Are you looking to improve lease negotiations and management? If you’ve just moved into a new commercial space, you need to completely understand your lease terms, payments, taxes, and end-of-lease dates.
Keep reading as this guide talks you through the basics of effective lease management, the best tips for negotiating leases, and the best tips for managing your commercial leases.
What Is Commercial Lease Management?
Lease management refers to the processes and tasks involved in overseeing and managing leases. Lease management is sometimes referred to as lease administration. Some of the main tasks involved with lease management include:
- Lease abstract. The lease abstract is a document that contains details for both the tenant and landlord, including phone numbers, addresses, and financial information. It also summarizes key points and terms in the lease, so, as the tenant, make sure you read through this carefully before signing a lease agreement.
- Singing a lease agreement. Both the owner of the space and the tenant looking to lease out the space must first negotiate the lease terms to enter a lease agreement. Once both parties have agreed, the lease is signed and the keys are handed over.
- Audits and reporting. During the lease, frequent audits and reporting can be performed. These audits should document how far the landlord is meeting his/her obligations under the lease (and the law); what procedures and contracts the landlord has for carrying out repairs and maintenance works; how the work is recorded; and how invoices are checked and authorized for payment.
- Documenting amendments to the lease. If there are any changes to the lease, these must put these in writing. For instance, if your contact details change, you must update the landlord/lease. Or, if there is an early termination of the lease, this should be documented in writing.
- Common area maintenance charges and tax. In addition to the rental payments, lease management should document your payments of any common area maintenance charges and tax payments.
Now you know the various tasks involved in lease management, let’s discuss how you can negotiate better leases and manage your leases more effectively.
Tips For Managing A Commercial Lease
One of the most powerful tools at your disposal when you sign and enter a commercial lease arrangement for a new space is lease management software.
Lease management software helps streamline the lease management process and ensures you don’t miss any critical dates during your lease. Some of the main benefits of lease management software include:
- End-of-lease alerts – failing to know when your lease is up will put you in a tight spot. You need to know when your lease is up so you can take the time to decide whether you would like to renew your lease or whether it’s time to look for another property. Lease management software automates end-of-lease alerts to ensure you never miss an end-of-lease date.
- Automated workflows – a considerable element in commercial lease management is assigning tasks to individual employees. Commercial lease management software creates automated workflows to ensure employees know their responsibilities and improve productivity.
- Report sharing – with lease management software, your employees can easily share reports and critical data with other departments. Simple report-sharing processes will help you to evaluate your lease portfolio more effectively.
Tips For Negotiating A Commercial Lease
When negotiating a commercial lease, you need to come to terms that both you and the landlord agree to. Here are some tips for commercial lease negotiation:
- Prioritize monthly overheads – when negotiating lease terms with your potential landlord, you must prioritize your monthly overheads. The best way to ensure lease terms are favorable is to opt for longer lease terms with lower monthly rental payments. You should also look for unnecessary CAM charges that you could eliminate, such as gardening charges, particularly if these fees are priced too high.
- Let the real estate agent/landlord appeal to you – your real estate company should sweeten the deal with you and offer lease terms you will be drawn to. For instance, they may offer you discounts for monthly direct debit payments. If you are happy with their lease terms and feel you are getting a good deal, the lease will be more favorable for you in the long run.
You should implement these strategies if you’re looking for better ways to negotiate and manage your leases. You must ensure that you are on top of your leases to avoid overpayments, complete necessary tasks, and plan more effectively for your end-of-lease dates. Consider investing in lease management software to have more organization and insight regarding your leases.