By: KeyCrew Media

The commercial real estate industry has embraced digital transformation across nearly every function, except where it matters most. While property owners deploy sophisticated tools for tenant communication, market analysis, and property tours, their portfolio management often remains trapped in technology from the 1990s.

This disconnect carries a steep price tag that most owners fail to recognize until they examine their operations closely.

The Pattern Repeats Across Markets

Jeri Frank, co-founder of STRATAFOLIO, sees the same operational vulnerabilities whether reviewing portfolios in Florida, Texas, California, or Tennessee (the company’s most active markets). The scale varies from small family offices to portfolios worth hundreds of millions, but the underlying problems remain remarkably consistent.

“The majority of the clients that, when they’re initially reaching out to us, are only using QuickBooks and spreadsheets to manage tens of millions of dollars in assets,” Frank observes. “Sometimes it’s hundreds of millions of dollars and assets in QuickBooks and spreadsheets. That is not the way you manage or grow a portfolio efficiently or successfully.”

The financial data reveals the consequences immediately. Bloated profit and loss statements. Misclassified transactions where expenses appear as income. Most critically, tenant deposits that match expected amounts without anyone confirming the numbers are actually correct.

Where Revenue Disappears

Three specific vulnerabilities appear across virtually every portfolio Frank examines, regardless of size, market, or owner experience level.

The Escalation Gap

Lease escalations represent scheduled rent increases built into commercial agreements. Property owners expect tenants to implement these increases automatically when the date arrives. Instead, tenants continue to pay the previous rate, month after month, and owners fail to notice because deposits continue to arrive on schedule.

The awkwardness of discovery prevents many owners from pursuing recovery. “The hard part about that is that if you, as the owner, have now missed this for one month or a year, it gets really awkward to go back and collect that,” Frank explains. Confronting tenants about the discrepancy essentially announces a lack of operational control, so owners frequently absorb the loss rather than damage the relationship.

The Reconciliation Problem

Common Area Maintenance reconciliation requires property owners to compare budgeted operating expenses with actual costs annually and adjust tenant charges accordingly. Triple net leases structure these expenses as pass-throughs—tenants should pay their proportional share of taxes, insurance, and maintenance costs.

When reconciliation fails or gets pushed into mid-year, owners lose visibility into what they should actually be collecting. “If you don’t do that work, you don’t really know what you should be charging those tenants,” Frank emphasizes. “And if you’re not collecting it all, that means that’s coming off of your bottom line.”

The problem intensifies in markets experiencing dramatic cost increases. Florida, Texas, and California have seen substantial jumps in insurance and property taxes recently, making accurate reconciliation more critical than ever.

The Insurance Exposure

Commercial tenants typically must maintain three to five different insurance policies and provide updated certificates annually. Yet Frank consistently discovers that tracking systems are severely outdated—sometimes showing policies that lapsed months or years earlier.

“It is shocking,” Frank admits. “But it is a fair number of people we talk to. It has happened where somebody’s insurance has lapsed, and that would be a breach of contract, but it doesn’t always get caught until a tragedy happens.”

This creates significant liability exposure for property owners who may incorrectly assume their tenants maintain required coverage.

The Documentation Crisis

These operational challenges compound dramatically during ownership transitions. As experienced owners retire and transfer portfolios to the next generation, the limitations of spreadsheet-based management become painfully apparent.

Frank recalls a particularly difficult case: “We had a client who was in his late 70s and had a substantial real estate portfolio, and he passed. A lot of leases started in the 70s, and there are some big gaps. Sometimes somebody just has to make a call and say, here’s what it is, and at the earliest opportunity, a new lease should be written.”

Informal “handshake deals” that functioned for previous generations create substantial problems for incoming owners. Without documented lease terms or accessible records, properties may continue renting far below market rates simply because no one can verify the original agreements or locate the paperwork.

The Accounting Foundation

When Frank reviews new client data, the underlying issues extend beyond missed deadlines. “We see a lot of people struggling with how to do CAM reconciliation accurately,” Frank explains. “Sometimes, when expenses are getting recorded, they are not clear on their non-reimbursable versus reimbursable expenses. When that expense gets posted to the wrong account, it makes CAM reconciliation very, very difficult and muddy.”

These classification errors aren’t merely accounting oversights. They make accurate expense allocation nearly impossible. Office utilities recorded in the same account as tenant utilities prevent clean separation between overhead costs and reimbursable expenses. The resulting confusion cascades through every subsequent financial report and reconciliation attempt.

Beyond Immediate Losses

The financial impact of these vulnerabilities extends beyond direct revenue losses. When property owners approach lenders for financing or refinancing, delayed or error-filled documentation raises questions about management competence. Tenants receiving inconsistent invoicing or reconciliation reports months late begin questioning the professionalism of their landlord relationship.

These reputational costs accumulate slowly but carry significant long-term consequences in an industry built on relationships and trust.

The Technology Gap

Commercial real estate has readily adopted technology for customer-facing functions and market intelligence. Portfolio management, however, remains largely manual for many owner-operators who continue relying on calendar reminders, disconnected spreadsheets, and institutional knowledge held by individual team members.

As portfolios grow and regulatory complexity increases, this approach creates exponentially more opportunities for costly errors. The question facing property owners in 2026 isn’t whether purpose-built portfolio management systems offer value, but rather how much revenue they’ll lose before implementing them.

For owners managing substantial assets across multiple properties and entities, the spreadsheet era has ended, even if their operations haven’t caught up yet.

The path forward begins with recognizing that tools designed for general accounting cannot effectively manage the specific complexity of commercial real estate portfolios. From that recognition, modernization becomes not just beneficial but essential.

Disclaimer: This article is for informational purposes only and reflects the opinions of the author based on industry knowledge and experience. It does not constitute financial, legal, or investment advice. Commercial real estate portfolio management strategies discussed may not apply to all situations. Readers are encouraged to seek professional guidance tailored to their specific needs before making any business or financial decisions.