Lease agreements are the typical business documents created to establish a mutual understanding between parties while acquiring or renting a property. Underwriting commercial real estate lease clauses are as crucial as managing lease data for the property owners or landlords to access data quickly.
According to a visual lease survey on commercial real estate in 2022, about 55% of tenants look for long-term leases, preferably more than five years, and 65% of landlords expect their tenants to expand their rented space.
As there is a growing demand for maintaining accurate lease data in the market, the industry players are fine-tuning their lease abstraction services with advanced technologies.
Managing the real estate portfolio has become more challenging for commercial real estate as the industry is recovering from the global pandemic.
Commercial leasing is positively gaining momentum this year. Organizations are typically looking out for long-term leases and deeds detailing the agreement terms concerning the ownership of the property.
The entire long-term property leasing procedure involves handling lease documents of not less than 50 pages.
Capturing and understanding essential details from voluminous commercial real estate project documents is quite complicated and an error-prone task for any real estate business. Hence, this creates the need for a lease abstraction service for realtors, property managers, and investors.
In this blog, let us understand why there is an increasing demand for lease abstraction software or services and the benefits one can attain from them.
What is lease abstraction service, and who needs it?
Lease abstraction involves capturing vital information from lease agreements to summarize lease data points in a precise and crisp manner known as lease abstract.
Lease abstracts are easy to understand and contain necessary information about the property, financial data, critical dates, and details about the lessee or the lessor.
Lease abstraction services enable the hassle-free process of extracting data. The AI lease abstraction service combined with machine learning and data analytics can deliver accurate output.
But, who needs a lease abstraction service?
Any real estate business or investor who deals with many lease documents can benefit from lease abstraction services. Here is the list.
- Property managers
- Property owners
- Property lenders
- Property Investors
- Lease administrators
Why should you look out for a lease abstraction service?
Real estate businesses understand the overwhelming time taken for managing their portfolios and regulating the legal exercises mentioned in the client lease agreements.
In comparison to administering the residential lease agreements, managing commercial and retail lease agreements adds complexity and more volume of lease data to be referred to.
The voluminous lease document handling makes lease abstraction less effective and prone to human errors.
Implementing lease abstraction software or outsourcing lease abstraction service could help realtors and the lease administering team manage their business portfolio effectively and help make insightful decisions.
Why should you outsource lease abstraction services?
The demand for lease abstraction among top real estate players is pretty high. With the growing demand, the lease abstraction players choose software implementation over managed lease services to effortlessly streamline the complicated process and obtain quicker results.
With the help of automated software support, the lease abstraction is made simple, and the party can get access to critical data. But are those abstracted data 100% accurate? The answer is NO!
Though most lease abstraction softwares are programmed to extract essential information, they often fail to obtain accurate outputs.
Lease abstraction is a tedious task that sometimes requires manual effort for an in-depth document review and understanding of the contract between the lessor and lessee.
Additionally, implementing lease abstraction software makes it necessary to understand the product’s full potential in less time and requires training the in-house staff, especially for handling the software. All this takes time and adds more expenditure for the company.
Outsourcing the lease abstraction to an experienced service provider can be cost-effective, guarantee effective lease management, be error-free and ensure timely compliance.
Benefits of outsourcing lease abstraction
Besides the complex process taken over by the professional team, the real estate businesses attain certain benefits upon outsourcing the lease abstraction services to industry experts. A small error at the onset of the process could become a huge miscalculation at the end.
Real estate businesses see lease abstraction as a preliminary and vital process for effective lease management. Hence, the abstracted lease data should be accurate and error-free.
Here are some of the benefits you can gain from outsourcing lease abstraction services,
- Quick turnaround time
Lease abstraction service vendors generally have a scalable team of certified and well-trained lease abstractors.
The vendor team members are trained for handling a large volume of leases and, with a bit of automation involved, can speed up the process while your in-house team may suffer to meet the deadlines for significant projects.
Lease abstraction demands exceptional skills, operational timing, and loads of manual workforce. Managing complicated and time-consuming tasks with the in-house team can increase your company’s expense, require extra hands at work, and demand staff training.
On the other hand, outsourcing the task to a service provider can reduce extra expenses, enable equal sharing of work among team members, and provide a scalable and flexible environment at a much more feasible price.
- Adequate access to resource utilization
For any business, including real estate, team productivity is vital for periodical success. Imagine each in-house team member working on the same lease abstraction projects, running their fingers through all lease agreement pages to track information.
It is a waste of time and practically puts your business at risk. Instead, outsourcing your lease abstraction to any third-party vendor can get your team’s attention towards other operational activities.
In this way, multiple business operations run smoothly, and team productivity is enhanced along with access to high-quality abstracts and real-time data.
- Objective-driven portfolio management
Effective portfolio management can be a critical advantage of outsourcing. Commercial real estate businesses operate across multiple geographical locations. The structure of lease documents and the lease financial approach varies with region. Also, abstracting and understanding data from different language documents is burdensome.
Outsourcing can solve these challenges, help real estate businesses stay updated on critical lease dates, and solve any obligations beforehand.
- Insightful access to accurate data
Commercial real estate administration requires keen attention, suitable financial investments, accounting, and other additional assistance for effective management. Lease abstractors understand the legal clauses and are well aware of the tricky terms mentioned in the document.
An experienced professional can identify and acquire financial, personal, and technical information mentioned in the paper and reveal accurate data to help businesses leverage the opportunities with better insightful data.
There are a lot of lease abstraction service providers available in the market but making sure you pick the right expertise for the job is what matters.
Mobius has offered extensive commercial lease abstraction services for more than a decade to businesses across the globe. We follow industry best practices to streamline complex business operations with solid data confidentiality.
If you plan to outsource lease abstraction, feel free to contact us. Our lease experts would be more than happy to help.