Lease Administration Guide: Recommended Programs, When to Use and What Comes After.

From my experience, most executives in charge of managing a company’s real estate portfolio are highly adept at communicating with departments across the organization for their direct responsibilities.  Additionally, they are in charge of a thousand other things.  For starters, they fill roles on special projects, work directly with clients, deal with off-site employees and often report directly to C-level executives.  For this reason, I have dubbed these hard working folks the “Swiss Army Knives” of their company.

When I meet with a “Swiss Army Knife” I always ask how they are managing the company’s leased and owned portfolio.  Sometimes the answer is a simple spreadsheet and other times they have something much more sophisticated.

In either case, I try to set several options in front of them that fit the size, scope and budget they require to mitigate risk and automate tactical functions so the Swiss Army Knife can spend less time inputting data into a spreadsheet and focus more time and energy on company initiatives from their unique perspective.

In this post, I will provide a short guide to the ins and outs of selecting and implementing a lease administration program.

Software developers.

How a Lease Administration Database Can Save Your A$$:

A Lease Administration Database (LAD), in its most basic form, serves to keep track of your lease data in an abstracted form so the 100 page lease for the Chicago site doesn’t have to be brought out every time your CEO has a question.

Abstracting is a critical function that should be done by a real estate professional or outsourced to a company that has a proven process in place.  Your real estate provider can probably do most of this in-house if you have a smaller portfolio of less than 100 leases.

However, as you get into larger portfolios between 200 and 1,000 leased properties, you may want to consider hiring someone internally to manage the abstracting process or outsourcing to a real estate provider like Newmark Knight Frank’s Global Corporate Services Group.  You could also use a smaller niche firm like Portfolio Solutions Group (PSG).

Newmark Knight Frank (NKF) offers a range of other real estate services, and is incredibly robust. PSG on the other hand focuses on managing the lease portfolio as an independent outsourcing solution project manager and can also serve as an extension of your accounting department.

Both groups have the horsepower to turn around information for you on a very short timeline.  The cost per lease varies with how much information needs to be pulled, the number of leases to be abstracted and if there is a need to import the information into a separate database for client reference/reporting.

Both of these groups have the processes in place to effectively abstract a large number of leases and can make you look pretty smart when you need to gather information or deliver a report to the executive team.

Interaction in office

What Should a Basic Lease Administration Software Provide?

  • View of individual properties as well as a global cost outlay of your real estate portfolio
  • Reporting capability for costs, liability, auditing reports
  • Communicate with accounting systems (as simple as exporting or direct integration with accounting software)
  • Mapping capability for leased and owned locations
  • Management of critical dates and automated reporting
  • Portfolio analysis, KPI and performance reporting

Here is a list of lease administration providers I am familiar with and would endorse for clients with a portfolio of less than 200 leased sites.

My top choice for this size client would be ProLease; however, Qube is probably the most sophisticated of the group and can be used as an iWMS, which I will explain shortly.

If your firm has less than 20 locations, you may want to consider managing in-house or having your service provider house the information and report regularly.  The cost to have one of these databases is difficult to justify when you have less than 20 sites.

I manage a lease portfolio for several clients already and submit critical dates and rent roll reports on a monthly/quarterly basis with great success.

In some cases, your existing real estate provider already has an account set up with one of the solutions listed above, which could save you from paying startup costs.

As your portfolio grows and communication across departments becomes more important, it might make sense to consider an integrated workplace management system (iWMS).

In essence, the iWMS is a software platform that integrates and optimizes the existing resources within an organization.  The core functional areas of iWMS are as follows:

My firm has access to these systems and can work directly with multiple iWMS vendors to identify the best solution for your global real estate portfolio.

Here are a few providers we currently work with and endorse:  Read more about Newmark’s GCS Technology Solutions here.  As you will see, these systems go well beyond the basic requirements of a LAD and allow for a seamless, user-friendly platform to initiate projects and maintain all the aspects of a large, robust real estate portfolio. The cost for these systems is much higher than what you’ll see for less sophisticated systems.

Please keep in mind that a lot goes into putting these systems in place, and it all begins with lease and property data.

It is critical for your company to set up internal processes that create a simple platform where measurable, accurate and useful information is added to the database in a consistent fashion.

If you don’t manage the information, then you are left with a “garbage in, garbage out” situation, and that will likely communicate bad information across the company.  Decisions made based on bad information can be costly.

Thank you for reading.  If you like what you’ve read, please share!


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