Can I sublet part of my warehouse? What Australian businesses need to know

These terms get used interchangeably but they’re slightly different in practice, and understanding the difference matters.

Subletting is when you, as the head tenant, lease a defined portion of your space to another business under a formal sublease agreement. That business becomes your subtenant. They have their own access, their own area, and their own agreement with you. You remain responsible to your landlord for the whole space.

Space sharing is a more flexible arrangement — two businesses sharing the same floor, often at different times or in different areas, under a licence to occupy or a space sharing agreement rather than a formal sublease. It’s common in warehouses where one business might use the space Monday to Wednesday and another Thursday to Friday, or where one occupies the front half and another the back.

For most small businesses sharing warehouse space, a space sharing agreement or licence to occupy is the simpler and more practical option. It’s less formal than a sublease, easier to exit, and better suited to the kind of flexible arrangements that work well in a shared warehouse environment.

Almost certainly yes — and this is the first thing to check before you do anything else.

Most commercial leases in Australia include a clause that requires you to get written consent from your landlord before subletting or sharing your space with another business. This clause exists to protect the landlord — they want to know who is in their building and what they’re doing there.

The good news is that most landlords will give consent if you ask properly. They want their tenants to stay financially stable — a subtenant helping you cover rent is generally in everyone’s interest. What they don’t want is to find out after the fact that you’ve put a business they know nothing about into their property.

This is where it gets important — and where a lot of businesses get caught out.

In Australia, the type of activity that can be carried out in a commercial space is governed by zoning laws and, in some cases, the relevant state retail licence legislation. A warehouse zoned for industrial or commercial use generally allows businesses to operate — manufacturing, assembly, distribution, trade, and so on. But not all spaces are created equal, and not all activities are permitted in all spaces.

This matters because there’s a big difference between a space where a business can simply store goods and a space where they can actively work — producing, assembling, packaging, or running day-to-day operations. At Unleased, every space we list is suitable for businesses that need to actually work in the space, not just store things. That’s a deliberate choice and it matters for the businesses sharing your floor.

Even if you’re sharing space with someone you know and trust, you need something in writing. Not because you expect things to go wrong — but because having clear terms agreed upfront is what stops small misunderstandings from becoming big problems.

A good space sharing agreement covers:

• Which part of the space is yours and which part is theirs — even if it’s a loose division, define it
• Access hours — when can each party be in the space, and is there any shared time
• Rent contribution — how much are they paying, when, and how
• Shared facilities — who uses the bathroom, the loading dock, the forklift, and how
• Utilities — how are power, water, and internet split
• Insurance — each business should hold their own public liability insurance at minimum
• Notice period — how much notice does either party need to give to end the arrangement
• What happens if something goes wrong — a simple process for resolving disputes

You don’t need a lawyer to write a space sharing agreement, but having one reviewed by a commercial lawyer before you sign is worth the investment — particularly if it’s a longer term arrangement or involves a significant rent contribution.

At Unleased we provide standard space sharing agreement templates that cover the basics — a practical starting point that most businesses can use as is or adapt to their situation.

Your existing public liability insurance almost certainly covers your business and your activities in the space — but it probably doesn’t cover another business operating in the same space. This is one of the things most people don’t think about until something goes wrong.

The simplest approach is to require the incoming business to hold their own public liability insurance as a condition of the arrangement. Ask to see their certificate of currency before they move in and make sure it’s current. Most legitimate small businesses will already have this — if they don’t, that’s a conversation worth having before you hand over the keys.

There’s no fixed formula, but most space sharing arrangements are calculated as a proportion of the rent you’re paying. If you’re paying $3,000 a month for 300sqm and you’re sharing 100sqm with another business, a reasonable starting point is $1,000 a month — roughly a third of your rent for a third of the space.

In practice, you might charge slightly more or less depending on:

• Access hours — if they have full access including weekends, that’s worth more than limited hours
• Shared facilities — a space with a loading dock, forklift, or quality amenities commands a premium
• Location — inner suburban industrial space is worth more than regional
• Market rate — what is similar space actually leasing for in your area

The goal isn’t to profit from your subtenant — it’s to offset your rent so the space works harder for your business. Even recovering 30–40% of your rent from a space you weren’t fully using is money back in your pocket every single month.

This is the question most operators think about last but should think about first. The wrong business in your space — even paying good rent — can create more problems than they solve.

A few things worth considering:

• Compatible hours — if you both need the space at the same time every day, it’s going to feel crowded quickly
• Compatible activities — a food producer and a chemical storage business are probably not ideal neighbours
• Similar size and stage — a business at a similar stage to yours is more likely to be a stable, reliable subtenant
• Communication style — you’ll be in close proximity. Make sure you can have a direct conversation with them if something needs to change.

At Unleased, we verify every business that enquires before connecting them with a space owner. That means you’re only hearing from businesses that are legitimate, operational, and genuinely looking for working warehouse space — not storage hunters or tyre-kickers. You still make the final call on who comes into your space. We just make sure the candidates are worth your time.

For most businesses with genuinely underutilised space — yes, absolutely.

The maths is simple. If you have 150sqm of warehouse space sitting idle and you’re paying $20 per sqm per month, that’s $3,000 a month going to waste. Finding a business to share that space — even at a modest rate — puts money back in your business every month without you having to do anything differently.

The businesses that do this well treat it as a long term arrangement, not a short term fix. When you find the right business to share with — compatible activities, compatible hours, clear terms — it becomes a genuinely good working relationship. We’ve seen it happen, and it’s a much better outcome than an empty bay and a rent bill that never goes down.