Beyond Rent Collections: The Hidden Value of Lease Administration

by Emily Klingler | 3 min. read

Commercial lease administration can encompass a variety of real estate services that may vary from lease to lease, but the goal is always to save landlords time and money. Existing within the scope of property management, lease administration transfers the bulk of the lease management burden from the landlord to industry professionals who are knowledgeable in the nuances of commercial real estate leasing. This collaborative dynamic protects landlords’ interests while allowing them the freedom to focus on maximizing their investment value and business operations.

Every commercial real estate lease is unique, but effective lease administration ensures that every lease is executed efficiently by identifying and curing known, and unknown roadblocks for landlords and tenants.

If you’re engaged in commercial leasing, it’s likely you’ve encountered at least one of the following reasons professional lease administration services can…

… Help save you time
Whether or not you’re familiar with navigating the complexities of commercial lease structures, effectively managing a commercial lease takes time. And time is a crucial resource for any real estate investor or business owner.

One of the most productive tools included in lease administration for any landlord is a lease abstract. Lease abstraction is an in-depth process that analyzes and organizes the essential dates, amendments, terms and conditions of lease agreements into a summary report that is updated regularly based on changes to the lease and real estate market. For landlords, this means staying connected to and informed of their properties and tenants with peace of mind.

Lease abstracts condense and simplify commercial leases, allowing landlords to easily track and monitor rent escalations, payment schedules, and insurance compliance of their tenants. This is especially useful for complex commercial properties with multiple tenants, uses, or lease formats. Lease abstracts spare landlords from having to read and decipher the legal jargon of lease agreements and reduce the risk of missed income opportunities or insurance compliance issues by having documents reviewed by industry professionals familiar with commercial lease structures.

Landlords also save time consumed by billing, collections deposits, payment of lease commissions and all related record-keeping. Lease administration professionals are equipped with the valuable knowledge required to streamline and optimize these services and may fill an advocacy role that benefits both landlords and tenants by establishing trust and accountability. For landlords who do not live in the immediate area, these advocacy roles usually include property management services and create a local presence on the landlord’s behalf, assisting with day-to-day operations and tenant relations. And for out of state landlords, these services provide crucial expertise in handling non-resident income tax withholding and other real estate ownership requirements specific to the Commonwealth of Pennsylvania.

… Help save you money
Spending money to save money is a necessary evil, especially when it comes to enlisting a CRE industry expert. Unlike in-house accounting, the financial components of commercial leasing require specialized knowledge to ensure appropriate rents, expenses and industry standards are in place. Professional lease administration practices promote ideal tenant relations and retention, providing landlords with a steady, reliable cashflow from their investment portfolio.

Lease administration services may include annual tenant expense reconciliation to maximize the owner’s expense recoveries and verify that ongoing expense rates are current. Scheduled rent increases may be based on changes in the Consumer Price Index (CPI) that may require someone experienced with the use of CPI tables to ensure tenants are paying what is required by the terms of their lease. These practices reassure tenants with transparency and accuracy of fees, and landlords gain the advantage of optimized occupancy costs while avoiding potential lienable items that could cloud the property’s title.

In many cases, the fee for lease administration services may be considered a recoverable pass-through expense in the tenant’s lease agreement. Alternatively, experts with brokerage advisory knowledge can provide the technical assistance to modify lease documents for use with future lease renewals and new tenants. Landlords may also avoid the need for a business banking account to handle tenant deposits, saving them the cost of banking fees.

Engage our Experts
Lost in the lease maze? Here’s your way out. At ROCK, our lease administration experts have proven their knowledge and experience to 118 property owners within South Central PA, providing lease administration services for 292 leases and handling over $13 million in tenant collections. Contact us today, and find out how our lease administration or property management services can optimize your real estate portfolio.