Real Estate Portfolio Management Software: Five Critical Functions

By Devon Maresco
Marketing Coordinator

Managing a commercial real estate portfolio is more difficult than ever. Work-from-home, flex work, and agile workplaces have all made it more difficult to benchmark and optimize workplaces—and to understand their efficiency. Thankfully, there’s real estate portfolio management software. As the workplace becomes more dynamic, specialized software helps portfolio managers better-understand the various physical cost centers a company operates.

To be effective in managing a portfolio of buildings and workplaces, managers need to understand them. What’s the cost to operate them? How do they assist in revenue generation? What kind of maintenance and upkeep goes along with them? What’s the demand for each workplace? Answering and acting on these questions is the primary role of a portfolio manager. To do it effectively, they’re increasingly relying on real estate portfolio management software to give them the lay of the land.

What is real estate portfolio management software?

Portfolio management software offers top-down insight about the governing metrics of properties operated by a company. It can show top-level information such as the location, occupancy, and lease costs of a facility. It can also narrow down to more specific metrics such as utilization, total cost of ownership, or even real-time data about how employees use it. The purpose of this software is to gauge property as an asset. How does it contribute to the success of the company?

The purpose of using real estate portfolio management software is to get insights and make decisions about how to maximize the productivity and cost efficiency of each workplace. It boils down to return on investment. Is a facility helping to generate more revenue and profit than it costs to operate and maintain? If not, what opportunities are there to right-size it on the balance sheet? The answers come from portfolio management software; specifically, the tools it offers.

Here’s a look at five must-have functions that make portfolio management software an asset to decision-makers charged with maintaining a healthy real estate portfolio.

1. Lease administration

Cost is everything in maintaining a real estate portfolio. To understand its weight on the balance sheet, portfolio managers need lease information pertinent to each location. What are the monthly and annual lease costs? What is the cost per square footage? If it’s a triple net lease, what fees or additional expenses factor into the building’s operation? These variables demand attention as part of the real estate evaluation process.

2. Accounting tools

It’s important to have an accounting standard that benchmarks all properties in a real estate portfolio relative to one another. What percentage of budget is allocated where for each location? What are the ROI metrics for each location against a clear standard? Accounting is an important function of real estate portfolio management software because it provides clear and unbiased insights about the cost of ownership for portfolio properties.

3. Budgeting and forecasting

Alongside accounting tools come budgeting and forecasting capabilities. These critical functions give portfolio managers context for understanding assets from a forward-looking perspective. The ability to look at past years’ expenses and projected costs allows for a more complete understanding of the cost of ownership of properties now and into the future. This fuels better decision-making about how to allocate spend and whether to expand, reduce, or sustain leased square footage or even entire locations.

4. Strategic planning

With cost and operations data in-hand, strategic planning is possible. Portfolio managers can liaise with individual facility managers and executive leadership to determine if the current portfolio meets the needs of the company. Strategic planning also happens at the facility level, such as the decision to undertake a capital project based on the likelihood of occupying that space for the foreseeable future. Real estate portfolio management software brings these insights together with context.

5. Space utilization oversight

Second to justifying the cost of properties within a portfolio, real estate managers need to ensure they’re utilized to the best of their abilities. While this utilization occurs at the facility level, portfolio managers can use high-level data to make decisions about how to optimize each location. The portfolio manager may reduce leased square footage at Location A by 10% and charge the facility manager at that location to optimize space—all this, while saving significant cost to the company.

How do I manage my real estate portfolio?

Property portfolio management software is an essential ingredient in the future of business cost management at a macro level. Facility overhead is the largest tangible expense on a company’s balance sheet (outside of salaries). It’s vital to have software that can drill down into each workplace to identify those expenses and, more importantly, how they’re offset by revenue generation. In doing so, portfolio managers can make better decisions about how to invest in real estate—or identify when it might be time to divest.

Portfolio management software needs to provide decision-makers with clear and valuable insights about each physical location, from a cost-center perspective. That means relying on tools for lease admin, accounting, budgeting and forecasting, strategic planning, and utilization metrics. Given these features, real estate portfolio management software becomes a valuable instrument in making smarter decisions about physical workplaces as a whole.

Keep reading: What Can You Do with Real Estate Analytics?


What Does a Real Estate Portfolio Manager Do?

By Devon Maresco
Marketing Coordinator

Enterprise companies with multiple real estate holdings have a lot of money tied up in static assets. As such, it’s critical for someone to monitor these assets to make sure they continue to generate revenue and other means of substantive ROI. This task falls to real estate portfolio managers—the people on the front lines of ensuring company properties align with mission-critical operations.

While facility managers oversee individual pieces of property and real estate asset managers examine them from an ROI standpoint, real estate portfolios are the true decision-makers of how to leverage all properties into company success.

What is a real estate portfolio manager?

Like you might pay someone to manage an investment portfolio of stocks, bonds, cash, and equities, in the corporate world, a real estate portfolio manager focuses on the properties owned and leased by a company. Their goal is to make sure the sum value of the properties—both their tangible worth and their contributions to operations—benefit a company.

Portfolio managers determine how facilities fit within the growth strategy of the company. They’re charged with looking at how the company’s resources are allocated, what risk real property poses for the company, and how to best leverage individual properties for greater portfolio performance.


Chief tasks of a portfolio manager

Because they deal with the performance of an entire portfolio of properties, the role of portfolio managers shifts to broader considerations. They may make decisions affecting specific properties, but they do so with the intent to affect better performance for the portfolio at large. Some of the chief tasks they’re engaged in include:

  • Asset allocation: Real estate is an asset, but there are smaller assets within each property that contribute to its revenue output. Allocation of assets—including budgeted capital—can affect the performance of a portfolio by enhancing the revenue-generating capabilities of specific properties. The simplest example might mean moving unused assets from Location A to Location B, where they become part of a revenue stream.
  • Risk adjustment: Real estate carries risk. As an asset, that risk manifests in the form of debt on a balance sheet. The job of a portfolio manager is to ensure the collective ROI of properties is enough to outweigh their risk, and to understand which properties in the portfolio are riskier vs. safer. Risk adjustment can involve making decisions like where to allocate funds for capital improvements, to mitigate the risk of future costs.
  • Transaction supervision: Similar to a securities portfolio, properties may enter or leave the fold of a real estate portfolio. As they do, a portfolio manager needs to see that they’re purchased and divested the right way. This can involve everything from overseeing the financial transaction to receiving or divesting the property as an asset on the balance sheet.
  • Execution of asset strategy: Real estate needs to align with the company’s goals and trajectory, and serve to move it forward. It’s the job of real estate portfolio managers to make sure real estate serves its intended purpose, whether that’s solely revenue production or strategic goals. When real estate and company goals align, the business can move forward with a cohesive operational strategy.

All these tasks lay the groundwork for one final, critical objective: to liaise with executives and other stakeholders and support data-backed decision-making involving real estate. Portfolio managers work to understand the effect of company decisions on real estate, as well as relay real estate information to help influence those decisions.

Real estate portfolio manager software

Real estate portfolio management is quantitative. Managers need access to the vital insights and data streams that contextualize the decisions they make. While they can get much of it from real estate asset managers, much of that data comes from software.

When examining a collection of portfolios across different building types, geographic areas, property sizes, and other variables, data becomes a source of truth in decision-making. With clean, organized, reliable data from various property funnels at their disposal, it’s easy for managers to delve into the portfolio with a mind for each property and its contribution to the whole.

What do real estate portfolio managers do?

In a nutshell, real estate portfolio managers make sure a company’s investment in property is worth the ROI is offers. Rather than dissecting the microcosm of any individual property, portfolio managers make higher-level decisions that affect the company at large—decisions like whether to move headquarters, consolidate facilities, or buy vs. lease a property. Most important, they juxtapose real property to the business in fundamental ways that allow for better decision-making.

Keep reading: What Can You Do with Real Estate Analytics?

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