Net vs Gross Rent (and Semi-Gross) in Adelaide Commercial Leasing: What's the Difference?

If you're searching for commercial space in Adelaide, you've probably noticed that rental prices aren't always presented the same way. One property is $350 per square metre. Another quotes $280 plus outgoings. A third mentions "semi-gross" without much explanation.

Understanding the difference between net, gross, and semi-gross rent is essential before you sign a lease: or before you accidentally compare apples to oranges when evaluating your options.

This guide breaks down each commercial lease rent type in plain language, explains who pays for what, and helps you understand which structure you're likely to encounter across Adelaide's office, retail, and industrial markets.

Why Rent Structure Is Important

The advertised rent is rarely the full story.

Two properties might both quote $400 per square metre, but if one is gross and the other is net, your actual annual cost could differ by tens of thousands of dollars. That equates to a significant amount of money over a typical three or five year lease term.

Knowing the rent structure also helps you:

• Budget accurately for total occupancy costs
• Compare listings fairly across different landlords and agents
• Negotiate effectively when you understand what's included
• Avoid surprises when outgoings reconciliations arrive

Let's look at each structure in detail.

Gross Rent: One Payment, All Included

A gross lease is the simplest structure for tenants. You pay a single, fixed rent amount, and the landlord covers all (or nearly all) property outgoings from that payment.

What's Typically Included in Gross Rent

• Council rates
• Water rates
• Land tax
• Building insurance
• Strata levies (if applicable)
• Common area maintenance
• Management fees

How It Works in Practice

If you lease 100 square metres at $450 per sqm gross, your annual rent is $45,000. That's it. No additional invoices for rates, insurance or any other outgoing throughout the year. Your utility usage will still need to be paid on top of rent however.

Who Prefers Gross Leases?

Tenants often prefer gross leases because they provide budget certainty. You know exactly what you're paying each month, which makes cash flow planning straightforward.

Landlords may offer gross leases to attract tenants who value simplicity, but they take on the risk that outgoings will increase faster than expected. To compensate, landlords typically factor in a buffer and charge a slightly higher base rent.

Where Gross Leases Are Common in Adelaide

Gross leases appear most often in:

• CBD Office space
• Some retail tenancies in strip shopping centres
• Older buildings where landlords want to simplify tenant management

That said, true gross leases are less common than many tenants assume.

Net Rent: Base Rent Plus Outgoings

A net lease separates the base rent from the property's operating expenses. You pay a base rent, then contribute separately to outgoings: either as a fixed estimate or based on direct recovery actual costs.

What Outgoings Might You Pay?

Under a net lease, tenants typically contribute to:

• Statutory Rates (Council, Water, ESL)
• Building insurance
• Common area maintenance and cleaning
• Management fees
• Strata levies (including Sinking fund contributions for future repairs)
• Repairs and maintenance
• Audit and Bank Fees

The exact list depends on your lease agreement. For any new lease, the exhaustive list of outgoings payable will be detailed in the Disclosure Statement which the landlord is required to provide before you sign a lease.

How It Works in Practice

Suppose you lease 150 square metres at $320 per sqm net, with estimated outgoings of $85 per sqm.

At the end of each year, the landlord reconciles actual outgoings against your payments. If costs were higher than estimated, you pay the difference. If lower, you receive a credit.

Who Prefers Net Leases?

Landlords generally prefer net leases because they recover actual expenses from tenants, protecting their returns if costs rise.

Where Net Leases Are Common in Adelaide

Net leases dominate Adelaide's commercial market, particularly for:

• Office space in metro locations
• Industrial and warehouse properties
• Retail tenancies and shopping centres

Semi-Gross Rent: The Middle Ground

A semi-gross lease is the middle ground between gross and net leases. The base rent includes some outgoings, but not all, and you pay separately only for the excluded items.

The contribution to outgoings is usually one of the following:

• A proportion of an increase in all outgoings over a base year. The base year will usually be the first year that the tenant occupied the premises and the proportion will be based on the area that the tenant's premises bears to the total area of the building.
• A proportionate share of only certain expenses. This is usually limited to statutory charges (for example, council rates, water rates and land tax).
• A proportion of an increase in only certain expenses. This is a hybrid of the first two options, the tenant paying its proportion, based on area, of increases in agreed expenses (usually statutory charges) over a base year.

In all cases the tenant would remain responsible for services metered separately to the premises (for example, water usage and electricity).

Common Semi-Gross Arrangements

There's no single standard for semi-gross leases. Common variations include:

The specifics depend entirely on negotiation and market practice for that property type.

Why Semi-Gross Leases Can Be Confusing

Many leases marketed as "gross" are actually semi-gross. The listing might say "gross rent," but the lease document excludes certain costs. It is important to ensure you read the lease agreement thoroughly before signing.

Comparing Offers: How to Calculate True Occupancy Cost

When you're comparing multiple properties, convert everything to a total occupancy cost per square metre so you're comparing like with like.

Step-by-Step Comparison

1. Start with the quoted rent (net, gross, or semi-gross)
2. Add any outgoings you'll pay separately
3. Include other occupancy costs (parking, signage levies, after-hours A/C charges)
4. Divide by lettable area to get a per-square-metre figure

Example: Comparing Two Adelaide Office Spaces

Property A's higher base rent actually delivers a lower total cost.

Which Structure Is Best for You?

There's no universally "better" option, it depends on your priorities and requirements and what suits your circumstances. In Adelaide's current market, net leases remain the norm for most commercial properties. If you prefer a gross structure, you may need to negotiate with the owner and request that the rental be grossed.

Questions to Ask Before Signing

Before committing to any commercial lease in Adelaide, clarify:

1. Is the quoted rent net, gross, or semi-gross?
2. Which outgoings are included, and which are payable separately?
3. What were the actual outgoings for the past two to three years?
4. Ensure a Disclosure Statement has been provided.

How ProRealty Can Help

Navigating Adelaide's commercial leasing market is easier with guidance. ProRealty Property Consultants can help tenants understand exactly what they're signing up for and we help landlords structure leases that work for both parties.

Whether you're searching for commercial space to lease or need support with property management for your investment, our team provides hands-on, personalised service tailored to Adelaide's market.

Ready to find the right space at the right terms? Get in touch with ProRealty to discuss your requirements.

Disclaimer: This article provides general information about commercial lease structures in Adelaide and is not intended as legal or financial advice. Lease terms vary between properties and landlords. We recommend seeking professional advice specific to your circumstances before entering into any lease agreement.