Is a warehouse a retail lease? Warehouses, offices and business-to-business premises
Retail lease or commercial lease? For warehouses, offices, yards and online businesses the answer is often not obvious, and it decides whether land tax can be passed on. This guide covers the harder cases.
Why the answer matters
A lease of a warehouse, factory, yard or office is either a retail lease governed by the Retail Leases Act 2003 (Vic) or an ordinary commercial lease. If the Act applies, a term requiring the tenant to pay the landlord’s land tax, or commercial and industrial property tax (CIPT), is void (s 50). The tenant also pays only the outgoings the lease specifies, and nothing until it has the landlord’s written estimate (s 46), and the term, including options, must be at least 5 years unless the tenant obtains a waiver certificate (see the 5 year minimum term).
Under a commercial lease outside the Act, land tax and other outgoings can be passed on if the lease says so. The question often comes up in a dispute, after years in which both sides treated the lease as commercial. The basic test and the main exclusions, such as the $1 million occupancy cost threshold, are in does the Retail Leases Act apply to my lease. This guide deals with the situations that test it.
Selling to businesses: the ultimate consumer test
It is often assumed that a lease is retail only if the tenant serves the public. That is not the law in Victoria. The courts ask whether the goods or services are supplied to the ultimate consumer: the customer who uses them, rather than passing them on unaltered to someone else. That customer can be a business.
The key case concerned a cold storage warehouse. The Court of Appeal held that the premises were retail premises although the customers were businesses storing their goods, and the High Court refused special leave to appeal in December 2017. The test is one consideration among several. The Small Business Commission’s own examples of sales to businesses that may be retail include flour sold to a bakery, car repairs for a hire company’s fleet, and legal or accounting services supplied to a university for its administration.
VCAT weighs a group of factors, none decisive on its own:
- the nature of the goods or services;
- whether a fee is paid;
- whether the goods or services are generally available to anyone willing to pay;
- whether they are supplied to the ultimate consumer;
- whether the premises are open to the public in the required sense; and
- whether the test was met when the lease was entered into.
Evidence matters. In a 2022 case about a steel warehouse, VCAT said that a sale to a member of the public is not the same thing as a sale to the ultimate consumer, and the tenant had not shown what share of its sales went to buyers who used the steel rather than resold it.
Premises open to customers
Whether the premises are open to the public, in the sense of inviting customers in to deal, is one of those factors. It is not a simple walk-in test, but where customers cannot come in, or come in only by appointment and under escort, VCAT has found premises were not retail premises.
- A health supplement business (2018). The premises were used to produce, pack and store powdered supplements, and nearly all sales were online and shipped from there. The public could not enter, there was no signage, and only a few long-standing customers could visit by appointment. VCAT held the premises were not retail premises, even though the goods went to ultimate consumers.
- A steel warehouse (2022). Members of the public could attend and buy, but the business park directory did not list the tenant, its only sign did not invite anyone in, the office door was locked, and customers had to be escorted among racking and overhead cranes. VCAT held the premises were not open to the public in the required sense.
Facts pointing the other way include signage that invites customers in, a counter or showroom, regular trading hours and customers who come and go. Storage premises open to the public for a fee have been treated as retail premises, even under a lease that banned retail use (see permitted use clauses and the Act).
Online businesses
An online business can sell by retail without its warehouse being retail premises. In the supplement case, VCAT held that the way sales are made, face to face or otherwise, is relevant, and that dispatching online orders from a production and storage facility did not make it retail premises. A warehouse that also has a pick-up counter, a showroom or regular customer visits may need a closer look.
Bare land, yards and quarries
Premises do not need a building. In a 2019 case, VCAT held that a lease of open rural land used as a sand and gravel quarry was a retail lease. It declined to read “premises” as limited to buildings, and found that the customers used the sand and gravel themselves, many of them to make concrete and other building products. Because the landlord had not given the outgoings estimate the Act requires, the tenant was not liable for the outgoings claimed. Leases of yards and storage land deserve the same scrutiny.
Offices and professional services
An office can be retail premises. Professional services, such as accounting or legal work, can be the retail provision of services where they are supplied to clients who use them. Many office leases are nevertheless outside the Act, commonly because:
- the office is a head office or back office from which no goods or services are supplied to customers;
- the occupancy costs exceed $1 million a year, excluding GST, or the tenant is a listed company or a subsidiary of one; or
- the premises are not located entirely on the first three storeys of the building, under the determination explained below.
The third storey determination
A Ministerial determination made in 2003 excludes premises located entirely within a building and used wholly or predominantly for the retail provision of services, unless they are located entirely on one or more of the first three storeys. Basement levels are not counted. The determination does not apply to premises used for selling or hiring goods, or to premises in a retail shopping centre. A shop selling goods on the tenth floor is not excluded by it, and nor is a service tenancy in a shopping centre.
Counting storeys is not the same as reading the lift buttons. In a 2023 case about premises on Level 3 of a city building, VCAT applied the Building Code of Australia definition of a storey, counted the ground floor as the first storey, and accepted that the premises were on the fourth storey, so the Act did not apply. Where a building has basements, mezzanines or split levels, check how the levels are counted before relying on the exclusion.
Working through your premises
The questions we ask when a lease of a warehouse, factory, yard or office might be retail:
- What use does the lease permit, and what actually happens at the premises?
- Who are the customers, and do they use the goods or services or resell them?
- Are customers invited in, by signage, opening hours and a place to deal?
- For services supplied from a building, which storey are the premises on, and is it a retail shopping centre?
- Do occupancy costs exceed $1 million a year, or is the tenant a listed company?
- What was the position when the lease was entered into or last renewed? That is when the test is applied (see when the Act stops applying).
For the rules that follow once the Act applies, see our guide to the Retail Leases Act 2003 (Vic).
How we help
- A free 15-minute phone call to work out whether your lease needs a closer look.
- A written view on whether the Act applies to a warehouse, office, yard or online business lease, before you sign or in a dispute. A lease review costs $1,100 including GST ($1,000 + GST) for most leases.
- Checking land tax, CIPT and outgoings charges under an existing lease.
- For landlords: leases drafted for the likely status of the premises, including where it is uncertain. See preparing a lease.
Common questions
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Usually not, but it can be. A warehouse is retail premises if it is used wholly or predominantly to sell goods or provide services by retail, which can include services to businesses, such as cold storage. Warehouses closed to customers, or used mainly to produce, store and dispatch goods, have been held not to be retail premises.
A retail lease is a lease of retail premises to which the Retail Leases Act 2003 (Vic) applies. The Act gives the tenant protections the lease cannot remove, including no recovery of land tax. Other commercial leases are governed mainly by their own terms, the general law and the Property Law Act 1958 (Vic).
Under a lease outside the Retail Leases Act, yes, if the lease says so. Under a retail lease, a term requiring the tenant to pay the landlord’s land tax or commercial and industrial property tax is void.
It can, if the office is used wholly or predominantly to provide services to clients who use them and no exclusion applies. Service premises entirely within a building and not located entirely on the first three storeys (not counting basements) are excluded, unless they are in a retail shopping centre.
Law referred to
- Retail Leases Act 2003 (Vic) ss 4(1) and (2), 5, 11, 17, 21, 46 and 50.
- Retail Leases Regulations 2023 (Vic) reg 6.
- Ministerial determination under s 5(1)(c), Premises Not Constituting Retail Premises (services premises not located entirely on the first three storeys of a building), Victoria Government Gazette, No S 75, 30 April 2003.
- IMCC Group (Australia) Pty Ltd v CB Cold Storage Pty Ltd [2017] VSCA 178; special leave to appeal refused, High Court of Australia, M104/2017, 15 December 2017.
- Bulk Powders Pty Ltd v Seicon Pty Ltd [2018] VCAT 2000.
- Phillips v Abel [2019] VCAT 1031.
- Eastcombe Pty Ltd v Fagersta Steels Pty Ltd [2022] VCAT 780.
- Aqua Greenland Pty Ltd v Max Therapy School Pty Ltd [2023] VCAT 449.
Last reviewed: October 2026, by a Victorian solicitor with a current practising certificate. This page is general information about Victorian law as at October 2026. It is not legal advice about your lease.
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