A commercial lease letter of intent shows that you’re serious about leasing a property, but not necessarily on the landlord’s terms. The letter does not obligate your organization to accept the landlord’s terms, but instead acts as the basis for an agreement if the framework is acceptable to both parties. This guide will walk through writing a commercial lease letter of intent and how to lay the foundation to get terms you can agree to.
What is a Commercial Lease Letter of Intent?
A commercial lease letter of intent is a document that creates the foundation of a lease deed between a landlord and tenant. The letter will include a broad overview of the final lease agreement, showing that the company is serious about renting the space if terms can be reached.
The letter should also include the exact accommodations your organization requires from the space so there aren’t any surprises later in the lease negotiation. Putting a solid letter of intent together lets potential landlords know that you’re serious about leasing a commercial property and provides an outline for further discussions and agreements.
How to Prepare to Write the Lease Letter of Intent
Organizing all your consideration is essential when it’s time to write a letter of intent. There is also information that every letter of intent should include to ensure the process goes smoothly.
Gather Information on the Space
It is easier to negotiate when you know more about the space you’re leasing. Dig into any past issues the building has experienced as well as the neighborhood and what you can expect in that part of town.
This extra info will put you in an advantageous position as you write the letter of intent and develop contract terms. It’ll also give you a chance to decide if tenant improvement allowances will be necessary.
How Do You Want to Present Your Company?
Your potential landlord will want to know as much about your organization as possible. It doesn’t make sense for a property owner to enter an agreement blindly, so come up with a written profile that you can include somewhere in the letter of intent.
The landlord will need to know you’re a serious bidder from a professional organization.
Understand That the Letter of Intent is Non-Binding
Perhaps the most important thing to include in your letter of intent is a clause making it clear that the letter is not legally binding. You’re merely exploring the option at this time, so you don’t want the landlord to assume the letter is a contract or use it as such in bad faith. Develop an explicit written clause before writing the rest of your letter.
Agree Internally on a Reasonable Expiry Date
It is a good idea to discuss a reasonable expiry date for the letter of intent with other decision-makers within your organization. This date is when you’ll move on to other options if the landlord doesn’t respond to the letter. Ensure you give yourself enough time to find another space if this inquiry doesn’t work out.
Ensuring you have this information gathered and agreed upon before you begin writing will make the next steps much more straightforward.
6 Things Every Commercial Lease Letter of Intent Should Include
You’re ready to begin creating the actual letter once you’ve gathered the information above, and the property owner won’t have to keep coming back to you for additional details. The letter of intent should include the following six things:
1. A Statement Declaring Your Interest in Leasing the Space
Clearly state why you’re writing the letter and why the property owner should continue reading. Include the property’s address and let the landlord know that you’re interested in leasing it under specific terms. Then go over your terms and include the non-binding clause.
2. A Description of Your Company
Your potential landlord will want to know a bit about you, including information on your business model, business activities, goods and services sold, and target markets. This will help them understand why you need the space and what you’ll do with it. Proof that you can afford the rent may also be necessary, particularly if you’re organization is a startup.
3. An Outline of On-Site Employees, Equipment, and Machinery
Inform the landlord about who and what will be on the premises. Some landlords might not want heavy machinery moving through the parking lots, and there’s a chance there might not be enough room to accommodate everyone and everything.
Be upfront with this information to prevent future problems.
4. Your Business Hours
The landlord will require information on your opening hours to avoid conflict with neighbors. The property type and location will determine whether your business hours are acceptable. Honesty is essential in this situation to avoid conflict.
5. An Overview of Your Current Space
The property owner might want to know a bit about your current space. This data provides further insight into whether the building you intend to lease has enough room to accommodate your operations.
6. Contact Details
Be sure to include detailed contact information in the letter of intent so the property owner can contact you for further discussions. Your commercial lease letter of intent is the first step in building this relationship, and your contact details should request additional communication to keep the process moving.
Including this information in your commercial lease letter of intent ensures the landlord will know enough about your organization to continue exploring the business relationship. If you are utilizing the services of a commercial real estate broker, their contact details should be exchanged as well.
Get Help Writing a Commercial Lease Letter of Intent
There’s a lot of information to include in these write-ups, and they can be a daunting task. If you’re unsure about your commercial lease letter of intent’s quality or content, professional tenant representation in Washington DC can ensure the document furthers your goal of renting some space for your company.
The Genau Group can help you create your commercial lease letter of intent, ensuring that you word the information clearly to achieve your desired result. Contact us for more information or some guidance on your next commercial lease letter of intent.