When is the best time to get bids for a lease space
I have been taking on more and more commercial tenant clientele and I have had some mentorship but mostly have been learning as I go.  I have gotten different answers to this question and would like to ask this sub.  When negotiating TI and obviously before signing the lease, when is the best time to collect bids from your contractors?  Should it be done before or after the LOI is submitted?
[{"id": "iezmjy5", "text": "I'm not exactly sure what you mean by this question. Are you a tenant or property rep? Do whatever serves your client best. The answer is not black and white", "replies": [{"id": "iezmutq", "text": "Also collected bids would entail having completed construction plans. I wouldn't want to pay for those before having a negotiated and signed agreement. I would, however want some cost estimates before landing on a negotiated TI. \n\n&amp;#x200B;\n\nMaybe describe your case and we can dig a little deeper", "replies": [{"id": "if0rojw", "text": "Thank you.  I'm the tenant rep.  I have spent the past year or so working with a few small retail clients that have been very simple.  Now I have a tenant looking to lease about 7k square feet of space and is my first serious commercial tenant client.  The space is 2nd generation and will require TI.  And you as well as the poster below answered my question.  Thanks!", "replies": [{"id": "if10gfm", "text": "Ok. Let\u2019s start from the bottom:\n\n1. Your client is in retail. That\u2019s good for you because retail landlords in most markets are feeling the pinch. Is this something happening in your market?\n\n2. You have a large tenant: good, what is their credit-worthiness? Are they a recognized brand? The more valuable the tenant, the more willing a bank is to finance the deal - the more $$ the LL is willing to put into TI\u2019s\n\n3. How long of a lease are they willing to sign? This question should be obvious. An LL is not going to hand large TI\u2019s to short-term tenants\n\n4. You mention something about the space being 2nd gen. you may want to learn to differentiate between base building and other build-outs. \n\n5. Look at a few commercial leases with tenant buildouts. Try and identify areas of concern to you. \n\nIf you think you have a good covenant, it could be worth having a designer come up with rough floor plans and a list of general space requirements. Use this to request a quote from the LL.  Based on this cost, you should then try and negotiate a TI package, where you can push as hard as your covenant will let. It all comes down to economics. If you can, try and have the landlord cover the cost of preliminary plans.\n\nAgain your question is pretty vague, but i hope this helps. \n\nFight for every inch.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "iezrqt4", "text": "On the LL rep side, my preferred sequence of events is as follows.  This assumes a turnkey deal and that the Tenant Rep broker disrupt the process with some long-ass RFP\\*.  Source: 25 years in office leasing and development.\n\n1.  Market space (duh).\n2. Tour space with prospective TT\n3. Assuming tour goes well and I am assured a certain level of interest, have the LL pay for a test fit floor plan, about $0.15-$0.20/foot.  \n4. Trade plans between parties to get to some level of agreement in regards to layouts.  No subs here, use assumptions for finishes like carpet selections and whatnot.  These will all be adjusted later.\n5. Have ONE GC give a preliminary estimate.\n6. Use this preliminary TI number to negotiate the deal via LOIs.  This might be one turn of TI and take a day, or it might be 27 and take 9 months  You've already solved for the TI, the main negotiating points of term and rental rate revolve around that.\n7. Memorialize the LOI when agreed to.\n8. LL drafts lease, shares with TT.  Sides turn these back and forth like the LOI, only now with a much more detailed lease doc and COUNSEL.\n9. Sign leases, collect deposits, etc.\n10. Begin CDs.  This can be done at some level in conjunction with 9., if the LL wants to go at risk or is indemnified by TT.\n11. Once CDs are done, bid to THREE GCs, and what subs they need to bring in.  Once collected, the GC who did you the favor at 5. gets final chance to review the other bids, explain why theirs in higher (if this is the case), and modify/lower their bid to win the deal.\n12. Hand deal over to Property Management for subsequent steps and buildout/move-in.\n\nAll of this upfront work is VERY time consuming and involves a ton of work and people, which is why you as a broker get paid handsomely.  I find the level of closed deals doing all the legwork on the front end results in a MUCH higher completion rate, as well as happier Tenants.\n\nUsing TI allowances is fast, but creates grey areas and surprises, with somebody being upset and holding the bag on some unknown variable that wasn't thought of when the \"deal\" was agreed to.\n\nHope this helps, best of luck!\n\n\\*Regarding RFPs.  I acknowledge they have a place, especially in corporate america on the Tenant side.  UNFORTUNATELY the response deadlines are almost never long enough for the above steps to be taken, so you end up using a TI Allowance to negotiate on, which eventually gets re-traded when you get real construction numbers anyways, and now you've also spent weeks with the pleasure of negotiating a worthless 18 page RFP and...SNDA, ADA, etc clauses that shouldn't be talked about until the fucken lease anyways!", "replies": [{"id": "if0rz5s", "text": "Thank you.  This was very informative and really answered my question.  I appreciate it!", "replies": [], "depth": 2}], "depth": 1}]