Make commercial property investment work for you

Commercial property investment is a unique market for investors to consider.

As an investment, it can deliver both flexibility and stability as property owners can custom-build lease terms to suit their needs.

Unlike their residential counterparts, commercial leases typically span years and are highly customised to suit the specific needs of both the landlord and the tenant.

With the right lease in place, investors can benefit from a relatively hands-off approach while enjoying long-term security and steady capital gains.

“No two commercial leases look alike,” Raine & Horne Commercial Canberra director Mark Nicholls says.

“From an investor’s perspective, you will want to tailor lease terms to maximise profitability, security, and ease of ownership.”

Having the right tenant is key. To achieve this, Mark recommends offering various incentives, retention through good property management and protecting the value of your asset in the long term with carefully crafted lease terms.

“To keep your investment property occupied and profitable, it’s crucial to choose the right tenant carefully and negotiate a fair, transparent lease from the start,” he says.

“A well-matched tenant is more likely to stay long term, ensuring stability and peace of mind.”

To attract the ideal tenant, landlords can offer upfront incentives such as rent-free periods, fitout contributions, or rent abatement. These options make the property more appealing to tenants while helping landlords maintain the overall value of their investment.

Commercial properties can also have longer lease terms, leading to less vacancy or ‘’void periods’’ where your investment is not earning an income.

“Alongside longer lease terms, a commercial lease will typically involve automatic rent reviews, either at an agreed percentage or in line with CPI, meaning you don’t need to continually renegotiate,” Mark says.

“While a typical commercial lease may run anywhere from two to five years, you can also agree to include options to automatically renew every year or so thereafter.”

Commercial property can be one of the most powerful tools in your investment portfolio and it often comes down to the lease.

The right terms don’t just secure reliable income, they build long-term stability, protect the future value of your asset, and give you the freedom to shape your investment around your goals.

Other clauses to consider when building your commercial lease terms include redecoration, specifying who is responsible for maintaining or upgrading the property’s appearance during the contract term.

A make-good clause requires the tenant to return the property to its original condition at the end of the lease, often by removing any alterations or repairs.

Outgoings can be covered in a lease, outlining the costs that the tenant must pay in addition to rent, such as rates, strata fees, insurance or even property management fees.

Some clauses can permit the tenant to transfer their lease to another party, and dictate whether they require the landlord’s approval.

A demolition clause, particularly relevant for older buildings with strong redevelopment potential, outlines conditions under which the landlord may demolish the property.

“Carefully considered lease terms which cover all eventualities means less bumps in the road, and your asset is well protected long term,” Mark says.

To maximise your investment, Mark recommends appointing a property manager to handle the day-to-day tenant management and maintenance.

“Leaning on experts for day-to-day management allows you to sit back and simply watch your asset working at its full potential,” he says.

Every investment option, whether shares, property or entrepreneurial ventures, comes with unique risks and rewards, so it’s vital to consult your trusted expert to ascertain options that align with your financial goals and lifestyle.

For more information, visit Raine & Horne Commercial Canberra.

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