10 Real Estate Lease Administration Cost Savings Opportunities
With the deadline for implementing the new lease accounting standards on the horizon, trillions of dollars of operating leases will soon move onto the balance sheets of corporations worldwide. At most companies, real estate represents the largest asset category in the leasing portfolio. As organizations upgrade systems, processes and controls to support the new accounting standards, many are also taking a closer look at opportunities for real estate lease administration cost savings.
Historically, real estate portfolios at large companies have been managed in a decentralized structure. The regional teams in each geography or country acted autonomously, making decisions to support the needs of local operations. While a decentralized approach provides empowerment to local organizations, it does not enable the optimization of the real estate portfolio across the enterprise
Over the past twenty years, companies have increasingly centralized all real estate functions across geographies and business units into a single, global organization. These centralized, corporate real estate organizations own everything from new construction projects and capital budget planning to building maintenance and lease administration. By centralizing lease administration functions, companies are able to adopt standardized best practices across the enterprise for each of these business processes.
In addition to building centralized organizations and standardizing business processes across the enterprise, most companies have implemented technology as well. Some organizations have invested in a lease administration software application to track all of their data, including contacts, clauses, and locations. The software can automate the workflows associated with exercising lease clauses such as rights to expand, contract, renew, terminate, and purchase. Additionally, the technology can be used to manage the invoice-to-pay process for landlord bills and the invoice-to-cash process for subtenants.