by Kelly Kepley, Vice President, Lease Services, CoStar Real Estate Manager
As we celebrate NRTA’s 20th anniversary, it is interesting to reflect on the plethora of changes we’ve all seen over that time – primarily in advancement of technology sophistication and the evolution from mom-and-pop retail establishments to major retail corporations with hundreds if not thousands of stores. Certainly the role of lease administrator is no different and today we see changes involving increased responsibilities and duties that ultimately can have a significant impact on a retailer’s bottom line. With these changes, however, comes the dilemma many companies face – just how many people in this role do we need to employ?
There isn’t one right answer
I am constantly asked this question – how many lease administrators does my company need to properly manage our real estate data? It is the most frequent question I hear at the NRTA conference and is, without fail, always asked by clients with whom I work. If only the question had a simple, black or white answer; but, of course, the reality is there is no one right answer. There are, however, some best practices that can help you navigate the “gray area” and arrive at the answer that is right for your company. I’ve developed these methodologies over my 20+ year career in commercial real estate, from working in the trenches managing lease administration teams to consulting and advising clients in my current role.
The methods and processes I’ll share with you in this article have proven successful in even the worst situations. One client was experiencing significant gaps in their annual real estate reports, and deadlines and critical dates were being missed. The consequences were often costly to the company. We discovered that, as the company’s real estate information needs intensified, more and more tasks were added to the same lease administration staff. These individuals’ jobs expanded beyond their original scope into areas such as finance, auditing and reporting. Sound familiar?
Similar chaotic situations happen all too often causing lease administrators to become so overwhelmed with work that they cannot set proper priorities. Instead, they focus primarily on the tasks at which they are completely competent and ones they enjoying doing, rather than on the tasks most important to achieving their companies’ real estate business goals. Transparency into information and processes is nonexistent and accountability for errors becomes a “hot potato” due to the unorganized and confusing work environment. The company is not getting what it needs and the lease administrators’ professional goals are not being met.
Lease administration is not a “drive-through window”
To begin the process of determining how many lease administrators your company needs, it is absolutely imperative that company leadership realizes and acknowledges that the role of lease administrator is not simply a data entry role. Believing that the extent of this role is keying in data to a software system is exactly what caused the untenable situation described in the previous section. The tendency to consider the job as “piecework” does not give consideration to the critical information being maintained about the company’s real estate holdings. The accuracy, completeness and consistency of this data are vitally important due to retailers’ significant investment in store locations.
Case in point: In the “Trends in Real Estate Information Management” survey conducted each year by CoStar Real Estate 
Manager and co-sponsored by NRTA, the importance of real estate data is proven by respondents’ rankings of the primary ways in which their companies use real estate information. As you can see in the box at right, real estate data is being used for very significant, strategic business reasons. It, therefore, makes good business sense to view the lease administrator role as requiring highly skilled experts who can be preemptive and proactive in identifying problems. These professionals must also have the experience and confidence to articulate and elevate these issues when needed. The lease administrator is the perfect role to serve as the check and balance between what each store is doing as compared to the actual lease terms.
It’s not a walk in the park
Admittedly, changing the “world view” of company leadership to understand all that the role of lease administrator encompasses is not easy. Nor should it be. Companies should act responsibly when considering increased resource investments and realignment of staff responsibilities. In my work with clients, I facilitate a thorough assessment of current and required business processes to best determine staffing levels, role definitions and department assignments that are right for each company. I’ve conducted these discovery assessments numerous times and the results have always been “eye opening”, to say the least. In addition, scheduled post-assessment reviews have proven the effectiveness of the approach, with clients reporting cost savings, reduced errors and increased confidence in their real estate information.
The process starts with some truthful analysis on the part of each person involved with lease administration work in an effort to break down the key job responsibilities. Each person should challenge themselves to make a thorough and accurate listing of all the tasks that consume their days, including who and which departments are the recipients or final users of this work. This is a critical step in your quest to determine staffing numbers since it creates the description of what is happening today. With this “stake in the ground” as your starting point, the next steps in the exercise will enable you to define your optimal scenario.
- With all the business processes listed, start determining which roles should own each task. A partial example of a worksheet I use in my discovery assessments is shown below which, when completed, is an exhaustive list that will give you that “A-HA” moment you’ve been looking for!
- Review your list of business processes and roles to make sure it is accurate. Remove redundancies and socialize the list with colleagues who occupy all the various roles to gain feedback and agreement. Once you have consensus, your list represents the optimal organizational scenario for responsibly managing your real estate data.
- Now that you have a blueprint, start developing job descriptions that include all the business process tasks for each role you need. Realign existing staff resources to assign the best analysts to each role for which they have expertise, while also ensuring the role is allocated to the right department. If there are no internal resources, you are now empowered to recruit the best talent.
- The structure of your blueprint also enables you to sequester the responsibilities of the lease administrator role. You will see that, while many tasks are properly positioned in this role, some have probably moved to other roles and departments. And this is a very good thing. As we discussed previously, real estate data is far too important to have just one owner. The greater the number of people working with and benefitting from the data, the greater the transparency and value to the entire company.
- Lastly, (and this is easier said than done), assess the amount of time it actually takes to complete each of the lease administrator tasks over a given period of time – usually a month – and multiply it by the volume of work and leases. This “formula”, while less than scientific, yields a true assessment of the hours required in a given month to optimally manage the real estate data; thus enabling you to determine the number of lease administrator positions you need.
Of course, we’ve all experienced those times when we’ve been thrown a curve ball that can cause even the most efficient lease administration teams to lose their way temporarily. Major company events like acquisitions can dramatically and instantaneously increase the number of leases to manage. New procedures and federal standards – like the upcoming FASB lease accounting changes – can cause a sudden influx of new data elements, financial restatements and calculations to process. New hires require time for training and “ramp up.” All of these situations and more can place stressful demands on lease administrators. Just remember that this meticulous process yields the optimal scenario for your company. And the beauty of it is that it bolsters your organizational structure with flexibility to help you successfully manage through exceptions like these.
To Outsource or Not to Outsource? 
That indeed is another difficult question facing real estate teams today. Evidence from the “Trends in Real Estate Information Management Survey”, cited previously, indicates “. . . that more companies are utilizing outsourced professionals and providers totally or to some degree to manager their real estate information. A sharp drop to 55% from 71% the year before for companies who use a centralized internal staff to manage their information may explain a sharp increase from 12% to 26% of companies utilizing a combination of internal staff and an outsourced partner. The largest percentage in four years was recorded this year for companies using only an outsource partner.”
The decision inevitably rests on cost savings, so be prepared to “do the math.” Work with your team to determine which specific business processes make sense to outsource. Gather detailed estimates of the costs, but remember that outsourcing work is not a one-to-one correlation. You still need an in-house expert(s) to validate the completed outsourced work and to be responsible for the tasks you don’t want to relinquish control of. Outsourcing can help enable internal resources to elevate to a more analytical role, so it can change the dynamics of current resources.
Lessons Learned in Your Quest for “The Right Answer”
First and foremost, make sure you determine lease administration staffing levels that make sense for your company. There isn’t an “out of the box” solution – there are no templates to follow, no standard job descriptions and each company is different. It’s a serious mistake to think one person can do it all, no matter the number of leases being managed. One person cannot and should not be the sole keeper of all of this critical information, which represents one of the top financial expenses for your company.
Use the “subject matter expertise” approach outlined in this article to ensure you understand all the myriad tasks involved with managing real estate data. Never start with a head count and try to match duties to this set number of people. While this strategic process is painstaking and sometimes difficult, you will benefit greatly from identifying all the tasks and roles, the time it takes to successfully accomplish each and then assigning and reassigning responsibilities based on department functions and staff skill sets.
By optimizing the right number of subject-matter experts in the right responsibility roles, you’ll quickly optimize lease administration duties. The resulting gain in efficiencies will be felt throughout your company, as all stakeholders enjoy confidence in the accuracy, consistency and completeness of real estate data which enables better overall real estate business decisions.