(Opening to Part 1)
Please read Part 1 (found here) of the blog, where we covered steps 1-5. There several important factors during those first steps to make sure the process flows seamlessly and there are no surprises along the way.
Step 6. Prepare an RFP (Request for Proposal) After touring the desired spaces, we work with our clients to pick the best 2-4 options. We will then work diligently together to complete a space planning assessment program that looks at things today and as they will change thru the lease. As well as, considering any additional requirements (electrical, power, flooring, HVAC, and others). Once completed, we will prepare a detailed RFP incorporating all the information we’ve collected during this process.
The RFP represents a compilation of the many considerations that a tenant has and should be customized to reflect their specific needs. It should be noted that the RFP, once presented, then becomes the basis for a systematic procedure used to document the negotiation and help maintain a focus on issues not fully resolved between the parties. Therefore, we incorporate all of our client’s needs in the RFP, so the landlord has the opportunity to price out the build-out and, in return, we get a proposal back that accurately depicts those additional costs to be factored into the lease rate.
Step 8. Finalize the Negotiations: After an LOI is signed, the Landlord will prepare a lease. We read through every lease very carefully so we can be completely transparent with our clients and make sure there are not any surprises. Every tenant signing a lease will want to consult an attorney, and we are there with our clients on these calls to discuss everything over with the attorney and, in that way, everyone is on the same page and we know what to discuss with the landlord’s broker regarding the most pressing issues. If it is a fast-moving project, we coordinate calls between the two attorneys to make sure any issues are wrapped up quickly. Once the lease language has been settled, our clients are close to the finish line.
Step 7. Proposals and LOI (Letter of Intent) The approach we take in creating a Proposal remains the same whether a client is looking to relocate or negotiate a new deal to stay at their existing location. We want to make sure to leverage our client’s stance in the negotiations with any landlord that is among the final options. There will usually be multiple proposals sent back and forth to make sure that WRA is getting you the best possible deal at each of the final options. We create a competitive environment with each landlord by creating a level playing field. We can’t stress enough the importance of creating the perception that there is a compelling reason to move with your existing landlord. The existing landlord almost 100% of the time prefers to keep existing tenants. It will cost them more out of pocket to secure a new tenant (e.g. loss of revenue from space being vacant, improvement costs, free rent, marketing costs, etc.).
Regardless of what route we take, negotiating a deal can be a very complicated and time-consuming process. Once the proposal has been mutually accepted, we focus our attention on the LOI. An LOI is a non-binding agreement used during the later stages of a commercial real estate transaction to reach an agreement on the business terms of a potential lease. The LOI is the last formal step between the Tenant and Landlord before a lease is drafted by the Landlord’s attorney.
Step 9. A Build-Out When negotiating your commercial office lease the two different scenarios, outlined below, have already been negotiated in the lease., Tenant leasehold improvements (T.I.) covers all the soft and hard costs for the design and build out required to fit out the space. The TI can be structured in many ways but ultimately, the goal is to secure a turnkey deal. If our client is planning to move into a space where there will be build-out, the tenant has 2 options:
1. Tenant Improvement Allowance –In a T.I. scenario, it’s up to the tenant to decide who they want to use for contractors, architects, and project management. Typically, the landlord is happy to hire in house people to handle everything, but we always suggest getting multiple quotes. This option shifts complete control of the build-out to the tenant who, along with WRA, will have a higher level of engagement towards making sure that the space is built exactly as they need and expect.
2. Turn-Key Build Out – A turnkey deal puts all the risk on the landlord because they’re responsible for every aspect of the build out, any unforeseen increases in costs that arise come at the sole cost of the landlord. This option almost completely eliminates the time-consuming level of engagement required in a T.I. allowance scenario.
The landlord provides the tenant with a turn-key process. However, in either case the next step is to meet with the architect(s) to finalize all space plans and get the architectural drawings done, which generally takes two to three weeks. After we’ve met with the architects and they’ve submitted the drawings to the town to be stamped, it is another 30 days before the town issues building permits. After these permits have been issued, the build out can begin which typically takes 45-60 days. With that said, it depends on the size and scope of the requirement.
Step 10. Move in and Lease Commencement: After the lease has been signed, we deal directly with the asset manager of the building to coordinate the buildout and move-in process. We will use our experience from past projects to manage contractors, designers, and any number of other construction-related professionals. We work with everyone involved to make sure the project stays on time and on budget. We are very detailed throughout the process, so we do everything in our power to make sure the project follows the necessary timeline and free of any last-minute surprises.
At WRA our job as tenant rep broker does not stop when a lease is signed. We will continue that relationship throughout the term of the lease, whether it’s helping the tenant deal with a challenging landlord, needing to expand, sublease or to downsize.
Finally, when it comes to moving day a there are several things that happen that can lead to stress and distraction. We have a full “Move-in-Checklist” designed to assure you that the move-in process flows flawlessly.
Conclusion. The real estate process can be long and tiresome. At WRA, this is what we do every day so we use our expertise to make sure we never leave our clients behind, which is different from the larger firms looking to get one deal done to move onto the next one and increase revenue to impress shareholders, board members, and other high-level executives. In the end, we can say with 100% certainty that we will go above and beyond for every client to make sure they know they have a team in their corner that is fighting for their best interests.