We're playing 20 Questions❓

 Abby here! I imagine we've all dated someone who seemed alright at first, but in short order, something they did or said gave us the ick. Thankfully, we can bail on the potential relationship the moment we realize there's no future for it...but only because we went on the date in the first place. 

Similarly, the only way to find out if an LOI might bloom in a lease is to jump right in -- even before we know if it chews with its mouth open or administers any alarming subreddits. Enjoy!

Just last month, I had a first day touring with a Pedal Retailer who’d recently graduated from the Dream Space Accelerator. The sun was shining, the cherry blossoms were giving way to fresh new leaves, and despite a persistent cloud of pollen, optimistic vibes of new beginnings abounded. We saw four spaces: one that was easy to discard, one that was “meh” and two that were pretty interesting. All in a day’s work.

When the dust (pollen?) settled, I asked if we were ready to request some proposals. The Pedal Retailer agreed, but had some questions first. Could we get customer parking validated? Would the landlord build new bathrooms? If they did, could she pick the finishes? She wanted an LOI as soon as we could get all of our preliminary questions answered.

Dearest gentlereaders, this is a super common misconception for first-time retailers: they assume we start by getting all the answers we need about a space and then roll up our sleeves to start negotiating. In reality, we’re doing both steps at the same time, and the LOI is the tool we use to communicate.

We use a lot of dating metaphors* to explain things here at Pedal, and here’s one more: although it can intuitively feel weird – like discussing a prenup on the second date – this is actually the best approach in brokerage. You definitely won’t give a landlord the ick if you get serious fast.

Lots of first-time retailers get this wrong, and it can cost them the space they want. Without getting the LOI negotiation process started, Landlords either a. lose interest after weeks of back-and-forth Q&A with no movement towards a deal or b. determine the retailer isn’t seriously interested in leasing their space and move on. And that’s not because the landlord is lazy or the broker is too aggressive in pushing a deal. Here are the real reasons we start negotiating an LOI as soon as possible after an encouraging tour:

🧩 1. Deal terms are interconnected – most questions can’t be answered in isolation.

All you get for trying to answer a whole bunch of questions as a precursor to getting a written proposal are more questions. Here’s how it goes…

“Will you build a bathroom for us?” Sure, but how much rent are you willing to pay? Are you expecting TI on top of that? How much control do you expect over the bathroom - its location? Configuration? Finishes? Who is responsible for getting building permits?

All of these decisions are interconnected and ripple throughout the whole deal structure. Without knowing what the rest of the terms look like, the answer to most questions is going to be some version of “OK, but that depends on [pick your deal term].”

🏋️ 2. Getting real answers requires real effort.

Outside of the circular reference issue, many questions take some time to answer, either because no one’s asked it before or because a third party holds the answer. The question about parking validation may take confirmation with a parking vendor. The question about building bathrooms may require a consultation with a contractor. At a minimum, most questions take some time and effort to answer, and sometimes, some money too.

When we ask our questions in the form of a written letter of intent, we are signaling to a landlord that we are serious and worthy of spending that time, effort, and maybe money on due diligence, and we’re not just kicking tires.

This is actually reason number eleventy-million that you want a broker – negotiating LOIs and understanding how all of the deal terms connect to each other is their zone of genius. You can come up with the list of questions, and the broker hunts down the answers in the lingua franca of the landlord.

💡 Requesting an LOI is less about making a commitment and more like having a super productive conversation. You’re not supposed to feel sure about a space before you request a proposal – that’s actually the whole point of the back-and-forth. By the time you’ve finished negotiating, you’re either there (aka secure and ready to make a commitment) or you’re not (aka ready to walk away)... but you can’t get that clarity until you get a proposal in writing.

*Dating metaphor #1, #2, #3