Your business doesn't slow down just because it's time to find new office space. Production quotas must still be met, client bases expanded, and day-to-day operations fulfilled. Given the amount of time and resources necessary to find a new space, any ability to streamline the process and lend it additional efficiency will only be beneficial to your organization.
To that point, submitting a commercial request for proposal (RFP) can significantly assist your search and give you a head start in lease negotiations if appropriate to your needs and handled correctly. With vast expertise in the commercial real estate space, TenantBase is glad to offer a few best practices regarding commercial and standard RFPs and how they might play a significant role in your path towards new office space.
What Is a Commercial RFP?
So you've sat down with the decision-makers within your office or organization, identified the particular features and amenities you'll need in your next space, and are now ready to proactively find a suitable new home for your company and team. Rather than submitting individual RFPs to specific landlords and property managers, a commercial RFP could save you substantial time and effort.
In short, a commercial RFP is submitted by a prospective tenant to many building owners and landlords at once, listing the specific features and amenities that the tenant must have in the new space. This list could include everything from lease rate and square footage to highway or rail proximity and a moving timeline. Building managers and landlords receive the commercial RFP and respond with properties that fit within the particular guidelines.
Of course, to avoid wasting your own time as well as a landlord’s, always be sure to include your exact requirements and prerequisites or, at least, a range that would be acceptable to you when using a commercial RFP. Landlords must absolutely meet these are conditions for you to even consider the office space.
For example, your commercial RFP could include options for either a five-year or seven-year term lease and the specific details of each that would be suitable for you. The landlords can specifically address any issues you foresee as solutions within their responses.
Although commercial RFPs are not as popular as a decade ago given the landlord-dominated marketplace, they remain an extremely viable option in particular instances. Government entities are required by law to use this process, mandating they review multiple proposals for these purposes.
Likewise, large, well-known organizations with significant economic impact can benefit greatly from the negotiation power granted by a commercial RFP. Amazon’s recent search for their second headquarters, HQ2, is a perfect example of a huge company taking advantage of its size and power by having many cities compete for their business through a commercial RFP.
Whether you choose to use a commercial RFP or go through the standard RFP process, there are a few things to keep in mind as you proceed. Always provide your broker a detailed list of everything you need in the new space so they can effectively communicate those requirements within the RFP. Enter into this process with a thorough understanding of everything involved by reviewing the following guides from TenantBase:
If expenses are of particular concern to you, remember that the fees associated with using an advisor never come out of the tenant’s own pocket and, likewise, will never be presented to you as a bill. This notion is a common misconception within the process and can significantly impede your ability to find appropriate space by wrongfully assuming that avoiding advisory or brokerage services will save you money.
To begin the process, be sure to get a formal agreement in place with your broker since RFPs are always broker-oriented and driven. You need to be contractually joined with your broker to let them effectively guide you through the process. Also, a binding contract lets your broker know that they are the only party representing you, making the time-consuming process involved with an RFP worth their time and effort.
Leave it to the building owner or landlord to compete for your business. It is incumbent upon them to prove how they can help you, as the tenant, through square footage options, rates, lease terms, moving allowances, and other essential factors. During the process, ask the landlord what distinguishes their building from the rest of the market and push them as much as possible to provide you with their very best offerings.
To prevent the RFP process from extending too far into the future, specify a firm due date for all RFP responses. Once the landlords or building owners present their completed responses to you, the prospective tenant, you should then whittle down the choices to a few finalists. From there, continue to narrow the field by contacting each of the landlords to see what else they can offer you.
While the RFP process can sometimes be challenging, remember that multiple rounds are always needed to get you the best possible proposals. As the tenant, you have leverage since the landlords typically don't know whom they are competing with or even how many other properties are in contention.
Maintain this upper hand, be precise and diligent with your negotiations, and you’re far more likely to find new space that suits your needs very well. Of course, all along the way, TenantBase is always here to provide you with additional guidance, perspective, and support.