Commercial real estate leases are high value and complex. When your lease portfolio contains multiple commercial real estate leases spread across different locations, it becomes all the more challenging to stay on top of it. As a result, sometimes, tenants tend to overlook some seemingly small, yet big-impact items that can have significant effect on their lease ROI. This blog discusses 5 such elements and how staying on top of them will help tenants save money on their leases.
CAM Audits
CAM or common area maintenance charges are an important element of the rent roll in your lease. As the name signifies, CAM charges refer to the expenses incurred by the Landlord on account of maintaining the common areas of the leased premises. Since these areas are common and shared by all tenants, landlords usually split the common area expenses amongst all the tenants. CAM overpayments are not uncommon–in the case of tenants with large lease portfolios characterized by multilingual leases or leases spread across multiple locations. Keeping track of their lease expenses across hundreds or even thousands of leases spanning across multiple locations is tricky. CAM audits and reconciliations by a reputed lease administration services provider can help you save hundreds of thousands of dollars annually.
Staying on top of renewals
Renewal is the option to extend the term of the lease after the expiration of the existing lease term. Renewal clauses give the tenant the right to extend the lease term for a specified period of time and at a pre-defined rental rate. However, for the renewal to take effect, the tenant has to provide a notice to the landlord within the time frame specified in the lease. Sometimes, leases have automatic renewal clauses in which case, the lease automatically renews for the next term at a said rental rate if the tenant doesn’t provide a notice to terminate it. In both cases, as we can see, there’s a need to provide notice to the landlord within a stipulated period before the existing lease term expires. Missing out on exercising a lease renewal that is economically viable or renewing a lease that is performing poorly in terms of ROI are both not ideal situations. So, your lease administrators should track such critical dates and ensure the notice requirements are taken care of in either scenario.
Not missing rent payments
Paying your rent on time is also very important as missing your rent payment date can result in heavy financial penalties.
Ensuring the rent increase stipulated by the landlord is accurate
When your landlord increases you rent, before you pay the updated amount, do have your lease administration team review all lease clauses related to rent increase and confirm if the rent amount increase specified by the landlord is correct.
Do your research and negotiate with the landlord before renewing your lease
Never renew your lease in haste! Do your homework first, so you can negotiate better terms with your landlord. For example, if you find comparable premises in your area are priced less in terms of rent or have better amenities or other perks, you can negotiate with the landlord for a better deal such as reduced rent or ask them to provide you with Tenant Improvement (TI) allowance.
The 5 points we discussed above seem pretty easy to implement, right? But, it can be challenging if you have a large lease portfolio encompassing hundreds or thousands of different lease locations. Consider outsourcing your day-to-day lease administration to an experienced lease administration vendor who can help you track critical dates, verify the charges levied upon you by your landlord and ensure you stay on top of your lease portfolio, always.
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