Commercial Magazine - March 2026 by First National Neilson Partners

March 2026

Front Cover: Funky modern retail space Inside Cover: 9 Loveridge Walk, Berwick

CONSIDERING COMMECIAL LEASING INCENTIVES? 05 NEW LISTINGS FOR SALE AND RENT

18 RECENTLY LEASED & SOLD

20 BERWICK STORAGE UNIT FACILITY

RETHINKING COMMERCIAL LEASING INCENTIVES

For many commercial property owners, the idea of offering an incentive can feel uncomfortable It can sound like you’re giving away money or that the market isn’t performing strongly.

But in reality, incentives have become a normal and strategic part of leasing, with both stronger and weaker markets. The key to consider isn’t whether you offer an incentive, it’s how you structure it.

Incentives come in many forms but are usually in the form of rent-free periods, contributions toward fit-outs, or other short-term arrangements such as discounted rent, and are often in exchange for a longer lease or a strong tenant

Importantly, offering an incentive isn’t the same as permanently reducing the rental. Usually, the rent remains at the agreed level, with the incentive applied for a set period throughout the duration or in some cases commencement of the lease

This is critical to consider as it does directly impact the cash flow and potentially valuation of the site in question

Vacant properties are costly to maintain. Outgoings still need to be paid, insurance must be maintained, and an empty building can lose appeal in the market.

Offering a well-structured incentive to attract a reliable tenant can often be far less expensive than waiting months for a new tenant to move in. Six months rent-free may look significant on paper, but is often cheaper than extended vacancy and uncertainty.

From a valuation standpoint, having a secure tenant and a stable income stream is far more important than getting the absolute highest rent from day one. Permanent rent reductions can hurt long-term value, while a timelimited incentive preserves the income structure and protects the asset.

Equally, if an incentive allows you to secure a longer lease (E.g 5-7 years) or a tenant with a strong covenant that has a substantial impact on the properties value. Proper documentation is also critical, especially in retail leases covered by the Retail Leases Act. Correct disclosure statements clarifying the rent free, outgoings recovery, and rent review terms help avoid problems down the line.

In today’s market, incentives aren’t a sign of weakness, they’re a practical tool. When used thoughtfully, they help secure the right tenants, maintain stable income, and protect the longterm value of your property.