Free Commercial Lease Letter of Intent Template

A commercial lease letter of intent sets out the main terms a prospective tenant and a landlord expect to include in a lease, before the lease itself is drafted. It covers the space, the rent, the term, and who pays for what.

Commercial leases are long and expensive to draft, so almost nobody starts there. The letter lets both sides settle the economics first, and the lawyers then write to terms that are already agreed.

Either side may send it. Landlords often issue one after a viewing, and tenants or their brokers frequently send one to open negotiation on a space they want.

The document is unusually consequential for its length. A commercial lease can run many years, and terms conceded at this stage are difficult to claw back once drafting begins.

Send a commercial lease letter of intent once you have seen the space and want to negotiate seriously. Typical moments include:

• A tenant has identified a space and wants to open terms with the landlord.
• A landlord is responding to interest and wants to set the parameters.
• A business is comparing two or three spaces and needs terms it can weigh against each other.
• An existing lease is coming up for renewal and both sides are renegotiating.
• A tenant needs fit-out work agreed before committing.
• A franchise or multi-site operator is standardising terms across locations.

Short or simple lettings sometimes go straight to a lease. The letter earns its place whenever the term is long, the rent is significant, or the space needs work before anyone can occupy it.

A commercial lease letter of intent usually runs one to two pages and reads as a term sheet.

The Parties and the Premises

Name the landlord and prospective tenant, and identify the space: address, unit, floor, and approximate area.

Term and Options

State the length of the initial term, the proposed commencement date, and any renewal options and how they are exercised.

Base Rent and Increases

Give the starting rent, how it is calculated, and the mechanism for increases across the term.

Operating Expenses and Outgoings

Say how costs such as maintenance, insurance, taxes, and common area charges are shared. This is where the real cost difference between deals usually sits.

Deposit and Guarantees

State the security deposit and whether any personal or corporate guarantee is expected.

Condition, Fit-Out, and Allowances

Describe the condition the space will be delivered in, what work each side does, and any contribution toward the tenant’s fit-out.

Permitted Use and Exclusivity

Define what the tenant may use the space for, and whether any exclusivity applies.

Free Rent, Expiry, and Signatures

Note any rent-free period, add an expiry date, and provide signature lines.

Tenants tend to negotiate hard on base rent and barely at all on the terms that turn out to matter more.

Operating expenses deserve close attention. How costs are apportioned, whether there is a cap on increases, and what the landlord may pass through can easily outweigh a difference in headline rent across a long term.

Get the delivery condition in writing. What the landlord will complete, to what standard, and by when determines whether you can actually open on the date you planned.

Look hard at assignment and subletting. If your circumstances change, the ability to hand the space on is what limits your exposure, and it is far easier to agree at this stage than later.

Tip: Ask what the rent figure includes before comparing spaces. Two quotes on very different bases are not comparable, and working out the total occupancy cost for each is the only way to see which deal is actually cheaper.

A commercial lease letter of intent takes about half an hour once the terms are settled. Document Genius walks you through each section with simple questions.

1. Identify the Parties and the Space

Open with the date, both parties, and the premises.

2. Set the Term and Commencement

Length, start date, and any options to renew.

3. State the Rent and How It Rises

Base rent, the calculation, and the increase mechanism.

4. Deal With Operating Costs

Say how expenses are shared and whether any cap applies.

5. Cover Condition, Fit-Out, and Use

Delivery standard, allowances, permitted use, and exclusivity.

6. Mark the Binding Clauses, Sign, and Send

Say what binds, add an expiry, and pass it to counsel. Start yours now and have it ready today.

Most commercial lease letters are written to be non-binding on the letting itself, with a few clauses intended to bind.

Confidentiality, exclusivity or a short period off-market, expense allocation, and governing law are the usual exceptions. Say which sections bind rather than leaving it to inference, and include a line confirming that a signed lease will govern the relationship.

Be careful with possession. Allowing a tenant into the space, or accepting rent, before a lease is signed can change the parties’ positions in ways neither intended, so keep access and payment aligned with the documentation.

Once signed, expect the landlord’s lawyers to produce a draft lease built on these terms. Reading it against the letter, line by line, is worth the hour it takes.

Commercial tenancy rules, security of tenure, and whether a preliminary document creates obligations all vary by jurisdiction and by the type of premises. Have a commercial property lawyer review the letter and the lease before you commit.

Landlords send these as often as tenants do, and the drafting priorities differ.

Set the parameters rather than the final terms. Issuing a letter that states base rent, term, and how expenses are handled gives you a starting position without conceding the detail that belongs in the lease.

Ask for what you need to assess the tenant. Accounts, trading history, guarantor details, and the intended use are all reasonable to request at this stage, and it is easier to ask before terms are agreed than after.

Be specific about the space’s condition. Committing to deliver in a particular state, or explicitly not committing, avoids the most common dispute in the weeks before a tenant opens.

Keep the offer time-limited. An expiry date prevents your terms being shopped around other landlords while the space sits empty, and it gives you a natural point to revisit the numbers.