Glossary / Lease terms and deal stages
Also known as: Workletter, construction exhibit, tenant improvement agreement
A work letter is the part of a commercial lease, usually an exhibit, that spells out who builds the tenant's improvements, who pays, how the allowance is disbursed, and what schedule applies. It often controls when the space is delivered and when rent starts.
SIOR's work letter primer for tenant rep brokers says the document "delineates the landlord's obligations regarding tenant improvements (TIs)." It identifies two main approaches: turnkey, where the landlord completes the work, and allowance-based, where the landlord provides a dollar amount for tenant-directed improvements.
Husch Blackwell calls the work letter "the primary tool for protecting the move-in schedule, controlling construction costs, and ensuring a seamless transition into a new space." It typically sets the scope of work, separates base building items from tenant improvements, sets out how the Tenant improvement allowance (TI) is paid and what it can be spent on, and addresses delays. Husch Blackwell advises tenants that rent should begin only after substantial completion and delivery of the space.
The work letter often decides your commission dates even though it never mentions you. When the Lease commencement date or Rent commencement date is tied to substantial completion, and your fee is tied to those dates or to Occupancy, the construction schedule in the work letter becomes your payment schedule.
SIOR recommends that tenant reps "clearly stipulate a completion date for all improvements" and consider penalties for delays. Clear deadlines help the tenant, and they also make your own payment timing more predictable. What counts as completion, and what happens on delay, depends on the specific lease. Husch Blackwell suggests that missed completion deadlines can trigger liquidated damages for the tenant, which shows how much weight these dates carry.
Read the work letter's completion and delivery definitions, because on many deals they set the date your second commission payment comes due.
