When it comes to administering a corporate real estate portfolio, one of the most important processes has almost nothing to do with the underlying buildings and land. Having a critical date management regime ensures that you not only meet your obligations under your leases but also that you are prepared for any changes that can occur in your occupancy status. To a large extent, leases are schedules of what you have to do and when you have to do it.
Critical Dates to Manage
While leases can vary, here are some of the date and classes of dates that you will need to keep track of:
Commencement Dates. Your lease typically has an effective date, which is the official date that the date is considered to have started. However, your rights to the space could occur before it, your move-in date could be after it and your rent commencement date, which is when you start paying rent, could happen even later.
Due Date. Most leases require monthly rent payments on the first of the month. However, it's wise to check your particular lease's due date, especially if your effective date is mid-month.
Anniversaries. Typically, when leases change, it's on the anniversary date, which is usually the same day of the year as the effective date. Rent increases typically occur on anniversaries, so it's good to be able to give your Accounts Payable team a heads up. CAM reconciliations can happen on anniversary dates or at the first of the calendar or building fiscal year, though, so confirming with your lease is important.
Option Dates. The most important factor for critical date management might be your option dates. Typically, renewal options have a limited window of time during which they can be exercised. If you attempt to execute them too early, the landlord can ignore you. However, if you send in your notification too late, you could end up losing your right to renew, losing your pre-negotiated rent or both. When you have automatic options that require notice to cancel, missing the date could leave you obligated to continue occupying a space that you want to leave.
Expiration Date. Your lease's expiration date hides a few additional details. Your landlord might gain access to your space in advance of the expiration date for showings, so you will want to prepare for interruptions. Also, you might need to plan tear-out and move-out processes to ensure that you return the space in the right condition on the expiration date.
Two Critical Date Management Secrets
When it comes to handling the scheduling aspects of your corporate real estate portfolios, there are two critical date management principles to keep in mind:
Don't Do It Alone. Commercial real estate software is designed to do critical date management. It has the templates and internal logic to potentially catch when you enter the wrong date and when you forget to enter one. Trusting yourself or your assistant to enter everything into Outlook is tempting disaster.
Always Be Early. Usually, being early won't cost you anything. However, when it comes to commercial real estate, being late can be extremely expensive. Some aspects of commercial real estates occupancy also require a great deal of lead time. Finding a new space, for example, could take up to a year. With this in mind, it's best to always build extra time into your critical date management regime, just in case.
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