LOI Guide9 min readApril 18, 2026

Commercial Real Estate Letter of Intent: What Goes In It, and a Template You Can Actually Use

A practical, plain-English guide to the commercial real estate letter of intent — what every section means, what tenants and landlords usually miss, and a working LOI template.

A commercial real estate letter of intent — usually just called an LOI — is the first real document of a deal. It sits between a handshake and a lease. It is not binding on most terms, but it sets the economic and structural frame for everything that follows. A sloppy LOI means a rough lease negotiation. A tight LOI means the attorneys can do their job instead of re-litigating what was already agreed.

Almost every LOI template floating around online is either a 1997-era Word document or a paywalled download from a site that wants your email. This guide walks through what actually belongs in an LOI, section by section, with the language we use when we draft them. If you just want the template, scroll to the end — or skip to the LOI Generator and build yours in three clicks.

What a Letter of Intent Actually Does

An LOI pins down the business terms of a commercial lease before either side spends money on legal review. It is usually 2-4 pages. Most of it is non-binding — both sides reserve the right to walk away. A small number of provisions are binding, and it matters which ones you mark as which.

The LOI has three jobs:

If any of those three are vague in the LOI, they will be vague in the lease, and you will find out a year from now when a dispute comes up.

The Sections Every Commercial LOI Should Have

Every LOI we draft follows the same skeleton. Some sections get longer or shorter depending on the deal — retail LOIs spend more time on exclusivity and co-tenancy, office LOIs spend more on tenant improvement allowances and signage — but the spine is the same.

1. Parties

Full legal names of the landlord and tenant entities. Not the brand name, not the DBA. If the tenant is a new LLC formed for the lease, say so and flag whether a personal guaranty is expected (it probably is, especially for restaurants, retail, and any first-time operator).

2. Premises

Exact address, suite number, and rentable square footage — plus the measurement standard used (BOMA, gross, usable). For retail, include a site plan or pad designation. For multi-tenant office, clarify common area load factors. Vague premises definitions are the single most common source of lease disputes we see.

3. Use

What the tenant will be doing in the space. Do not agree to "retail" or "general office use" — that is too narrow later when you want to change concepts, and too broad for the landlord who wants control over the tenant mix. A solid use clause names the primary use plus any ancillary activities the tenant may need: "a full-service restaurant serving [cuisine] with on-premises alcohol service, plus incidental catering, delivery, and retail sale of branded merchandise."

4. Term and Commencement

The initial term length, any renewal options (how many, how long, at what rent), and when the lease starts. Commencement language is where deals get messy. Distinguish between:

If the landlord is building out the space, the LOI should say rent commences on the earlier of (a) a fixed number of days after substantial completion or (b) the tenant opening for business. The worst LOIs are silent on this and it becomes a two-month fight.

5. Base Rent and Escalations

The starting rent (usually expressed in dollars per rentable square foot per year), the payment cadence, and the escalation structure. Typical patterns:

Be specific. "Market rent at renewal" with no process for determining market is a landlord-favorable trap.

6. Operating Expenses (NNN or Gross)

This is where most tenants get surprised. Clarify upfront whether the deal is:

If it's NNN, ask for an estimated current NNN charge and an audit right. If it's gross, ask whether there is an expense stop and what counts toward it. We have seen "gross" leases that carved out utilities, janitorial, HVAC maintenance, and property taxes — leaving the tenant paying 80% of what a NNN deal would have cost.

7. Tenant Improvement Allowance (TIA) and Free Rent

Dollar amount per square foot of TIA, what it covers, and whether it's paid by the landlord directly to contractors or reimbursed to the tenant. Plus any free rent or abated rent — how many months, and whether it includes NNN charges or only base rent. (It should include NNN if you can get it.)

8. Exclusivity and Co-Tenancy (Retail)

For retail LOIs, this section is often the most important. Exclusivity is the tenant's right to be the only [concept type] in the center. Co-tenancy is the tenant's right to reduce rent or terminate if anchor tenants leave. Both are negotiated in the LOI, not the lease — once the business points are set, the lease language is just cleanup.

9. Personal Guaranty

For smaller tenants, landlords almost always ask for a personal guaranty. Common structures:

Negotiate this in the LOI. Asking for it to come off the lease after it's been drafted is much harder.

10. Binding vs. Non-Binding

State clearly which provisions are binding and which are not. Standard pattern: everything is non-binding except (a) confidentiality, (b) exclusivity during the negotiation period, and (c) expense reimbursement if the deal dies.

11. Expiration

When does the LOI itself expire if the lease isn't signed? Thirty to sixty days is standard. Beyond that, one side is usually getting strung along.

Mistakes We See in 80% of LOIs

After reviewing thousands of these, a few patterns repeat:

A Working LOI Template

Here is the skeleton we use as a starting point. Drop your deal-specific terms in, send it, and iterate. You can also generate a polished, on-letterhead version of this in about three minutes using our LOI Generator — saves you from rebuilding the formatting every time.

LETTER OF INTENT

Date: [DATE]

TO: [LANDLORD LEGAL NAME]
FROM: [TENANT LEGAL NAME]

RE: Proposed Lease of [PREMISES ADDRESS, SUITE #]

1. PREMISES. Approximately [SQ FT] rentable square feet at [ADDRESS], as depicted on Exhibit A.
2. USE. [PRIMARY USE, plus ancillary activities]. No other use without landlord consent.
3. TERM. [X] years commencing on the Rent Commencement Date.
4. RENT COMMENCEMENT. The earlier of (a) [X] days after substantial completion of landlord's work, or (b) tenant opening for business.
5. BASE RENT. $[X] per rentable square foot per year, increasing [%] annually.
6. OPERATING EXPENSES. Lease to be [NNN / Modified Gross / Full Service]. [Estimated current charges: $X/sf.]
7. TENANT IMPROVEMENT ALLOWANCE. $[X] per rentable square foot, disbursed [as work progresses / upon completion].
8. FREE RENT. [X] months base rent abated, commencing on Rent Commencement Date.
9. OPTIONS TO RENEW. [X] options of [X] years each at [fair market rent / X% escalation].
10. EXCLUSIVITY. Tenant shall have the exclusive right within the center to operate as a [CONCEPT], subject to customary exceptions.
11. GUARANTY. [Good guy / burn-down / full-term] guaranty from [GUARANTOR NAME].
12. CONTINGENCIES. Subject to mutual negotiation of a lease and tenant's due diligence during a [X]-day period.
13. BINDING PROVISIONS. This LOI is non-binding except for Sections 14 (Confidentiality) and 15 (Exclusivity During Negotiation).
14. CONFIDENTIALITY. Parties agree to keep terms confidential except to their professional advisors.
15. EXCLUSIVITY DURING NEGOTIATION. Landlord shall not solicit or entertain competing proposals for [X] days from the date of this LOI.
16. EXPIRATION. This LOI expires [X] days from the date above if a lease has not been executed.

Signed,
[TENANT]                         [LANDLORD]

Before You Send It

Three last things worth checking before the LOI goes out:

An LOI is not the lease, but it is what the lease will look like. Spend the hour getting it right.

Tools on this site: The LOI Generator turns the structure above into a polished, on-letterhead LOI you can send in three clicks. Free. If you later receive a counter with redlines, the Redline Analyzer will summarize what changed in plain English. And before you sign the lease itself, the Lease Reader gives you a plain-English read of the full document. This article is educational, not legal advice — always work with an attorney before signing.

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