Retail Leases Now Apply to Gyms and Small Bars

Gymnasium and small bar operators should be aware of a significant change to retail leases, which occurred on 1 January 2023.

Do you lease commercial space to operate a:

1. gymnasium or fitness centre,
2. a yoga, barre, pilates, or dance studio, or
3. a small bar with a maximum patron capacity of 120?

Or are you a landlord leasing commercial space to one of these businesses? 

If so, you should read on…

From 1 January 2023, these businesses were added to the list of ‘retail shops’ which are covered by the Retail Leases Act 1994 (NSW), regardless of whether they are located in a shopping centre.

What does this mean for you?

All new leases entered into after 1 January 2023 must be retail leases. This means tenants are given greater protections, such as:

• landlord cannot recover its legal costs from the tenant; 

• landlord must provide a disclosure statement to the tenant, outlining critical terms of the Lease and estimating the outgoings payable by the tenant; and

• If the lease contains no option to renew, the tenant may extend the Lease for a further six months, unless the landlord has specifically notified the tenant shortly before expiry that the Lease will not be extended.

For existing leases, tenants can use the mandatory dispute resolution regime, which requires parties to attempt mediation before going to court.

How can we help?

Commercial leasing is one of Sarah Mehlert specialty areas. At Donovan Oates Hannaford our property team can help you negotiate the often complex process of drafting or reviewing commercial lease agreements to protect your interests. We can advise on the requirements under the Retail Leases Act and interpret the lease terms as they apply to issues arising during the tenancy and disputes between landlord and tenant.

Contact our business law team for more information.