What Is a Lease Proposal?

A lease proposal is a business offer that is usually given to a prospective tenant or client in order to rent a space. Landlords or real estate development companies usually draft lease proposals.  

According to an article by Forbes, the COVID-19 pandemic has certainly changed the landscape of business, particularly in the business of commercial and office space. The figures suggest the challenge of companies and business owners to stay afloat amid the global health crisis. As of January 2021, 33% of small to medium businesses reported they could not afford to pay the rent for that month. Another survey concerning commercial landlords reported 54% of them experienced a rise in either missed or late payments for commercial space. Lastly, research also showed that vacancy rates have shot up with office spaces reaching 90% vacancy while retail space increased by 50%. 

What Spaces Can You Lease?

Residential Space: Not everyone can afford to buy a house, much less build one. The alternative is to rent a house or an apartment. In big cities and urban centers, space is limited and it is lucrative for developers to develop and construct residential complexes that can accommodate hundreds of people. These can be apartments, condominiums, townhouses, compounds and essentially any place that a person can live. Renting a place is common and there are both pros and cons for having to rent instead of buy. On the other hand, if you are the person renting out the space, it is a supplemental source of income. It is passive form of income so it does not require active effort like that of employment or holding down a job. Commercial Space: In our present economy, buying and selling are part of everyday transactions. Businesses need to put up shop to market their products or services. With this, it is common practice for developers, particularly real estate developers, to build a commercial space and lease it out to all kinds of businesses. Malls, retail complexes, arcades, strips are all examples of commercial developments. Within these commercial spaces, you can find multiple businesses such as restaurants, clothing and apparel shops, boutiques and specialty stores, drugstores, etc. These businesses pay for rent the same way people pay their monthly dues. For decades the status quo has relatively stayed the same. However, it is important to note that since the ecommerce boom, brick-and-mortar stores have suffered greatly as people have migrated to online shops because of its convenience and efficiency. Physical stores are losing their appeal and their relevance is slowly chipping away. This is the constant challenge that is faced by a lot of retail companies and even some restaurant businesses; and adapting and innovating is their only chance of survival in the market. Office Space: Another type of commercial rent is leasing office space. Buildings, especially those concentrated in central business districts and key urban centers, house hundreds of different companies and industries. Developers often invest in the construction of commercial buildings then lease them out to various tenants. For example, business process outsourcing companies typically set up shop in these buildings-often in a plug-and-play manner- and pay rent like how a lessee pays a landlord. Other times, the owners or developers offer spaces that are ready-to-use and fully furnished. Utilities like internet connection are usually just factored in monthly dues. Industrial Space: Some individuals and companies require big spaces to store their equipment and other essentials. Industrial and economic zones house thousands of these facilities. Warehouses and storage facilities can either be bought or rented out. Some companies even use these industrial complexes to park their machinery and heavy equipment. Warehouses are not just for companies nowadays, even individuals are forced to rent or purchase offsite storage spaces due to the sheer amount of material things they own.

What are the Processes in Offering a Lease Proposal? 

A lease proposal, like any proposal, is essentially a sales pitch. The intent is to persuade the recipient of the proposal to consider your offer. There are multiple factors to take into account for a lease proposal to turn out successful. The processes may be more complex than most people think. Unfortunately, it is not as simple as merely drafting a proposal. So what can you expect when you offer someone a lease proposal? The processes below explains this in detail.   

Market Sourcing: Unless you are offering a prime spot or an in-demand location, sometimes you need to be the one to reach out to potential clients. If you are lucky, you don’t need to do market sourcing if there is high interest and demand for your spaces. Otherwise, you need all the customers and clients you can get in order to make a profit. It’s easy to get distracted and lose sight of the goal if you are sourcing without a clear objective in mind. Make sure you do enough market research and competitor analysis before diving right into it. It will be far easier and more focused when you know what you are looking for. This is especially applicable to commercial businesses and commercial spaces. If you own a mall or an arcade, you want to fill it with income-generating businesses. Introduction or Letter of Intent: Once you have done adequate surveying and narrowed down your targets, you need to reach out to potential tenants. It is an advantage when you already have an established connection, whether your own or by a few degrees of separation. It is in these cases that having a diverse network plays a big role. Other times in the absence of an established link, you would need to introduce yourself and express your interest in doing business with prospective tenants or businesses. Most of the time, a letter of intent will suffice. It is helpful to include basic information in your introductory letter. Include an official logo and contact information in case the recipient is interested in exploring a business relationship. Avoid prolonging the message with unnecessary paragraphs. Try to keep it brief. A one-page letter is ideal. Offer: If the prospect shows interest and responds positively to your letter of intent, you can then come up with an official lease offer. Your proposal should contain accurate details. For example, if you are an owner or a developer of a strip mall, you need to be specific when making your offer. Indicate the size of the space to be leased, the rent amount being offered, and other key data. You can include supplementary documents to help the prospect understand better. This could be a sketch layout of the proposed space, initial drawings, a map of the facility, or a combination of any of these. Counteroffer: Once the client has received the offer, he or she may either accept it on the spot or it is highly likely they may respond with a counteroffer. Counteroffers vary and are relative especially when a client feels they could be getting a better deal than the initial offer. Sometimes, prospects will try to haggle for a lower rate or explore other available spaces that are more ideal. Part of the transactions in offering a lease proposal is the constant give and take before finally settling on an agreement. In most cases, a potential tenant or client may want to see the space for themselves. It is advisable to invite clients for a tour or an ocular inspection of the proposed space. Contract Agreement: When an agreement is reached, an official contract is then needed to certify the transaction. Rent or lease contracts come in various shapes and forms. An apartment or condominium rent agreement will look slightly different from a retail lease contract. In addition, it is normal for multiple meetings to take place, wherein both parties craft and decide on the various terms and conditions. Further, lease contracts are usually subject to renewal. It is also the discretion of the landlord whether or not to continue a tenant’s occupancy. Problem tenants pose a threat to other people and businesses in the vicinity; and can be bad for business as well.

How to Create a Lease Proposal

Before drafting your lease proposal, make sure you have gathered all the key information. Your goal is to convince the prospect why your space is worth investing in. You have the option to create your own lease proposal or use an existing template. Follow the step-by-step guide below to get started! 

Step 1: Have a Uniformed Format

Especially if you are a company or developer, it is best to keep to a uniformed format when sending out any official documents, including lease proposals. Do not forget to place a company logo and relevant information such as the business address, contact number, email address, website, etc. Start with a brief introduction. You should address the recipient professionally and as much as possible, you want to avoid using ‘to whom it may concern’ as an opening. Addressing the recipient using their real names suggests more intention and sincerity. 

Step 2: Information is Key

Next, provide as many details as possible. You want to be able to strike a balance between being thorough and concise. A lease proposal is a sales pitch and potential tenants are on the lookout for the best possible deal. Include the actual measurements of the proposed space, what is inclusive of monthly dues, and a clear breakdown of the amount and fees. You can organize all the information and figures in a single table so it looks less daunting.   

Step 3: Outline the Terms and Conditions

Similar to a contract, terms and conditions must be set to establish clarity and prevent unnecessary conflict. After providing the essential information about the space, lay down the stipulations. These may cover the tenure or duration of lease, payment guidelines, timetables, and other arrangements. To make it more organized, itemize each item or number them accordingly. Emphasize the important details by either underlining, highlighting, or using bold text. 

Step 4: Leave Contact Details

It is important to provide accurate contact information at the end of your proposal. Make sure to affix your name and signature at the bottom too. Your channel must be open to clarifications and further queries. Indicate your name, designation, contact number and email address. The only way to move forward with negotiations is by actively engaging with the client and listening intently to their needs. 


How do you write a lease proposal?

To write a lease proposal, you need to have a good grasp on what it is you are leasing. Like a sales pitch, you need to consider both the strengths and weaknesses of your product; in this case, it is the leasable space. The easiest way to get started is by making use of an existing template. You can use it as a guide or blueprint to customize your own lease proposal.

What is a rental proposal?

A rental proposal is a written document that is handed to a lessee by a lessor. It contains rental information along with terms and conditions that is subject to agreement between the parties.

Is a lease proposal binding?

A lease proposal is not necessarily binding, but it can be. Often, a proposal is not yet a guarantee of a successful business transaction. There are a lot of steps or processes involved before a lease proposal can turn into a business deal. Once a contract is agreed upon and signed by both parties, then it may be considered binding.

Lease proposals can be described as getting your foot in the door. It takes determination, perseverance and negotiation skills to truly win a client over. Make sure your lease proposal is informative, persuasive, and effective. Browse through the sample templates above to get started on your own lease proposal!