Fair Wear and Tear in Victorian Commercial Leases: What Warehouse Tenants Need to Know

A pristine warehouse floor is a myth in a high-volume Melbourne distribution centre, yet many landlords expect exactly that when a lease ends. Fair wear and tear is broadly understood as the natural deterioration that comes from reasonable, ordinary use of a premises — but in practice, the line between expected aging and billable damage is often blurred, and getting it wrong can mean losing part of your bank guarantee.

This guide walks through how fair wear and tear is generally assessed for Victorian industrial tenancies, where AS 4084-2023 racking compliance intersects with your make good obligations, and how to approach the end-of-lease process with confidence. It’s general guidance, not legal advice — for anything specific to your lease, it’s worth having your own contract reviewed.

Table of Contents

• Understanding fair wear and tear in Victorian commercial leases
• Fair wear vs damage: practical examples for industrial sites
• How AS 4084-2023 affects racking and safety equipment
• Managing your end-of-lease make good

Understanding fair wear and tear in Victorian commercial leases

Fair wear and tear generally refers to the gradual deterioration caused by ordinary, reasonable use of a premises over the lease term. It’s not a fixed checklist — it’s usually assessed against what a similar business, operating normally, would reasonably cause over the same period. For a Melbourne warehouse, that might mean minor scuffing on walls or some floor fading — a very different standard to what’s expected of a corporate office fit-out.

Which legislation applies to your lease

The Retail Leases Act 2003 provides specific protections for retail tenants, and can place more responsibility on landlords for maintaining the building’s structure and essential services. Most industrial and warehouse tenancies, however, fall outside this Act and are governed instead by the general law of contract and lease-specific terms, alongside the Property Law Act 1958. This means your make good obligations for an industrial site are largely defined by what’s actually written in your lease — which makes the wording of your make good clause worth reviewing carefully with your own advisor before you sign, and again well before you exit.

Your condition report is your best evidence

Your initial condition report is the strongest evidence in any end-of-lease dispute. It establishes the baseline condition the property is compared against at handover. A detailed report with clear photos, taken at the start of your tenancy, is your best protection against being billed for aging that was already present — or for damage that was there before you moved in.

Fair wear vs damage: practical examples for industrial sites

The general distinction comes down to whether deterioration resulted from routine, careful operation, or from a specific incident. In a busy Melbourne warehouse, floor surfaces will show rubber marks from forklift tyres over time — that’s an ordinary byproduct of logistics work. A dent from a vehicle impacting a roller door or safety bollard, on the other hand, is typically treated as damage rather than wear, even if it was accidental.

Warehouse flooring and mezzanine surfaces

Fading protective sealants or light surface scuffing from pallet movement is generally accepted as fair wear. Deep gouges in the concrete slab, chemical etching, or unpatched holes left after removing racking are generally treated differently. Any structural compromise to a slab or mezzanine floor should be addressed professionally, both for handover and for AS 4084-2023 compliance if racking was involved.

Walls, partitions, and office fit-outs

In administrative areas, minor scuffing in high-traffic corridors is typically accepted as fair wear, while significant holes from mounted equipment or cracked partitions usually aren’t. If your business had an office fit-out with bespoke cabinetry, removing it often leaves scarring that needs professional patching and painting before handover. If you’re unsure how your specific fit-out will be assessed, our team can walk through a site assessment with you.

How AS 4084-2023 affects racking and safety equipment

In an industrial environment, safety standards add a layer that goes beyond the usual wear-and-tear conversation. A landlord might reasonably accept minor cosmetic scuffs on paintwork, but structural damage to storage racking is a safety issue, not just a cosmetic one. AS 4084-2023 sets out requirements for maintaining steel storage racking in a safe condition, and WorkSafe Victoria can issue a Provisional Improvement Notice if damaged or unmaintained racking is identified — a risk that applies to whoever is occupying the site, tenant or landlord, at the time it’s found.

Cosmetic scuffs vs structural compromise

The line between a cosmetic mark and a genuine structural issue comes down to the tolerances defined in AS 4084-2023 — a scratch on the powder coating is cosmetic, while a dent that exceeds the standard’s deflection limits is a structural fault that needs to be repaired or the component replaced, regardless of how it happened.

Safety barriers and line marking

Fading line marking is generally treated as expected wear in a high-traffic facility. Removed or damaged safety barriers, bollards, and guardrails are usually treated as a make good item, since safety infrastructure typically needs to be returned to the original fit-out specification. If you’d like your current racking and safety equipment checked before you plan your exit, our team can carry out a racking safety inspection.

Managing your end-of-lease make good

The make good process is often the most contentious part of an industrial tenancy exit. Starting this process three to six months before your lease expires gives you room to manage it properly, rather than facing last-minute pressure from a landlord close to the exit date. Coordinating separate contractors for electrical, flooring, and racking removal individually tends to be slower and less efficient than managing it as one project.

A practical make good checklist

A thorough exit typically involves removing pallet racking, mezzanines, and internal partitions without compromising the base building structure, then addressing floor repairs and patching any holes left in the slab or walls. Our end-of-lease make good service covers this end-to-end, from industrial dismantling through to final surface repairs, aiming to return the facility to a condition that satisfies your lease terms without unnecessary over-capitalisation on repairs that go beyond what’s actually required.

Getting the right advice early

Lease clauses around make good obligations can be dense, and it’s easy to either under- or over-deliver relative to what’s actually required. Working with a single point of contact for design, permits, and construction — with all structural changes signed off by Victorian-registered practitioners — helps keep the process straightforward and reduces the risk of disputes at handover.

As a member of the Master Builders Association of Victoria with 24 years’ experience, A1 Precision Solutions helps Melbourne businesses manage complex industrial decommissioning and make good projects, from racking removal to final compliance sign-off. If you’re approaching the end of a lease, we’re happy to help you plan the process properly.

Contact A1 Precision for a make good assessment.

Frequently Asked Questions

Does the Retail Leases Act 2003 cover fair wear and tear for warehouses?

Generally, the Retail Leases Act 2003 applies to premises used for retail trade or providing services to the public — most industrial warehouse tenancies fall outside it and are governed by the specific terms of the lease itself. Check your permitted use clause, or ask your lawyer, to confirm which framework applies to your lease.

Am I responsible for painting the warehouse walls before I move out?

This depends entirely on your lease’s redecoration clause. Minor scuffing from ordinary use is typically treated as fair wear, but many commercial leases include a specific requirement to repaint at the end of term regardless of condition — worth checking your lease directly rather than assuming.

Is pallet racking damage considered fair wear and tear in Victoria?

Structural damage to racking is generally treated separately from ordinary wear because of the safety implications under AS 4084-2023. Racking that exceeds deflection limits or has compromised uprights typically needs to be repaired or replaced regardless of how the damage occurred.

What happens if the landlord and tenant disagree on what counts as fair wear?

Dispute resolution options depend on your lease type and specific clauses — retail tenancies may have access to Victorian Small Business Commission mediation, while other commercial leases typically follow whatever dispute process is written into the contract. Detailed entry and exit condition reports are your strongest evidence in either case.

Should I get a racking inspection before my lease ends?

Arranging an inspection a few months before your lease ends gives you time to address any issues on your own terms, rather than having a landlord identify and bill for them later. A competent person assessing your racking against AS 4084-2023 can flag structural issues early enough to manage them cost-effectively.