Industrial Real Estate Terminology – The LOI and the RFP
Submit a Letter of Intent
A Letter of Intent, commonly referred to as an LOI in the business world, is a document stating that you intend on entering into a contract with another party. However, the LOI is usually non-binding and it outlines topics for negotiations. In industrial real estate, these topics will usually include:
Needed tenant improvements
Tthe term or length of the lease you require
The rate at which you would like to pay (usually per square foot per month)
When you need to move in
The rate of operating expenses (commonly referred to as NNN charges), free base rent, early occupancy, and any other concessions your company may require
Once the landlord receives the LOI, they will have a designated amount of time to respond and agree or disagree/counter your proposed terms. Once the LOI is agreed upon, both parties can move forward with a lease.
The Request for Proposal
A less common and sometimes overlooked tool of the trade is the request for proposal, commonly referred to as the RFP. In this document, you are not setting the terms, but you are asking the landlord to put forth their best offer. Usually, companies requesting RFPs are shopping multiple properties and are likely extremely desirable tenants with long-term needs. This sort of proposal is not right for everyone, but it can be very useful in the right scenario.
If you are unsure of where to begin, we recommend that you leave it to the professionals. At Miller Industrial Properties, we draft proposals constantly for all different types of clients. Whether you’re a mom-and-pop contractor or a large scale international distribution center, we can handle the paperwork for you. It’s not just about filling in the blanks – there’s a lot to consider when negotiating these term. It’s in your best interest to rely on a real estate professional who can get you the best deal possible with as many concessions as possible.