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Can tech automate commercial lease management? Stay tuned

December 23, 2022 by Daniel S. Gonzales Leave a Comment

Recently, a corporate client asked me to assist it in ascertaining whether it was properly handling the common area maintenance (CAM) charges under its lease with a triple net tenant, a national medical services provider.  As I pored over the terms of the lease and reviewed its CAM provisions with my client, not for the first time did I wonder, “There’s got to be a better way.”  Well, thanks to recent developments in technology and the interest in such developments in the investment community, perhaps there soon will be.

In what is becoming a crowded space, several companies are now offering software-based services that help commercial landlords manage their leases.  Joining  NTrust, Realogic, Accenture, MRI Software and DealSumm, among others offering lease abstraction and related consulting services in the commercial real estate space, Prophia, a San Francisco-based startup, has raised $10.2 million in a Series A round of funding to support its development of a product that assists in managing commercial property by scouring and extracting key terms from commercial leases.

Driven by increased competition in commercial real estate and the resultant need to operate quickly and more efficiently, many institutional landlords are moving to the use of technology in managing their leases.  While many startups are facing dismal prospects in the current investment environment, this expanding market has fueled investor interest in the services being developed by Prophia and others.  Given these trends, we may start seeing more commercial real estate businesses move to these technology products as more businesses create these solutions.

As a commercial real estate attorney, I welcome these advances.  The automation of these types of tasks can only be a boon to this industry, as the benefits of efficiency and economy will help lower the costs of property management, and free up financial and human resources for more creative activities.  Still, like any tool, results will continue to vary depending on the skill of the person wielding the tool, so humans haven’t yet become obsolete in commercial real estate.

 

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Mr. Gonzales is in private practice, providing representation, advice and counsel in complex real estate, corporate, and business transactions on behalf of public and private institutions, businesses, and individuals.

This material has been prepared by Daniel S. Gonzales for informational purposes only and does not constitute advertising, a solicitation, or legal advice. Neither delivery nor transmission of this material or the information contained herein is intended to create, and receipt thereof does not constitute formation of, an attorney-client relationship. The reader should not rely upon this information for any purpose without seeking legal advice from a licensed attorney. The information contained in this material is provided only as general information and is not promised or guaranteed to be correct or complete. Daniel S. Gonzales expressly disclaims all liability in respect to actions taken or not taken based on any or all the contents of this material.

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