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Looking for a commercial space requires several steps before eventually signing a commercial lease. Once you have found the perfect office, warehouse, retail or industrial location, a commercial lease letter of intent becomes the official document to start a negotiation for your commercial space.
As a business owner, the letter shows the landlord that you are serious about leasing the space while establishing basic terms for the lease.
To get the process started, here's how to write a letter of intent for a commercial lease.
When preparing a commercial letter of intent, or commercial LOI, organization can save plenty of time and resources. Take the time to gather all of the details about the commercial space.
Often times, you will have found the property through a commercial realty website or realtor.
Typically, they provide basic information like asking rent price, square footage and floor plans. In addition, you might have research comparable properties for lease in the area.
Gather as much information as possible so that you can create a detailed LOI. To write your commercial lease letter of intent, you will need all the details provided from the listing.
To start writing a commercial lease LOI, find a template or sample to work with. There are many commercial lease letter of intent templates and samples available online.
While you don't need to download them directly, they will give you the format that you need to follow without over-complicating the process. Most letter of intent lease examples contain the major terms including premises, square footage, rental rate, lease type and term.
Additionally, your letter may include any tenant or landlord improvements, security deposit and commencement date. Your details here will serve as the basis for negotiating your commercial lease letter of intent.
Follow a template to include the critical negotiating points for your lease.
In addition to the commercial lease terms, consider including a formal introduction in your letter of intent. A brief letter will inform the landlord about your company's industry, operations and ability to perform as a tenant.
This is an opportunity to express your intent to lease the commercial space. You can include details about why your company would be a great fit for the location or building.
Plus, you can include any details that make you stand out as an ideal commercial tenant. This LOI introduction can create a positive first impression with the landlord, possibly leading to a better commercial lease agreement.
Once you have a letter of intent that includes the basic deal terms and perhaps, a brief introduction of your company, include a clause that states the commercial lease LOI is non-binding.
While most LOIs are considered non-binding, you should explicitly write that neither party has a binding obligation to execute the lease.
The purpose of the letter is to work on drafting a lease and coming to an agreement. You do not want to leave any interpretation as to whether the agreement is binding or non-binding.
This way, your LOI is written in a manner than does bind either party beyond the scope of negotiating the lease.
Furthermore, write a commercial lease letter of intent expiration date. This is particularly beneficial for you because it gives the landlord a deadline to respond. A reasonable LOI expiration date ranges between 5-10 days. Of course, if you are looking at multiple commercial spaces or need a quicker response, you can adjust the date accordingly.
This gives you some flexibility when negotiating between multiple properties, avoiding wasted time on landlords who are not interested in reaching a lease agreement.
Once you have found a commercial space to lease, consider writing a letter of intent to the landlord. Start out by collecting all the important information about the space.
Next, follow a commercial lease letter of intent template. If you have the time, consider writing a brief introduction to include with the letter.
Then, include that the letter of intent is non-binding with an expiration date. By following these steps, you can write a commercial letter of intent that sets up the lease negotiation process successfully.
Oh yes we did. We edited a real letter of intent to show you what we would modify.
If you prefer to watch videos, here are my top 6 concepts to think about when you are constructing or reviewing an LOI. There is also a special offer in the video (yay!).