The Letter of Intent is where your most important commercial lease terms are actually decided.
Do not treat the LOI like a formality
By the time the formal lease arrives, the rent, term, concessions, and flexibility may already be shaped by what you agreed to earlier.
The lease is built from the LOI
The LOI becomes the skeleton of the final lease. If a protection is missing, you may have to ask for it after the landlord believes the deal is already settled.
Negotiate before you commit
At the LOI stage, the landlord still has to win your business. Once the LOI is signed and the deal gains momentum, your ability to walk away becomes harder to use.
Five terms to secure in the LOI
Use this checklist before the deal moves into lease drafting.
1. Base rent and annual escalations The cap on future increases can matter more than the starting rate.
2. Lease term and renewal options Protect the runway you need without giving up future flexibility.
3. Free rent and improvement allowances Define the dollars, timing, and reimbursement conditions before drafting begins.
4. Expansion, contraction, and sublease rights Build in options for how your space needs may change.
5. Operating costs and who pays for what Clarify pass-throughs, exclusions, and audit rights while leverage is strongest.
Slow down where it counts.
A tenant representative can shape the LOI so the lease that follows already works in your favor.
This material is for general information only and is not legal advice. Consult a qualified commercial real estate attorney before signing any LOI or lease.
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