease, those costs are built into the face rent and the landlord manages them.
Understand exactly what you're being asked to pay beyond the headline rent figure, and ask for a clear estimate of outgoings before you sign. A net lease that looks competitive on the face rent can carry substantial additional costs that only become visible when the first outgoings invoices arrive — and on an industrial building, those can be larger than owners expect.
Make-good provisions
A make-good clause requires the tenant to return the premises to a specified condition at the end of the lease. In industrial premises this can be a very material exposure, particularly if the building has been fitted out or modified for a specialised use over many years.
Negotiate make-good obligations carefully at the outset, while you have leverage, rather than leaving them vague. Clarity about what's required — and just as importantly what isn't — protects you from an open-ended liability at expiry. In many cases a sensible landlord will accept a practical, proportionate make-good position rather than an unrealistic one that benefits no one, so it's worth raising early.
Assignment and sublease rights
One term that's easy to overlook at signing becomes vital if your circumstances change: the right to assign the lease or sublease the premises. Businesses evolve — you might sell the company, merge, restructure, or simply need less space than you once did. If the lease ties you in with no practical ability to transfer or share the obligation, a commitment that suited you on day one can turn into a constraint you can't move.
Look closely at how assignment and subleasing are handled. Ideally the landlord's consent shouldn't be unreasonably withheld, and the conditions for transferring to a suitable replacement tenant should be workable rather than designed to frustrate you. This matters most in a trade sale of your business: a buyer will want confidence they can occupy the site, so a clean, sensible assignment provision protects the value of the company itself, not just the lease. It's exactly the kind of clause a long-term landlord should be comfortable getting right, because a workable lease serves both sides.
The bottom line — and a landlord worth staying with
The terms in the lease matter enormously, but so does who you're signing it with, because a lease is only as good as the landlord standing behind it. A landlord with a short hold horizon, a fund nearing its exit date, or a speculative developer each introduce a kind of risk that a stable, permanent-hold owner simply doesn't — the risk that your security gets traded away when their strategy changes.
Walter Taylor holds indefinitely. We're not managing to a fund life cycle or a valuation benchmark, which means we have a direct, lasting interest in a lease and a relationship that genuinely works for the occupier over the long term. Whatever route you take, have your own solicitor review the lease before you sign — the cost of that advice is trivial against the size of the commitment you're making, and it's the best money you'll spend in the whole process. If you'd like to talk through what a long-term lease with a permanent holder looks like, we're always happy to.