Retail Lease vs Commercial Lease: Why the Difference Matters

•30 October 2026

Key Points

Whether a lease is a retail lease depends on the type of business and where the premises are, not on what the lease is called.
If the Retail Leases Act 1994 (NSW) applies, it gives the tenant protections that the lease cannot override.

Shop key on a signed lease, illustrating a retail lease vs commercial lease

The main difference between a retail lease vs commercial lease in NSW is the law that applies. A retail lease is covered by the Retail Leases Act 1994 (NSW), which gives tenants protections the lease cannot override. A commercial lease that falls outside the Act is governed mainly by its own terms.

Knowing which you have before you sign can change what the landlord must tell you and can charge you.

What makes a lease a retail lease in NSW?

In NSW, the Retail Leases Act applies to leases of a “retail shop”. Premises can be a retail shop in two ways:

they are used wholly or mainly for a business on the list of retail businesses in the Retail Leases Regulation 2022, or
they are in a retail shopping centre, even if the business is not on that list (subject to the exclusions below).

The list is long, so check it. Some shops and leases are excluded, including very large shops and very short or very long leases.

If you are asking “is my lease a retail lease?”, look at your business and premises, not the document’s heading.

Retail lease vs commercial lease: why the difference matters

If the Act applies, it overrides inconsistent lease terms. Among other things:

the landlord must give the tenant a disclosure statement with key information before the lease is entered into, and
the landlord generally cannot make the tenant pay its costs of preparing the lease.

Outside the Act, these protections do not apply, so the lease terms matter more. Option terms are one example: see our article on commercial lease options.

Frequently asked questions

My lease says “commercial lease”. Can it still be a retail lease?

Yes. If the premises meet the definition of a retail shop, the Act applies whatever the lease is called. The NSW Small Business Commissioner has warned that a clause excluding the Act is invalid in that case.

Is every lease in a shopping centre a retail lease?

Usually, but not always. The Act only counts a centre with at least five retail shops under the same owner or strata plan that is promoted or seen as a shopping centre. Even then, some leases in a centre are excluded, including shops with a lettable area of 1,000 square metres or more, spaces used only for something like an ATM, vending machine or car parking, and leases of 25 years or more.

How we can help

If you are about to sign a lease, or you are not sure whether yours is a retail lease, contact Stephen Wawn & Associates for a free consultation. Our lease advice team can review the lease with you before you commit.

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Bella Pirina

Bella Pirina is a paralegal at Stephen Wawn & Associates, working in probate, conveyancing and estate planning under the supervision of the principal. She is completing a combined Business and Law degree at UTS and her PLT with the College of Law, and expects to be admitted in February 2027.