WHAT WE FOUND

Although the lease was for a large format retail tenancy and wasn't subject to the Retail Leases Act 1994 (NSW), the market rent review clause within the lease itself was based on section 31 of the Act. This meant that the market rent review must be undertaken on a net effective basis.

The landlord's market rent review notice however, appeared to provide a net face market rent and didn't seem to account for numerous factors we noted in our advice.

The landlord's notice didn't appear to provide any indication of an incentive having been considered in a market where the evidence indicated incentives ranging between 10.0% and 17.5%.

In our view, the size, configuration, and layout of the subject tenancy, particularly when taken within the context of the specific lease terms justified a significantly lower net market rent than what the landlord had proposed.