Critical Date Management for Your Industrial CRE Leases

Industrial_Date_Management

Critical date management of your industrial CRE leases will save your company a great deal of money. Most industrial leases have four dates that require your attention. Missing them could cause you to both lose opportunities and potentially run into cashflow shortfalls:

Lease Commencement

The date that your lease officially commences can be different from the date that you signed your lease, the date you moved in or the date that you started paying rent. The commencement date, though, is usually the date from which every other date in your lease gets calculated. The day of the month on which your commencement date falls is also when your rent payments are due.

Anniversary Date

Two things typically happen on your lease's annual anniversary date. The first is that your rent may have an annual adjustment. The second is that many landlords do their CAM reconciliations. If expenses ran significantly ahead of budget, you could end up needing to write a large reconciliation check to your landlord at the anniversary date. As such, you should set a reminder your critical date management system so that you have liquid funds available.

Option Notification

Many industrial leases contain options where you can renew your lease at a preset rate. Options are important because they can not only shield you from rent increases but also because they protect your ability to occupy your space. Most options require you to notify your landlord of your intent by a certain date and will expire if you do not do so.

Lease Termination

Your lease termination date is when you will need to be completely out of your space if you do not renew your lease. Keeping careful track of it will ensure that you have a new space lined up and a plan for moving your business there.

While these are excellent rules of thumbs, leases can differ from the norm. As such, setting your critical date management system should always include a careful review and abstracting of your specific lease. This important step ensures that you do not miss anything.