Standardizing your commercial real estate portfolio management isn't about putting every location file in the same color folder. The key to standardization is to move away from the original documents. Every landlord tends to use their own lease documents, making them hard to directly compare. At the same time, you also have to deal with different city, state and national laws which also makes documents disparate. Whether you go with a simple system that you devise yourself or you opt for a software package that automates the process for you, the key is to put your CRE portfolio information into a usable format.
Abstracts
Abstracting is the first step in making sense of the leases that make up your corporate real estate portfolio. Creating your own form and using it to make lease summaries of all of the disparate documents that are in your property files will save you time and effort when you need to refer to them. The abstract is also a gateway to other forms of portfolio standardization.
Abstracts and Tracking
While an abstract is a useful document, it's only valuable if you remember to look at it. The next step in standardizing your portfolio is to take the data out of the abstracts and into a format that you will use on a regular basis. For critical date management, you can enter lease dates into Outlook or another calendaring tool. Another option is to create a spreadsheet with dates or other facts that you can use to review all of your leases at a glance.
While using off-the-shelf general-purpose business software is better than just having abstracts in your lease files, it's still a limited solution. These tools ultimately don't tell you anything new. They just make the abstracts easier to use and remind you of what you need to get done.
CRE Portfolio Management Software
Specialized portfolio management software takes the data from your leases and abstracts and creates a calendar for you. However, its real power is in letting you look at your commercial real estate portfolio and analyze its performance. CRE management software enables comparisons on such metrics as cost per square foot, or, if you enter data from your company as well as from your leases, square footage per employee or sales per square foot.
These programs give you a better strategic understanding of your corporate real estate portfolio as a whole. This lets you take the nuts-and-bolts information like which leases are rolling over next and begin to make tactical decisions as to whether to renew, move to a different location in the same market or shut down that market. You can also make that decision knowing what you're paying and doing in the other locations in your portfolio.
Connected CRE Portfolio Management
While traditional CRE portfolio software is a quantum leap over other solutions, providing standardized information that is also useful, it still has one major shortcoming. It exists in a vacuum.
If you're paying $15 per square foot for one of your locations and it seems like a good deal relative to your others, you're missing an important point of information. The question isn't if office space in Wichita is less expensive than office space in New York City -- that goes without saying. What really matters is if what you're paying in Wichita is less or more than what others are paying for similar space. CRE portfolio management software that is connected to comprehensive market data can give you that knowledge so that you can truly make strategic decisions. It's the best way to go beyond simply standardizing your data.
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