Everything you need to know
before signing a commercial lease

Before any other analysis, three numbers matter most: (1) estimated daily foot traffic past your door, (2) monthly rent as a % of projected revenue, and (3) competitor count within 500m. If these three stack up, everything else is refinable. If they don't, no amount of great branding will save you.

Demographics shift dramatically within short distances in Australian cities. A suburb of young professionals (Fitzroy, Newtown) has fundamentally different purchasing behaviour to a suburb of families (Box Hill, Parramatta). Median income, age profile, and household type are the three demographic variables that most predict category spend.

Anchor tenants (supermarkets, major pharmacy chains, large format retail) generate habitual foot traffic that benefits nearby businesses. A café or retail store within 100m of a busy Woolworths draws from that traffic pattern. Landlords know this — which is why anchor-adjacent rents are higher. The question is whether the traffic premium justifies the rent premium.

The rent affordability test: take your monthly rent and divide it by 0.12. That's the monthly revenue you need to make the rent manageable. Then divide that by your average transaction value and by 26 trading days. That's your required daily transaction count. If that number seems achievable based on observed foot traffic — you might have a viable site.

The rent affordability formula

Is this rent actually affordable for your business?

Most people look at rent as a monthly cost. The right way to look at it is as a percentage of your projected revenue. Here is the simple test every founder should run before signing anything.

Sydney, NSW — Market overview

Highest commercial rents in Australia. Inner-west suburbs (Newtown, Surry Hills) offer better ROI than CBD for most SMEs.

Low competition

0–2 competitors within 500m

Good sign

Market may be underserved. Check that demand exists before assuming it is an opportunity.

Moderate

3–5 competitors within 500m

Healthy

Proven demand exists. Differentiation becomes the key success factor.

High competition

6–9 competitors within 500m

Caution

Market is competitive. You need a clear point of difference or superior location.

Saturated

10+ competitors within 500m

Avoid

Unless foot traffic is exceptional, margin pressure will be severe from day one.

Q: How long should I spend analysing a location before signing?

A: At minimum: one full week of data gathering. Visit the site at least 3 times — once on a weekday morning, once on a weekday lunch, once on a weekend. Run a data analysis (like Locatalyze) to check demographics, competition and financials. Then speak to neighbouring business owners. Most founders who regret their location signed within 2 weeks of finding the site.

Q: Can I trust a data analysis for a decision this big?

A: Data analysis is a tool, not a replacement for professional advice. Locatalyze gives you a fast, data-driven starting point — competition counts, demographic scoring, financial modelling. Estimates are based on available public data and calibrated benchmarks; actual performance will vary. It narrows down which sites are worth deeper investigation. Before signing any lease, also get advice from a commercial real estate agent and a business accountant.

Q: What is the single most important thing to check?

A: The rent-to-revenue ratio. Everything else — foot traffic, demographics, competition — ultimately flows through to your P&L. But the rent is your fixed commitment. A location with moderate foot traffic and cheap rent can be far more profitable than a premium location with high rent.

Q: Does Locatalyze work for businesses outside the food and fitness industry?

A: Yes. The financial model works for any business where you can define an average transaction value and estimate a daily customer count. We have built-in calibrations for cafes, restaurants, retail, gyms and takeaway — but the scoring engine works for any retail or service business.