How to Use the Commercial Lease LOI Comparison Prompt to See Which Deal Actually Costs Less

When a small business owner gets two or three letters of intent from landlords, the lowest rent per square foot often looks like the obvious winner. Then the free rent, tenant improvement allowance, escalations, and personal guaranty start to change the picture. The Commercial Lease Letter of Intent Comparison for Small Business Tenants: Side by Side Terms, Net Effective Rent Math, Guaranty and Exclusive Use Risks, and a Counter Proposal prompt lines the offers up, works the rent math step by step, and points to the terms that cost the most later.

What the prompt produces

1. A side by side terms table with one column per letter of intent.
2. Rent math for each offer: base rent by year, total over the term, free rent value, tenant improvement allowance, and net effective rent per square foot.
3. A year one occupancy cost including estimated CAM and taxes.
4. A build out gap comparing the allowance with your contractor's estimate.
5. A risk table for personal guaranty, exclusive use, delivery condition, permits, and assignment.
6. A must haves check for each offer.
7. A recommendation and counter proposal with asks in priority order.
8. Questions for the landlord and items for an attorney.

How to fill the inputs

LoiTerms holds the money terms from each letter: size, base rent, escalation type, lease type, term, free rent, allowance, CAM and tax estimates, and deposit. Escalations can be a percentage or a fixed dollar step, and the prompt handles both.

LoiConditions covers the terms that do not show up in the rent math but can matter more: how long your personal guaranty lasts, whether you get an exclusive on your use, what condition the space is delivered in, renewal options, and permit contingencies.

BusinessUse explains what you will do in the space. A coffee shop, a salon, and an accounting office care about very different terms.

BuildOutEstimate is your contractor's number. Without it, a generous allowance and a small one are hard to compare in real dollars.

MustHaves lists deal breakers in plain words. The prompt checks every offer against them.

Reading the example output

The example compares two offers for a specialty coffee shop.

• Offer A has lower rent and a larger allowance, and its net effective base rent after allowance works out to about $23.85 per square foot per year.
• Offer B works out to about $31.80 per square foot per year on the same basis.
• On paper, A wins. But A has a personal guaranty for the full term, no exclusive on coffee, delivery as a bare shell, and no way out if permits fail.
• B caps and burns off the guaranty, protects the shop from a competing coffee tenant, delivers working HVAC, and includes a permit contingency.
• The recommendation picks B and lists counter asks: a larger allowance, more free rent, an earlier guaranty burn off, and a cap on controllable CAM increases.

The point of the comparison is not to find the cheapest number. It is to see what each offer really costs and what risks come with it.

Tips for better results

• Ask each landlord for last year's actual CAM costs, not just the estimate.
• Get your build out estimate before comparing offers. It changes the math more than most owners expect.
• Keep the comparison table updated as counters come back so you can see what moved.
• Share the output with your attorney before any lease draft is prepared.

Mistakes to avoid

• Do not compare base rent alone. Free rent, allowances, and escalations change the real cost.
• Do not sign an LOI without checking which parts are binding. Many are mostly non binding, but some clauses can be binding.
• Do not accept a full term personal guaranty without asking for a cap or burn off.

Who it is for

Small business owners leasing their first or second location, restaurant and retail operators, franchisees, and the advisors who help them review offers.

A practical negotiation order

Collect every LOI and your contractor estimate. Run the prompt and pick the offer that meets your must haves, not just the lowest number. Send a counter with your top three asks, then rerun the comparison when the landlord responds. Once terms are settled, have an attorney review the LOI and the lease draft before you sign anything.

Related PromptDig links

Open the Commercial Lease Letter of Intent Comparison for Small Business Tenants: Side by Side Terms, Net Effective Rent Math, Guaranty and Exclusive Use Risks, and a Counter Proposal prompt with your offers. For more business prompts, Browse more prompts. If you have a lease checklist other owners could use, Share a prompt.