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A Complete Guide to Commercial Lease Administration and Post-Occupancy Services

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    Signing a commercial lease is a milestone for any business, but the administrative work doesn’t stop there. The next step is commercial lease administration, which occurs during the post-occupancy phase of tenancy and ensures you can access as much relevant information as possible.

    The need for commercial lease administration comes from the fact that the building, lease agreement, and your needs are continually evolving. Collecting and analyzing the data along the way helps both landlords and tenants make informed decisions and benefit from commercial lease administration. The idea is that both parties monitor the contract and compare it to their ever-changing requirements to ensure the lease and building are working for them. The information is often put into a database, making it easily accessible and searchable.

    Renters will often outsource these administrative jobs, while large commercial real estate firms usually have an in-house lease administration team. Your need for commercial lease administration services can depend on how many CRE contracts you have in place, since every agreement will have some differences that you’ll need to monitor actively. 

    This guide will take you through the importance of commercial lease administration and how it relates to post-occupancy services for tenants.

    Why Lease Administration Is Important

    Lease administration is a broad topic that covers a lot of ground. The result is that most businesses that are renting commercial property can benefit from this type of post-occupancy service for multiple reasons, including:

    • Make Data Accessible
      One of the most vital benefits commercial lease administration provides for companies is making data available. Commercial leases are complex documents featuring a seemingly endless amount of information, but a post-occupancy service can break this data down and present it in a consumable format. Tenants benefit significantly in this situation because they’ll have access to all the information they need without having to search for it.
    • Manage Risk
      Lease administration helps businesses manage risk by analyzing the property being rented and comparing it to their needs. This analysis allows companies to understand when their current lease isn’t working so they can potentially move to another building. Having this information also provides leverage during the lease renewal process.
    • Track Expenses
      Businesses with multiple locations can use commercial lease administration services to assist as they track their expenses. This type of service can help when one property is due for a rent increase but the rest aren’t, because it allows you to adjust your budget and reallocate funds accordingly. Tracking rent increases also ensures you make all your payments on time and for the right amount.

    Commercial lease administration is always a good idea because of the insight it provides into your tenancy contracts. Having all the information you need at your fingertips makes it more likely you’ll be happy with your next lease.

    6 Lease Administration Services for Commercial Tenants

    someone handing over some keys

    You know that commercial lease administration involves collecting information and presenting it to you in an easy-to-follow format, but what exactly does that entail? The actual content depends because every lease agreement and business are different, but there are some common subjects that these services tend to cover.

    1. Monitor Your Critical Dates

    Hiring an organization to provide post-occupancy tenant services ensures that you have someone monitoring all your critical dates. These dates include open-notice dates, rent adjustment dates, and lease expirations. Your service provider will remind you of these important dates in advance to ensure you don’t miss anything.

    2. Check the Building’s Condition

    Another valuable job a post-occupancy service can provide for a tenant involves monitoring the building’s condition. Keeping an eye on any issues occurring within the property can add leverage to future negotiations and ensure that landlords know these problems. 

    3. Track Changes to Costs

    You’ll want to watch your expenses to ensure your commercial lease agreement provides value. A post-occupancy service will keep you updated on both expected and unexpected rent increases, ensuring you’re aware when they occur. This service helps create a reciprocal relationship with your landlord because both parties will be mindful of everything that’s going on.

    4. Provide an Annual Lease Abstract Update

    Annual lease abstracts are a vital piece of information because they keep you informed of any alterations to the agreement. Having a professional firm create this abstract ensures you don’t miss anything and saves you from reading the entire document. Post-occupancy service providers will go through the whole lease document and ensure you’re aware of all the most essential parts. 

    5. Early-Renewal Negotiation

    Starting an early-renewal negotiation could be a good idea if you plan on staying in the location. Using up-to-date data such as local vacancies and rental rate trends helps create leverage in your negotiations and can assist as you finalize a new agreement before your current one expires.

    6. Annual Updates

    There’s more to update than the lease abstract, as you might require annual market summary reports, a pass-through cost review, and a space occupancy and planning review. This report provides information on the quality of your lease compared to the market and goes over your operating expenses. The data will also help you see how well you’re using your existing space, so you can determine if it’s right for you.

    Running a business is challenging, and you’ll have some critical decisions to make when it comes to your upcoming leases. Using a post-occupancy service to help you crunch the numbers and analyze your data can simplify the job moving forward.

    Contact a Commercial Lease Administration and Post-Occupancy Expert

    There’s a lot of overlap in commercial lease administration and post-occupancy services on the tenant side of commercial real estate. It’s challenging, though, to determine whether you need this help without knowing how much it will affect your bottom line.

    The Genau Group provides post-occupancy services in the Washington, D.C., area for clients who need our market insight and experience. Our team can prepare thorough reports that analyze your current commercial lease contracts and help you see if these agreements are working for you. Be sure to contact us today for more information.