Gabriel Safar
As commercial real estate organizations reflect on what worked (and what didn’t) in 2018 and look ahead strategically to 2019, one thing is certain: continuing to rely on what worked for the industry in 1990 no longer works today.
That is true for all aspects of a CRE business, but it is especially true for drafting and closing leasing contracts through antiquated paper documents. With 2019 planning already well underway, bringing CRE leasing into the 21st century isn’t just beneficial – it’s critical.
Are your employees able to reach their full potential, or are they bogged down by inefficient administrative processes? If large portions of their job require them to use paper documents or traditional word processors, chances are they could be accomplishing tasks a lot faster and, more importantly, smarter for your business. By finally adopting digital, data-driven technologies in 2019, CRE companies will be able to expedite business processes and produce greater outcomes for their employees, tenants and ultimately the bottom line.
Currently, legal counsel for CRE owners draft leases using a standard word processor, which has remained relatively untouched for decades, with revisions then being red-lined by the tenant’s counsel. During this negotiation phase, several iterations of the draft lease are exchanged. Because leases are made up of dependencies, if something changes minor detail revisions must be made in number of places throughout the lease. This requires painstaking attention to detail by counsel to ensure that the lease is in fact correct, and often falls to the backburner as legal teams shift their focus back to more important tasks. Unfortunately, the result has been a 90-day timeframe, on average, to close a CRE lease. This level of inefficiency would simply not be acceptable in any other industry.
The limitations of paper documents also affect businesses even after the deal is closed. Once a lease is finally completed, paralegals and lease administrators must then manually import the information from the stack of paper documents into software, databases, or other online programs for outside departments, such as financial information for an accounting team. Not only does that further slow businesses down, it also introduces an even greater opportunity for human error.
Mining Data from Lease Language
Technology provides a more strategic and efficient way for the CRE world to not only draft leases but leverage the data within to derive new insights on key industry trends, projections or outcomes. The benefits of a digital world – particularly for the CRE industry – are endless, ranging from increased efficiencies to cost savings. The most important benefit, however, is technology’s ability to free up CRE employees from banal, uninspiring administrative work and let them focus on the tasks that matter most. Through technology, employees can finally focus on more strategic initiatives that require creative and critical thought, something a machine cannot accomplish, and is what truly sets a business apart from its competitors.
Instead of asking legal departments to use 1990s technology in 2019, the CRE industry must begin to embrace today’s technology. There is no better time than now to bring CRE into the 21st century and toward a world that is free from paper documents.
Gabriel Safar is CEO of Boston-based LeasePilot.
