From 75 pages to 25: Dexus unveils a new simple and easy commercial lease
Article3 min21 January 2016
Fed up with a lease agreement a mile long? It may become a thing of the past.
Dexus, one of Australia's biggest commercial landlords, has cut the length of its standard office and industrial lease from 75 pages to just 25.
The new, shorter modified lease will be launched this week. The aim is to make currently complex - and sometimes confrontational - leasing negotiations simpler and easier, according to executive general manager for office and industrial Kevin George.
"It's more common sense than anything else," he said. "Previously both sides have sought to address every possible eventuality for every possible circumstance. We have gone back to the core principle of the relationship between the landlord and the tenant."
"It allows it to be more of a partnership than a confrontational contract."
Dexus said the modified version forgoes many of the traditional provisions that landlords typically rely upon across the market. Most of the core headings and sections from Dexus's existing standard lease are still there but they have been simplified.
Lease agreements gradually become more complicated with the rise of tenant reps and advisers, even though it was with "good intent", Mr George said.
One lease we did took just 12 minutes to complete - the client loved it
Market rent review clauses simplified
A key example is the revised market rent review clause which simplifies the complex clauses that have made their way into leases over the years and reverts to core valuation principles and the market conditions at the time of valuation.
Dexus has also reduced its standard heads of agreement from 12 pages to three.
Initially it looks like more risk but if both parties do what they say they are going to do and Dexus manages the relationship in the best way possible there won't be any extra risk, Mr George said.
To date a number of Dexus customers have trialled the new modified lease. As of this week it will be rolled out and used for all of the company's leasing agreements.
"One lease we did took just 12 minutes to complete. The client loved it," Mr George said.
The aim is for the modified lease to set a new industry standard.
Minter Ellison Partner and head of the firm's NSW Government Group, Virginia Briggs, worked with Dexus for the creation of the new lease.
"I can see the broader adoption of the modified lease by Dexus customers as having the potential to be a game changer in the property industry," Ms Briggs said.
"My partners are giving me a hard time for not having this done before we entered into the lease for our new premises with Dexus at Governor Macquarie Tower.
The article represents the views of the author only and not those of Dexus.