Having a real estate portfolio is essential to achieving and staying on top of financial goals. It allows you to have a clear picture of how to best manage your leased properties and what options you have for further investment. Most of the time, leasing a commercial building requires more than just signing a lease agreement. Often, buildouts are required to improve the new space to make it functional and efficient for the users while also staying within a specific budget that suits your financial goals. The best way to achieve this is through lease management software. Here are some of the ways effectively managing your lease portfolio improves efficiency from leasing to buildouts.
Finding the Space
When choosing to lease a space for your business you must consider your requirements. You may want your space to offer an open space layout, with multiple workstations, but also a couple private offices, kitchens and both large and small conference rooms. However, there are times when an office space does not have the layout you seek and may be missing some of the features you are looking for. In this case, you want to make sure that alterations can be made for the space to be redesigned according to your needs to ensure that it delivers the best work environment for your users. Location and price are definitely some of the most important factors to consider when leasing an office space, but the space itself has to also fit your needs for it to be used efficiently and have high occupancy rates.
Leasing the Space
Once you have decided on a space, you must close a lease agreement. This includes everything from the lease period, fees, special conditions, buildout credits and other details regarding the space. This document is extremely important as it allows your team members to keep track of key deadlines, changes and important information regarding the lease. With the help of lease management software, like the one provided by Yardi Corom, you can store all lease information in a single, centralized system that grants you access to contact information, documents, lease terms and even helps you ensure ASC 842 and IFRS 16 lease accounting standards compliance. This is essential to efficiently access and manage lease information across all lease portfolios. Having easy access to this information helps you make better strategic decisions by turning data into actionable insights to help you save costs and influence revenue. But the software is also useful when managing buildout credits.
Building the Space
When signing a lease agreement for a new space, one of the things listed is the buildout credit, if there is one. A buildout credit, or tenant improvement allowance, is the amount of money a landlord offers a tenant to redesign and renovate an office space. This amount is listed in the lease agreement and negotiated upfront as either a total dollar amount or dollar amount per square foot. The allowance is used by the tenants to customize the space according to their needs and usually covers all costs associated with the renovation. Lease management software is essential in properly administering how the tenant improvement allowance is used. You want to make sure that you use as much of the credit as possible to make the space efficient and resemble your office wants and needs. Since you will be losing any amount of the credit you do not use for the restoration of the office space, it’s best to have a solid construction plan containing every detail of the process along with the corresponding price for each phase. Properly managing the lease to adapt it to your needs is essential to making the most of the buildout credit to create an office space that is suitable and efficient.
Office spaces look different from one company to another and the features they offer must be well thought out to best accommodate user needs that ensure a comfortable, unique and productive work environment. While tenant improvement allowances are usually used by landlords to attract tenants to lease their spaces, this is something companies should use to their advantage and customize their space to best represent their company’s work culture. And with the help of lease management software, companies can easily stay on top of buildouts and manage their lease portfolio to ensure their spaces are running efficiently while their financial goals are met.
Yardi Corom is a simple and comprehensive accounting, lease and workplace management solution for CRE tenants. Our cloud-based software solution allows employers to activate hybrid workplaces and desk hoteling, increases efficiency and accuracy across your entire lease portfolio: manage leases and subleases, track key lease data, centralize transactions and become FASB/GASB/IFRS compliant. To learn more, you can visit our website or schedule a meeting with our team.