This article is intended as general information only and does not constitute financial or legal advice.
If you run a logistics operation, this matters to you: the wrong lease can turn a great site into a liability. A logistics lease isn't just about rent. It determines who carries operating costs, how predictable future rent increases are, what happens when you modify the site, how hard it is to exit or renew, and which surprises arrive at the worst possible time.
Most disputes and "we didn't realise…" moments aren't caused by bad landlords or bad tenants. They're caused by clauses treated as legal fine print when they're actually commercial risk. Below are the lease clauses logistics and warehousing businesses must understand before committing to a site.
Outgoings: What You Pay on Top of Rent
In most industrial leases, outgoings sit with the tenant. What matters is not just that they apply, but exactly what sits within them and how those costs behave over time.
Typically, this includes insurance, utilities, and ongoing maintenance. These are often underestimated or poorly defined at the outset, which is where issues can start to surface later.
Maintenance in particular deserves close attention. It is common, especially in newer or investor-held assets, for tenants to take responsibility for day-to-day upkeep, while landlords retain only structural obligations.
This is not inherently a disadvantage. In practice, the cost sits with the tenant either way, whether paid directly or built into the rent. Managing it yourself can be more efficient, allowing issues to be resolved quickly without relying on a landlord who may not be local or responsive.
The focus should be on clarity. Understand precisely where responsibility sits, how costs are likely to move, and how they feed into your operating model. That is what prevents friction and avoids unexpected pressure on cashflow.
Rent Reviews: How Your Rent Can Increase
Rent review clauses are often misunderstood and poorly planned for. Your rent might increase through fixed annual bumps, inflation-linked adjustments, market reviews every few years, or a combination. Many leases include clauses like "3% or inflation, whichever is higher" - which sounds reasonable until inflation spikes and suddenly your rent jumps dramatically.
For logistics operators, predictability matters more than almost anything. Check whether increases are fixed and if not, understand exactly how inflation adjustments work, and run a simple five-year scenario where your rent escalates faster than your revenue grows. This planning prevents painful cashflow crunches down the track.
Lease Term and Options: Your Real Security of Tenure
Many business owners push for shorter lease terms to preserve flexibility. In practice, that can work against them.
If a site is critical to your operation, the reality is you are unlikely to move after a few years. Logistics facilities are not easily relocatable, and once you are embedded, with racking, systems, staff, and transport flows established, the cost and disruption of moving becomes significant.
Lease term is also a commercial lever. Landlords place a premium on certainty of income, and longer commitments typically result in more favourable terms, whether through rent, incentives, or flexibility in other areas of the lease. A shorter term can limit your ability to negotiate effectively.
The more useful question is not how to stay flexible, but how to align the lease with your actual business horizon. If your growth plan assumes or requires you to be in the facility for the long term, structure the lease accordingly.
From there, focus on the detail. Confirm the initial term, the number and structure of renewal options, how and when those options must be exercised, and whether renewals reset to market rent. These mechanics ultimately determine how much control you retain over your position.
Make-good: The Clause That Creates Surprise Bills
Make-good obligations are often one of the largest hidden liabilities in commercial and industrial leases. They typically require tenants to return the space to an agreed condition at the end of the lease.
This can include removing racking or fitout, repairing floor penetrations, repainting, reinstating offices or mezzanines, and returning the site to base building condition, depending on what has been agreed.
Because many businesses make substantial modifications to suit their operation, these obligations need to be clearly defined at the outset. Without that clarity, disputes tend to surface at the worst possible time, when you are trying to exit.
What is often overlooked is that make-good is not just an end-of-lease issue. Every change made during the tenancy can affect the final outcome. Alterations should be considered in the context of how they will be treated when you leave.
There is also scope to manage this proactively. In some cases, improvements that add value to the building may be acceptable to leave in place, but this might need agreement with the landlord in advance, not at the point of exit.
The key is to treat make-good as something to plan for throughout the life of the lease. Budget for it early, revisit it as your site evolves, and avoid leaving it as a last-minute negotiation.
Repairs and Maintenance: Who Is Responsible for What?
Industrial buildings contain expensive components that will need attention: roller doors, dock levellers, HVAC systems, roofing, drainage, and fire safety systems. Many tenants assume the landlord handles major maintenance, but leases frequently shift substantial obligations onto tenants.
Ask specifically who maintains roller doors and dock equipment, who handles fire system certification, and who pays for major capital works versus routine maintenance. Ambiguity in this area becomes expensive very quickly, often when equipment fails at the worst possible moment.
Alterations and Approvals: What You're Allowed to Do
Logistics sites rarely remain static. You may need racking and mezzanines, yard markings and barriers, charging stations, security and access controls, canopies, signage, or IT infrastructure. The lease should specify what requires landlord consent, how quickly consent must be granted or considered, whether consent can be unreasonably withheld, and who owns improvements when the lease ends.
If your operation depends on site modifications — and most logistics operations do — this clause can make or break your business model.
Access, Hours, and Yard Use: Operational Clauses That Get Overlooked
Many logistics leases restrict access hours, limit heavy vehicle movements, or impose conditions on yard use that can cripple 24/7 operations. Check whether there are restrictions on operating hours, limits on truck movements or noise, constraints on yard storage or container placement, restrictions on staff parking, and any limitations on customer or supplier access.
These operational restrictions often seem minor during lease negotiations but become major constraints when your business grows or customer demands change. A logistics operator recently discovered their lease prohibited weekend deliveries — a restriction that cost them a major retail contract.
Assignment and Subletting: Your Exit Strategy
When you need to exit a lease, assignment (transferring the lease to another party) is often your only realistic option. However, many leases give landlords broad discretion to refuse assignments, creating a trap where you're stuck paying rent for a site you no longer need.
Understand what grounds the landlord can use to refuse assignment, whether you remain liable after assignment, what information you must provide to potential assignees, and how long the landlord has to respond to assignment requests. The easier it is to assign your lease, the more valuable and less risky it becomes.
Read Before You Commit
A good lease protects your operation and gives you flexibility to grow. A bad lease creates ongoing costs, restricts your business, and becomes harder to escape over time.
The clauses above are not just legal details. They are the points where real businesses either protect themselves or create problems that surface later.
These are the areas experienced operators stress test before committing, because once the lease is signed, the flexibility to change them is limited.
