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To Bundle, or Not to Bundle? Outsourcing Corporate Real Estate Services

May 17, 2023

Guest Post by Sara Stanley, MCR, Managing Director at Commercial Tenant Services, Inc.

Bundling your outsource needs might not yield significant cost savings.

Would you go to the same doctor for a flu shot, teeth cleaning and an eye examination? Nope, even if your medical provider says, “Sure, I will cover all that!” You need specialists.

Lease Administration and Lease Audit are often interlaced or umbrella ’ed under another Real Estate function, although they are fundamentally quite different. Lease Administration often focuses on reporting deadlines, document management, coordinating between stakeholders, managing rent payments and many administrative and operational tasks, and transactional duties. All important and often time-consuming demands.

If a Lease Audit is performed by Lease Administration, it is usually limited to a CAM/desktop audit. Staffing and budget limitations and the continuous pressure of meeting payment due dates often constrain the Lease Administration’s team’s time investigating billing mistakes, legal research, lease arrangements, pass-throughs, as well as market analysis. It is virtually impossible for Lease Administration teams to identify every complex billing anomaly that may exist as well as focus on negotiation and resolving claims leading to larger recoveries.

Lease Auditors often start by “Auditor intuition” based on comprehensive, dedicated experience and knowledge of markets, landlords and building systems, often including factors overlooked or not examined thoroughly by other groups. Lease Admin teams usually have too many projects to apply the proper expertise or dig deep on instincts.

Lease Auditors delve into the intricacies of leases, analyzing every aspect in search of discrepancies, abnormalities, and/or oversights made by landlords. This component complements and extends a company’s Lease Administration function by improving cash flow, decreasing spend and positively influencing stakeholders’ interests as well as producing a positive impact on a department’s budget and the company’s bottom line.

Brokerage firms are great at brokerage. Lease Administration Teams are authorities in Lease Administration. Stand-alone Lease Audit firms are experts in Lease Audit.

Outsourcing corporate real estate services can be great. Combining all functions under one provider, however, might not be.

Sara Stanley, MCR, is Managing Director at Commercial Tenant Services, Inc.

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