From letter of intent to lease
Letters of intent are usually non-binding as to the deal itself but may include binding terms on confidentiality or exclusivity. The landlord's lawyer typically prepares the first lease draft, often from a building form, and the tenant's comments come back as a markup or a rider. Rent escalations, operating expense and tax pass-throughs, and the method of measuring the space all affect the real cost, and in New York City office leases the rentable area can be noticeably larger than the space you can actually use. In New York City, confirming that the intended use fits the certificate of occupancy and zoning before signing avoids costly surprises.
Terms that carry the most weight
Negotiate the guaranty early, including whether it can be limited once the space is surrendered. Build-out terms should cover who performs the work, the allowance, and what happens if delays push back the opening. Assignment and subletting rights matter if you might sell the business or downsize. Renewal options, early termination rights, and co-tenancy or exclusive-use clauses for retail tenants can matter as much as the base rent. Repair and maintenance duties for building systems and storefronts should be assigned clearly rather than left to a general clause. Accessibility obligations should be allocated clearly, since both landlords and tenants can be responsible under federal disability law.
How we approach the negotiation
We start with your business plan and the terms you cannot do without, then rank the remaining points. For landlords, we focus on protecting income and limiting open-ended obligations. Market practice varies by building type and neighborhood, so we discuss which requests are realistic in your market. Commercial lease negotiation usually works when both sides finish able to work together over the term, and we keep that in mind while pressing the points that matter to you. We also coordinate with your broker so legal points are raised before the business terms harden.
