Most of the money in a lease is decided before anyone writes the lease. The letter of intent (LOI) is a short document that lays out the business terms so both sides can agree before paying attorneys to draft. It is where most of the leverage sits, because everything after it is a fight to change something already on paper.

Your job here is to write an LOI complete enough to prevent surprises, then negotiate the clauses that move real dollars. Industrial and retail get equal treatment. Office deals follow the same steps.

Throughout, NNN (triple net) means the tenant pays base rent plus its share of property taxes, insurance and common area maintenance (CAM), the cost of running shared areas.

This lesson builds on The Tenant Rep Process, The Landlord Rep Process and Deal Economics and Comparing Proposals. Course 12 teaches the sale-side version in Drafting the Letter of Intent.

What the LOI is, and what binds

An LOI is a proposal, not a lease. Most are nonbinding, meaning either side can walk away without liability. Two paragraphs are often made binding: confidentiality, and a no-shop, where the landlord agrees not to market the space to others for a stated period.

State which paragraphs bind, mark NNN charges as estimates so they cannot be argued to be a cap, and set a response deadline. Send any promise to negotiate in good faith to a Florida attorney, because whether it makes part of an LOI enforceable is a legal question. Florida also requires a lease longer than one year to be a signed writing (F.S. 725.01 and 689.01), so a nonbinding LOI never replaces the lease.

This is education, not legal advice. Confirm legal points with your broker of record and a Florida attorney.

What a good LOI contains

Write every term below into the LOI, because a blank becomes a lease dispute. Rentable square feet (RSF) is the square footage the rent is charged on, so state which measurement standard and edition produced it.

Term	What to write	Watch for
Parties	Exact legal names	Tenant entity, not a trade name
Premises and SF	Address, suite, RSF, measurement standard	Yards, covered docks, mezzanines counted or not
Term, commencement and options	Years; delivery and rent commencement dates; option number, length and rent (fixed or fair market)	Retail: earlier of days after delivery or opening. Option notice window
Base rent and bumps	Year 1 rate per SF per year; escalations (scheduled annual increases)	Fixed percent, dollar step, or CPI with floor and cap
NNN charges	Taxes, insurance, CAM estimate	Label as estimate; ask for a controllable cap
TI and free rent	Tenant improvement (TI) allowance per SF; free rent months	Whether NNN is due during free rent
Deposit and guaranty	Months and form; who guarantees, cap, burn-off	Covered below
Use and exclusives	Permitted use, narrowly written; retail exclusive category and remedy	Industrial: outdoor storage, hazardous materials. Retail: prohibited uses, exclusives held by others
Signage	Storefront, monument, pylon panel (a slot on the tall roadside sign)	Sign plan attached; permits a contingency
Delivery condition	As-is, vanilla shell (basic finished shell with utilities and restrooms) or a landlord work list	An exhibit, not a label
Contingencies	Permits, zoning, board approval, inspections	An outside date
Timing and brokerage	Response deadline, who drafts, target signing; who pays whom, per a separate written agreement	Commission basis: see Lessons 1, 5 and 7

Two sample LOIs (adapt, do not paste blind)

(a) Industrial: 25,000 RSF, one building

Subject: Letter of intent, [Street], [City], [county] County

Dear [Landlord contact]: [Tenant legal name] proposes the terms below for the space at [Street]. Except for paragraph 9, this letter is a nonbinding expression of intent.

Premises: about 25,000 RSF, measured under [standard and edition], with [number] dock-high doors, [number] grade-level doors, [clear height] clear height and [amps and voltage] power.

Term: 60 months from rent commencement, plus one 60-month option at [fixed rent or a stated percent of fair market rent], on [number] months' written notice.

Base rent: $[X] per SF per year NNN, with [percent] annual increases.

NNN charges: estimated at $[X] per SF per year, an estimate only, controllable CAM increases capped at [percent] per year.

Free rent: [number] months of base rent, and NNN [is or is not] payable during that period. TI allowance: $[X] per SF.

Deposit and guaranty: [number] months of base rent; guaranty by [entity], [capped and burning off as follows].

Use: [warehouse and light assembly], with outdoor storage of [items] in the fenced yard subject to zoning approval.

Delivery: as-is, with roof watertight and dock equipment and HVAC working on [date].

Confidentiality and no-shop through [date]. This paragraph is binding.

Brokerage: per separate written agreement. This proposal expires [date].

(b) Retail: 2,400 SF inline bay in a strip center

Subject: Letter of intent, [Suite], [Center name], [City]

Dear [Landlord contact]: [Tenant legal name] proposes the following. This letter is nonbinding except confidentiality.

Premises and term: 2,400 SF, suite [number], per the attached site plan; 5 years from rent commencement, plus two 5-year options at fixed steps of [percent].

Base rent: $[X] per SF per year NNN, increasing [percent or dollar step] annually. NNN charges estimated at $[X] per SF, estimate only, controllable cap of [percent].

TI allowance: $[X] per SF, paid on completion against paid invoices and lien waivers. Delivery: [vanilla shell per Exhibit A].

Rent commencement: the earlier of [90] days after delivery or opening. If permits are delayed beyond [date], commencement extends day for day, up to an outside date of [date].

Use: [category], with an exclusive for [category] and prohibited uses per the attached list. Signage: storefront and pylon panel at [position], per attached sign plan, subject to permits.

Deposit: [amount]. Guaranty: [form]. Brokerage: per separate written agreement. Proposal expires [date].

Lease clauses that matter

Course 13 covers these clauses from the investor side in Reading a NNN Lease. Here you negotiate them. Keep the Lease Clauses Decoder open for quick lookup.

Clause	Tenant wants	Landlord wants
Term and options	Options at fixed or capped rent; long notice window. Industrial: room to grow. Retail: enough term to recover the build-out	Fair market rent options; firm notice deadlines
Expansion and right of first refusal (ROFR)	ROFR on the adjacent bay; right to shrink after a set year	Right of first offer (ROFO) only, or none
Use and exclusives	Broad use; retail exclusive, with rent reduction as the remedy	Narrow use; exceptions for anchors, existing tenants and incidental sales
Assignment and subletting	Transfer to affiliates and successors without consent	Consent for all transfers; recapture (right to take the space back)
Maintenance and repair	Landlord keeps roof and structure. Industrial: capped HVAC and dock equipment replacement	Tenant maintains the inside; capital items passed through over useful life
CAM caps and audit	Cap on controllable items, admin fee limit, capital exclusion, audit right	Uncapped pass-through, short audit window
Default and cure	Written notice, cure period, no cross-default (one default triggering another lease)	Short cure, broad remedies
Hazardous materials (industrial)	Defined quantities for the actual use; landlord owns pre-existing conditions	Tenant indemnity, restoration and testing at exit
Relocation	None	Right to move the tenant
Holdover (staying past the end)	Modest rent after a short grace	High rent; damages for late turnover
Subordination and estoppel	SNDA (subordination, non-disturbance and attornment) from the lender	Automatic subordination; estoppel certificate (signed statement confirming lease terms) returned within a set number of days
Early termination	Right to terminate after a set year for a fee	Fee repaying unamortized TI, commission and free rent

Two cautions. In single-tenant industrial NNN deals the tenant often takes the roof, so it is negotiable. And the lease sets holdover rent; Florida's fallback is double the monthly rent (F.S. 83.06), covered in Lesson 7.

Personal guaranty and security

A personal guaranty is a signed promise by an owner to pay the tenant's obligations if the business does not. Landlords ask for one when the tenant is new, small or thinly capitalized. Florida's nonresidential landlord-tenant statute does not regulate guaranties or deposits, so both are negotiable.

Form	How it works	Lever for the tenant
Unlimited	Guarantor owes all rent and damages	Ask for a row below
Dollar cap	Exposure limited, such as 12 months of base rent	Trade a cap for longer term
Burn-off	Cap shrinks or ends after on-time performance	Tie it to no monetary default for 24 months
Good guy	Guarantor released once the tenant pays through surrender and returns the space	Agree to a notice period
Letter of credit	Bank guarantee instead of a personal promise	Bank fee versus personal exposure

Illustrative arithmetic from the settled industrial deal below: a guaranty capped at 12 months of base rent at the year 1 rate is 25,000 x $10.00 = $250,000 of exposure. A two-month deposit is $250,000 divided by 12 = $20,833.33, times 2 = $41,666.67. Have counsel draft every guaranty.

How to negotiate

Leverage follows vacancy. Published Orlando industrial vacancy figures disagree by source, so pull current submarket numbers and never quote one from memory. In a softer market (recently, larger industrial blocks), a tenant rep sends the same request to several buildings and asks for free rent, TI, caps and options; a landlord rep holds face rent and trades concessions for term and credit. In a tighter market (recently, well-located retail bays), the tenant rep starts early and negotiates what still moves, such as delivery, signage and CAM caps; the landlord rep takes several offers and tightens use and commencement dates.

Sequencing. Agree the economic range first (base rent, term, free rent, TI) so nobody wastes time on clauses in a deal that will not price. Then put must-have clauses in the LOI itself; a guaranty cap or roof responsibility first raised in the lease is a broken deal, not a tactic.

Give to get. Every concession comes with a request. Trade term for free rent, credit for a smaller deposit, a longer option notice for a lower escalation. Ask for more than you need in round one. Course 12 covers Psychological Tactics and BATNAs and Walkaway Points. Answer within a day or two to keep the deal alive.

(a) The landlord's broker says the TI request is too high

"I hear you, and I know the landlord has to recover that money. Here is what I can do: my client will take a lower allowance if the term goes from 5 years to 7. That gives your side more time to earn back the cost. Can you take that to the owner and let me know by Thursday?"

(b) The tenant's broker asks for lower escalations

"I understand you want more certainty on cost. The landlord priced this at 3.5 percent. I will ask my client whether 3 percent works if your client signs a 7-year term with a two-month deposit. Would your client do that? I will come back to you by Friday."

Roles and limits

You negotiate business terms (rent, term, free rent, TI, options, delivery) and run the process. Attorneys draft and advise on legal terms, including enforceability and whether to record a lease or memorandum of lease. Do not practice law, even when a clause looks simple.

Send it to counsel for any guaranty, indemnity, hazardous materials, default remedy, SNDA, recapture or relocation language, or anything you cannot explain to your client in plain words.

From LOI to lease

Most commercial leases start from the landlord's or its attorney's form, not a broker form, so expect the first draft to favor the landlord. The ranges below are rough planning figures from published broker guides and experience. They vary widely.

Step	Who	Rough range
LOI negotiation	Both brokers	About 2 to 4 weeks
Lease draft, then redlines (marked-up drafts showing changes)	Landlord's attorney, then tenant's attorney	3 to 7 weeks combined
Approvals and signing	Owner, lender, tenant	1 to 2 weeks
Permits and build-out	Tenant's contractor	Industrial: often two to six months. Retail: varies by format; restaurants take longer

Run zoning, environmental and building-condition checks while you negotiate. Keep an issues list with each open point, its owner and its due date. Insist on track changes and match every lease term to the signed LOI; if the landlord's form contradicts it, point to the LOI in writing. Approvals hide delays, from the landlord's lender to insurance certificates.

Common mistakes that cost money

Mistake	Cost	Fix
LOI silent on NNN during free rent	Months of surprise charges	State it
NNN estimate unlabeled, no cap	Dispute over the "quoted" cost	Label it; ask for a cap
Retail commencement not tied to delivery or permits	Rent starts on a shell	Earlier of days after delivery or opening, with outside date
Missed option notice window	Lost renewal rights	Calendar it at signing
Old form adds sales tax to rent	Wrong invoices for periods from October 1, 2025	Update the form; see Lesson 7

A worked example (illustrative negotiation, invented parties)

A fictional distributor, Bayline Supply Co., needs 25,000 SF of industrial space on a 5-year NNN lease in an invented Orange County business park. Every figure is assumed for teaching, not taken from MaxLife Commercial results or market surveys, so use your own comps. The settled column is the same lease as Worked example 1 in Lesson 5, so the numbers tie. Real rounds trade items against each other, as in the scripts above.

Term	Tenant's first proposal	Landlord's counter	Settled
Year 1 base rent (NNN)	$9.25 per SF	$10.75 per SF	$10.00 per SF
Annual increases	2.5%	3.5%	3.0%
Free base rent	5 months	1 month	3 months
TI allowance	$7.00 per SF	$3.00 per SF	$5.00 per SF
Deposit	1 month	3 months	2 months
Guaranty	None	Unlimited personal	12-month cap, burns off after 24 on-time months
Base rent paid over 5 years	$1,119,171.80	$1,418,766.88	$1,264,783.95
Net effective rent per SF per year	$7.55	$10.75	$9.12

Method. Net effective rent follows the Lesson 5 method: base rent paid minus the TI allowance, divided by SF times years, undiscounted, with free rent on base rent only and NNN left out because it is paid throughout. Each year is rounded to the cent.

Settled column. Year 1 is 25,000 x $10.00 = $250,000.00. Each later year adds 3 percent: $257,500.00, $265,225.00, $273,181.75 and $281,377.20, totaling $1,327,283.95. Free rent is $250,000 x 3 / 12 = $62,500.00, so rent paid is $1,327,283.95 minus $62,500.00 = $1,264,783.95. TI is 25,000 x $5.00 = $125,000. Net effective rent is ($1,264,783.95 minus $125,000) divided by 125,000 SF-years = $9.12.

The other columns use the same steps.

The opening positions are $3.20 per SF apart in net effective rent; the settled deal lands $1.57 above the tenant's opening and $1.63 below the landlord's counter. The guaranty cap cost the landlord no cash today but reduced its security, which is why it held out for a two-month deposit.

Key takeaways

Write the LOI before the lease, state which paragraphs bind, and fill every term
Guaranties are negotiable: cap, burn off or use a letter of credit
Settle economics first, put must-have clauses in the LOI, and give only to get
Send guaranty, indemnity and default language to counsel
Compare proposals on net effective rent, not face rent

Next: Lesson 7 covers Florida leasing law, commissions, and getting the deal closed.

The LOI and Lease Negotiation