Types of business premises
Business premises means a building or any other space where you do business.
For example a:
- warehouse, manufacturing plant or storage facility
- commercial office or co-working space
- temporary space such as a market stall or pop-up store
- home office if you run a business from home
- retail store.
One of your premises needs to be your principal place of business.
Define your needs first
Any space has its advantages and disadvantages. The one that’s right for you depends on what your business needs.
Before you start your search, write a list of your needs to guide you.
Here are some questions to consider.
Location
- Do you need to be close to your customers?
- Is high foot traffic (the number of people who visit the area) important?
- Should it be easily accessible by public transport or for supplier vehicles?
- Are there car parks nearby?
Size and layout
- How much space do you need for customers, business activities, equipment and storage?
- Do you need an open floorplan or private rooms?
- Do you need an office area separate to the rest of your business?
Cost
- What’s your budget for rent, utilities (like electricity, internet and water) and other costs?
- Are you looking for a long-term lease or something more flexible?
- How much can you pay for a fit-out before you start selling to customers?
Facilities and utilities
- Do you need high-speed internet, special equipment or a specific power connection?
- What about bathrooms or a kitchen?
Compliance
- Is the area zoned for your type of business?
- Are you able to get the permits you need to use the space?
Future growth
- Does the space need to support your plan to expand?
- Can you adapt it as your business evolves?
Prioritise your needs based on how important they are to your business. Decide if they’re essential or desirable.
Example list of needs for a retail business
Essential
- Location – high foot traffic area, easy access to public transport.
- Size and layout – minimum 140 m2, open floor plan for product display.
- Cost – rent up to $3,000 per month, flexible lease terms.
- Facilities – high-speed internet, good lighting and air conditioning.
- Compliance – zoned for retail, able to get the necessary permits.
Desirable
- Amenities – nearby cafes and shops to attract customers.
- Visibility – large storefront windows for displays.
- Parking – car spaces out the front for customers.
- Expansion – option to lease extra space in the future.
What's the simplest space you can try?
You can refine your product or service and attract more customers before committing to a more expensive space.
For example, if you:
- sell food, you could rent a commercial kitchen by the hour
- sell clothes, you could pay for a stall at a market
- provide a professional service, you could rent a co-working space or virtual office monthly.
Search online to find spaces near you and compare their costs.
Compare leasing and buying
Leasing means you rent the space from the person or company that owns it. There are different kinds of leases for businesses.
Buying means you pay for and own the space outright. You can apply for a mortgage if you don’t have enough cash to pay upfront.
Small businesses tend to lease instead of buy because of lower upfront costs and greater flexibility. Whichever option you choose, make sure you get legal advice before you sign a contract.
Some of the differences between leasing and buying include:
| Leasing | Buying | |
|---|---|---|
| Upfront cost | Lower (deposit, advance rent and fit-out) | Higher (deposit, stamp duty and legal fees) |
| Regular costs | Include rent, utilities and insurance | Include mortgage repayments, maintenance, rates, utilities and insurance |
| Cost increases | Include rental increases, typically yearly | Include rates and possible mortgage payment increases, if you have a variable interest rate |
| Flexibility | Higher (easier to relocate or expand) | Lower (may be a long-term commitment) |
| Ownership | None | Full ownership |
| Maintenance | Less or no responsibility (often the landlord must cover maintenance) | Full responsibility |
| Equity | None | Builds your equity over time |
| Tax deductions | Lease payments may be tax deductible | Mortgage interest and expenses such as repairs may be tax deductible |
| Control | Limited control (depends on your lease terms) | Full control |
| Stability | Depends on your lease terms | More stable |
| Asset value | No financial benefit | Financial benefit if the property grows in value over time |
| Customisations | Limited (depends on your landlord’s approval) | Full freedom to customise |
Upfront cost
Leasing
Lower (deposit, advance rent and fit-out)
Buying
Higher (deposit, stamp duty and legal fees)
Regular costs
Leasing
Include rent, utilities and insurance
Buying
Include mortgage repayments, maintenance, rates, utilities and insurance
Cost increases
Leasing
Include rental increases, typically yearly
Buying
Include rates and possible mortgage payment increases, if you have a variable interest rate
Flexibility
Leasing
Higher (easier to relocate or expand)
Buying
Lower (may be a long-term commitment)
Ownership
Leasing
None
Buying
Full ownership
Maintenance
Leasing
Less or no responsibility (often the landlord must cover maintenance)
Buying
Full responsibility
Equity
Leasing
None
Buying
Builds your equity over time
Tax deductions
Leasing
Lease payments may be tax deductible
Buying
Mortgage interest and expenses such as repairs may be tax deductible
Control
Leasing
Limited control (depends on your lease terms)
Buying
Full control
Stability
Leasing
Depends on your lease terms
Buying
More stable
Asset value
Leasing
No financial benefit
Buying
Financial benefit if the property grows in value over time
Customisations
Leasing
Limited (depends on your landlord’s approval)
Buying
Full freedom to customise
Tips for your search
- Browse real estate websites for property listings.
- Get market reports about property values and trends.
- Check an area’s demographic data (such as the median age and income) to see if it matches your target customers. You can find census data on the Australian Bureau of Statistics (ABS) website.
- Look up crime and unemployment rates. You can find reports on the ABS website.
- Search forums or social media to see what business owners and customers say.
- Look at reviews and ratings of similar business in the area.
- Use maps and virtual tours to explore an area.
- Real estate agents can give you advice and access to property listings that meet your needs.
- Real estate lawyers can review lease agreements or purchase contracts.
- Financial advisers and mortgage brokers can give you financing options and a breakdown of costs.
- Building inspectors can check for structural issues in a building.
- Architects and interior designers can help you see a space’s potential.
- Business advisers can help you define your business needs and understand the options available to you.
Find out where your competitors are and the types of spaces they use. Depending on your business, it might be better to be close to your competitors or in a different area.
They can tell you about:
- zoning – the rules that say if you can run your type of business in the area
- rates you may need to pay
- permits or approvals you need (for example, before you can fit out)
- future development or activities in the area that might affect your business.
Searching online can help you understand different locations and shortlist spaces. But it’s important to check them out in person. The more familiar you are with an area and the spaces that are available, the easier it will be to identify a good deal.
