How to Effectively Monitor Critical Lease Dates

Last Updated on March 29, 2023 by Morgan Beard

Modern leases are often sprawling in length and complexity. Within these lengthy leases are hundreds of data points to track, manage, analyze, and execute on. Some of these data points, especially critical dates, have weighty consequences. In this blog will dive into how to effectively monitor critical lease dates.

Lease expenses are typically an organization’s second largest expense behind payroll, it would seem organizations have always had sophisticated tools to monitor critical lease dates — yet, that’s not true. Only recently have organizations had access to powerful proptech solutions to manage their real estate portfolios.

Whether you’re a developer building from the ground up or executing a retail real estate investment strategy, there’s a lot of value in understanding critical lease dates, historical tools, and the benefits of adopting modern lease management tools to achieve success and avoid disaster.

The Impacts of Ineffective Monitoring of Critical Lease Dates

Critical date management is a central need for any organization managing its lease portfolio. For commercial tenants, the stakes are extremely high: It’s not an overstatement to say critical date management has one of the biggest effects on a company’s bottom line and needs to be organized carefully. However, the strategic real estate implications can only be executed if the organization knows its options and its real estate critical dates. To put themselves in the best position, each organization know the contractual critical date within their lease portfolio.

While leases can vary in complexity and length, they generally share common attributes — perhaps none more important than the lease commencement, lease expiration, termination, and renewal rights clauses. As outlined in the lease, each of these key moments (or obligations) requires that the tenant or the landlord take some action by a specific calendar date. Each is important, but there are a few that outweigh the others. For example, the most important critical dates that tenants and brokers track are their lease expiration dates. If a commercial tenant misses this date, it can mean one of the following:

· The tenant could lose their right to renew the lease.

· The tenant could lose their right to expand.

· The tenant could be auto-enrolled in a new lease agreement.

These are just a few potential scenarios involving real estate critical dates, but they paint a good picture of the impact on the tenant’s ability to negotiate favorable terms and strategize their organization’s real estate growth or contraction. Yet, understanding the consequences isn’t quite enough — real estate organizations also need the correct tools to track their critical dates.

Finding the Tools to Track and Monitor Critical Lease Dates

Commercial real estate has been one of the last industries to adopt modern tech solutions. Historically, tenants managing commercial lease portfolios have relied on spreadsheets and calendar notifications. Those legacy tools served their purpose for a time, but there are now more intelligent ways to capture, track, and execute on your team’s critical lease dates.

Organizations, particularly those that manage multiple leases, are better served using proptech tools that are purpose-built for commercial real estate tenants. For example, modern tenant lease management software solutions often include automated critical date management notifications to monitor critical lease dates. By setting reminders at various intervals, you can make decisions about whether to exercise rights based on your organization’s needs, financial capacity, and growth goals. Because those decisions require a significant amount of lead time, it’s critical to have tools that help you avoid missing important dates (and, as a result, being at the mercy of your landlord’s lease revenue goals).

Here are three other ways lease management software can help tenants manage their real estate critical dates:

1. Critical date notifications.

Spreadsheets have their benefits, but they don’t notify you when a critical date is approaching. We estimate that roughly 90% of spreadsheets contain errors, so the likelihood of missing an important date is high. Your lease administration software should be configurable to send your team custom notifications in-app and via email when a particular lease has an important date on the horizon. Additionally, because lease management software serves as a single source of truth, multiple eyes have access to and can monitor critical lease dates for both accuracy and action.

2. Effective task management.

Communication and collaboration are integral needs for any organization’s real estate tech stack. Task management enables your in-house real estate team to assign tasks to internal and external team members, discuss potential actions to take on critical dates, and ultimately close out said jobs. This functionality empowers essential automated reminders of dates and tasks so that you can plan your leasing strategy cohesively.

3. Easy-to-use data repository.

Every lease document contains hundreds of unique data points, from critical dates and legalities to rent financials, escalation language, usage rights, and beyond. Ultimately, leaving those critical data points in a spreadsheet puts your organization at risk of missing important dates. Lease management software solves this problem by enabling you to search, filter, and sort through your lease data with just a few clicks.

You Need Lease Management Software for Critical Date Management

As mentioned, the second largest financial risk on many organizations’ balance sheets is the lease portfolio. So, if you are managing hundreds of real estate, equipment, and embedded leases in a single spreadsheet — for example, if you’re implementing a retail real estate investment strategy — you’re at risk of missing a date with steep financial implications. The ROI and time-savings baked into an intelligent tenant-focused lease management software make it a cost-effective solution for organizations looking to monitor critical lease dates easily and efficiently.

Ultimately, organizations should carefully consider the risks of relying on legacy tools and the upsides of proptech solutions and then decide to take the next step. That way, they can avoid missing critical dates and instead shore up their business operations and financial health.

Check out Occupier’s critical data management glossary for more information. It offers definitions of common lease data points that are helpful as you monitor critical lease dates.