Is Your Lease Administration Effective?
January 11, 2012
A well-managed lease administration model will drive cost savings, organizational effectiveness and risk mitigation.
Proactive lease management should identify cost savings against all landlord charges in accordance to lease terms. Property managers not a party to the lease negotiation are susceptible to making errors on charges that may be the landlord’s responsibility including but not limited to common area charges, incorrect CPI or other escalator calculations, and capital costs not allowed under the lease.
Accurate and accessible lease data is imperative to keep the real estate portfolio on track and supporting ever-changing corporate strategies. For example, critical date reporting should link individual business unit planning to overall corporate strategy. Regular monitoring of landlord notifications will allow for more aggressive negotiation for renewal terms. Acting on renewal triggers 12 to 24 months in advance eliminates holdover penalties, constricted construction build-outs, and business interruption. Further, proactive critical date management enables scenario planning and forecasting.
In today’s environment of increased corporate controls and operational transparency, an effective lease administration function should ensure that leases are maintained, their terms and conditions are abstracted, and all data is readily available for audit.
Finally, having a professional knowledgeable in lease administration, interpretation of lease terms and conditions, and who can identify cost savings as well as cost avoidance opportunities with the ability to communicate and effectively negotiate with landlords is critical. To many brokers and brokerage teams go through the motions after they win the business. You want someone that will think about and take personally, how to save you money and time, and make your life easier, every minute of every day.
If you need thought leadership on your lease administration function please all us.
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