Lease administration will save the day for CRE

Lease administration is the unsung hero of commercial real estate. Far from its days as a back-office function, lease admin has emerged as a critical component of strategic portfolio management, encompassing a range of vital activities that significantly impact an organization's bottom line and operational efficiency.

A proactive, analytics-driven approach to lease administration not only mitigates risks but also creates opportunities for portfolio optimization and cost reduction. As highlighted in JLL's Global Real Estate Perspective, real estate is increasingly viewed as a value driver, rather than a cost center these days. This shift in perspective underscores the growing importance of lease administration in compelling organizational efficiency and strengthening business growth trajectories.

1) Enhanced visibility into lease portfolios

Too often, organizations find themselves on the edge of a lease expiration without having time to properly analyze the market and consider all options. A streamlined, proactive approach to lease management provides an accurate view of upcoming critical lease events, so you can avoid pitfalls of being unprepared.

There's deep strategic value in your lease data. Knowing when contracts expire and where you have options for renewal and contraction clauses, as well as where local real estate markets are in the cycle, you can strategically and agilely take action in favorable market conditions.

2) Streamlined lease management and financial oversight

Managing a large-scale portfolio can be a major logistical feat. A consolidated rent payment system simplifies processes and reduces the administrative burden of managing payments. Best practices include cross-checking invoices against the lease for accuracy, setting up rent roll variation reports to flag changes, and scrutinizing the details to understand variances and ensure accuracy.

With a comprehensive real estate invoice review program, JLL clients saved nearly $70M in cost savings and cost avoidance last year. If you’re not checking all invoices against your negotiated lease terms, you’re probably leaving money on the table.

3) Analytics-driven review processes 

Successful real estate leaders know the value of process and project management. Scheduling regular critical date pipeline reviews will help you keep track of action items. For example, you may realize that time is running out to take advantage of a substantial landlord capital contribution that was included in your lease. With the right tech, you can pivot to ensure you don’t miss the opportunity.

Landlord capital contributions – which companies have a limited time to claim from landlords – are often used to build out space, upgrade tech, enhance building amenities and improve energy efficiency. Many companies reap financial benefits from renegotiating how capital is used, working with their landlords to allocate contributions to rent abatement.

Thanks to advancing technology, organizations are turning lease data into actionable insights and informing broader portfolio strategies. Data sources and processes are improving leaps and bounds with customizable lease abstracts, comprehensive reporting, document storage and critical date management.

As an industry leading real estate advisor, JLL is brandishing AI-powered abstraction tools to enhance first-pass accuracy and reduce cycle times. Additionally, ensure the highest standards of data integrity, by using a data quality management system that routinely checks information for accuracy. 

Looking ahead, lease administration will play an increasingly strategic role in corporate real estate management. As organizations navigate challenges such as sustainability requirements, rising costs and the need for portfolio flexibility, a robust lease administration function will continue to be crucial.

Lease administration has evolved into a strategic, tech-empowered imperative for high-performing portfolios. By providing accurate data, ensuring compliance, driving cost savings and informing portfolio strategy, effective lease administration is indeed the unsung hero of modern portfolio management.

Supercharge your lease administration services to save big and ensure resilience for your portfolio. ->