One of the keys to running a corporate real estate portfolio is to have good lease abstracts that are readily available. This saves time and reduces the risk of errors. However, getting those abstracts can be challenging. Here are some tips to make the commercial lease abstraction process yield better results.
Have a Place for Them
Abstracts are only useful if they are easy to get to and to use. Back when corporate real estate departments ran on paper, abstracts would be placed in the front of the paper file for the lease. That way, you would have had them handy whenever you needed to look into that particular space. Today, the best use of the commercial lease abstraction process is to take the data you extract and put it into your company's corporate real estate software application. That way, the data is there and it can also be used by the software to populate other fields -- like due dates.
Capture to a Standardized Format
It goes without saying that the right number of times to go through commercial lease abstraction is once. Before starting to abstract leases, take some time to figure out what information your company really needs. At the same time, rank that information and design your abstract around those priorities.
The goal is to create a document -- or an electronic filing system -- that puts the most used information on the front page. At the same time, it can also capture just about everything else you might need in the future, and put it in a less prominent place.
Once you have developed that format, you can continue using it throughout your company's portfolio. This way, you can easily compare apples to apples regardless of the lease format. If you ever need different formats of abstracts, you can always copy from your standardized form into the specialized one.
Don't Do it Yourself
Commercial lease abstraction is an arduous and time-consuming process. Luckily, you don't have to do it yourself. Sometimes, your tenant representative might prepare an abstract for you as a service. Alternately, your company's real estate attorney could do it. Some companies specialize in doing abstracts as a full-time business, as well. In the latter two cases, the work they do in filling out your abstract might even be covered by liability insurance so, if there is an error in the abstract, they could be held responsible.
Given that abstracting is usually a one-time process, you could fine that farming the work out makes sense. That way, it gets done by people who do it for a living and you don't have to either staff up to get it done or pull already busy staffers off of other projects.
Redundancy Is Accuracy
If you really want to get your abstracts right the first time, there is one way to greatly reduce the risk of errors. Have two people complete separate abstracts of each lease and then compare the two forms (which are in the exact same format, as recommended above). While it's possible that two people could make the exact same commercial lease abstraction mistake in the same place, it is relatively unlikely. Doing this increases the cost of the process but could also increase the quality of the work product.
Other great Commercial Lease Articles:
The Importance of the Commercial Lease Audit
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