Contact Us September 09, 2020
While it is essential for most commercial real estate firms to work from home during the pandemic, being away from the office makes it difficult to stay on top of lease administration services. Working remotely is a challenge for many real estate professionals to manage day-to-day property accounting tasks in a timely manner. For many companies, this difficulty has resulted in a transaction backlog that needs to be effectively handled.
A simple solution to this problem is outsourcing lease administration services. By bringing in a partner who can provide end-to-end lease services while also optimizing the time, cost and efforts spent on these tasks, you’ll give your employees the ability to retrain focus on achieving operational excellence. Lease administrators work closely with property management team and serve as a critical coordinator to the operating and accounting teams to perform specialized tasks that are niche to property administration. Their expertise and integrated approach enable accelerated processing of numerous tasks, thereby resulting in cost optimization and increase in revenues.
Centralizing leasing data using real estate administration software is a key foundational step to identifying cost saving opportunities in sublease collections, security deposit recovery and critical data management. Outsourcing lease administration can prove to be effective for many reasons, some of the major advantages mentioned below:
Leverage
Corporate real estate teams are looking to become thinner, more agile and strategic. With the right external partner, a company can upskill its internal team and rely on its outsourced partner for day-to-day operations. This partner is not just working on a tactical level, but jointly taking a strategic command of the execution. The increased productivity, pricing leverage and access to resources that a partner is able to bring can make the company’s portfolio more effective and its performances more predictable.
World-Class Expertise
Companies recognize that they will achieve better results by focusing on core competencies and bringing in strong strategic partners to provide services noncore to their business. This trend was observed during the IT outsourcing revolution, where internal IT employees moved to new specialized employers providing them with better training, expert supervision and brighter career opportunities while companies got leaner direct payroll and a more expert and cost-effective IT support. We are seeing this model come to life in the corporate real estate industry in a very sophisticated way.
Compliance and Risk Management
In today’s world where businesses continue to evolve in terms of models and structures, the compliance environment is also trying to keep pace. Changes are seen in both regulatory and contractual compliance requirements across the globe. The broad diversity and complexity of regulations across geographies makes it a real challenge for multinational organizations.
Real estate management software can also provide other key insights related to workplace productivity, capital asset planning and sustainability. The way data is captured and reported to visualize occupancy utilization, service requests, equipment faults, actual energy consumption plays a primary role in effective decision-making and business performance. Multinational companies prefer to bring in a partner because these elements are increasingly important in global markets. The need to better manage costs and remain competitive on a global scale means that companies have become more concerned about the productivity of their real estate portfolio, productivity of their workplace and their people.
Managing these complex and time-consuming lease administration tasks in-house can be expensive, including the time and cost needed to source and train the staff. Also, it may not guarantee timeliness and accuracy despite the investment and training. On the other hand, outsourcing lease abstraction projects to professionals allows business to share the workload and extend their in-house lease administration capabilities, without going through the challenge of recruitment and training and creating process controls. In addition, it offers flexibility and scalability, all at a much viable and cheaper cost. Applying Best Practices from Accounts Payable to Real Estate Invoices helps in detecting and handling billing errors and invoicing discrepancies. Numerous case studies have shown that periodic reviews of rent charges against contract terms can yield savings of one-half to a one full basis point. Thus, companies can achieve significant cost reductions of 2-4% of total real estate portfolio spends, or even more, through the use of lease administration software and centralization of real estate functions. The 2019 Global outsourcing report cites 92.5 billion USD in revenue for global outsourcing services, and much has been contributed through REFM outsourcing, as trends are positive as per KPMG report.
If your business is struggling to control operating costs related to leasing administration, and facing increased lead times to finalize reports and make key decisions, outsourcing the leasing activities will help you resolve these impediments and optimize the cost of doing business.