You're underwriting a value-add deal where a single TI/LC decision can blow the budget or save the hold. This cre asset management checklist treats TI/LC, reserves, and KPIs as linked controls, not independent line items. If you don't run them as an integrated system, you end up chasing surprises instead of creating value.
1) TI/LC: Stop treating allowances like blank checks
TI and landlord concessions are where deals live or die. Too often teams write an allowance into the lease and hand it to property or a contractor with no guardrails. That creates scope creep, cost overruns, and the wrong incentives.
Do this instead:
- Document a clear TI/LC policy in the lease exhibit. Spell out who approves change orders, acceptable unit costs, and what is a core scope versus a tenant wish list.
- Set approval thresholds tied to roles. Require asset-manager sign-off when a change order exceeds the property manager’s threshold.
- Use phased releases. Pay mobilization up front, hold a percentage until completion, and retain a final holdback until the punchlist is closed and a certificate of occupancy (or equivalent deliverable) is provided.
- Prequalify vendors and set unit-cost bands. Establish acceptable ranges for finishes and systems tied to tenant profiles so you don’t invent prices on every job.
- Tie TI approvals to expected uplift. Approve tenant spend only when projected rent uplift or lease term justifies it on your underwriting basis. See our practical underwriting guide for testing TI uplift assumptions.
2) Reserves: Make reserves a governance tool, not a hope chest
Reserves are either a roadmap or a wish list. Most teams treat them as the latter — money set aside and forgotten until something breaks. That leads to lumpy capital requests and emergency funding conversations.
Make your reserve policy operational:
- Segment reserves into operating and capital buckets. Fund operating reserves for short-term cash needs and capital reserves for roofs, HVAC, and major systems the property will actually need.
- Formalize funding and draw rules. Decide when funds move to the property and who approves draws. Don’t let property managers draw capex without a capex request and asset-manager approval.
- Schedule cushion reviews. During budget season, reconcile expected capex with reserve balances and move items into planned capital or deferred-maintenance lists. Avoid mid-year surprises migrating into the operating budget without formal sign-off.
- Require simple ROI documentation for reserve draws. If you pull capital reserves for improvements, attach an expected outcome — lease retention, rent uplift, or cost avoidance — and track whether it materializes.
- Create a replenishment rule. If reserves fall below the minimum, decide whether to front-load next year’s budget or cut discretionary capex. Make this rule explicit so the decision isn’t emotional when the CFO asks why reserves are low. If replenishment may require interim financing, see the bridge loan guide for short-term funding gaps.
3) KPIs: Track the handful that force decisions
KPI dashboards are too often a vanity parade. Long spreadsheets full of unused metrics won't help. The right KPIs tell you what decision to make this week. If you're unsure which metric to prioritize, consider cap rate vs cash-on-cash vs IRR for performance context.
Pick a few operational KPIs and own them:
- Leasing velocity: measure pipeline to executed deals and where deals stall. That shows whether TI policy is slowing leasing or pricing needs adjustment — and points to operational habits for consistent CRE deal flow you can implement.
- TI spend per executed lease: links concessions to outcomes. If TI spend rises but vacancy and rents don’t improve, that’s a red flag.
- Downtime: track vacancy-to‑operational (OP) time by unit type so you can budget realistic TI timelines and staffing.
- Budget vs actual: maintain a rolling view of capex and operating budgets with clear accountability. If a line is repeatedly over, change the process, not just the forecast format.
- Vendor performance: measure turnaround time, punchlist completion, and change‑order frequency for each vendor. Use tools described in our best tools for managing due diligence and vendor tracking post to collect consistent vendor metrics and feed them into selection.
Assign owners and cadence. The asset manager should own a compact dashboard and present it monthly; property operations should own tactical follow-ups.
4) Workflow: Make the process predictable and fast
Good policy dies in bad process. If approvals, procurement, and reporting are slow or inconsistent, TI spend and reserve draws will chase deadlines and emotions.
Practical workflow fixes:
- Standardize the capex request: one form, same attachments, same approvals. No back-and-forth PDF email chains.
- Limit spreadsheet proliferation. Keep one master source for the current-year budget and reserve balances. If you have multiple versions, you have no control. When spreadsheets start breaking, consider when to switch from spreadsheets to deal management software.
- Create an approval matrix that matches money and risk. Small changes on short timelines stay at the property level; anything that alters underwriting or changes the capex plan goes to the asset manager and sponsor.
- Run post-project reviews. After a TI or capital job, capture what went right and wrong and feed lessons into vendor selection and future cost bands.
Mini-case: How a sloppy TI process killed leasing momentum
We inherited a value-add office with high vacancy and generous TI language but no approval process. Brokers promised different finishes to close deals, and the property manager approved small vendor change orders on the fly. The result was a dozen incomplete suites, mixed finishes, and a backlog of unapproved change orders that stalled multiple lease starts.
We paused new builds, instituted a single TI spec for each suite class, and routed all change orders through a two-step approval. Leasing restarted with a consistent offering; the backlog cleared faster than expected, and the team stopped making ad hoc concessions just to get signatures.
Where a CRE-specific tool helps
Missed due-diligence items and unclear closing ownership are workflow problems, not just spreadsheet issues. Use Transaction Checklists to keep closing tasks attached to the deal, deal-stage automation to create reminders when a file moves stages, and deal comments with @mentions so ownership is explicit and auditable. These simple controls reduce missed items and make post-project reviews and vendor accountability practical. Use Transaction Checklists in CREflow to consolidate closing tasks and keep accountability tied to each deal.
Key takeaways
- Treat TI/LC, reserves, and KPIs as a single control system — change one and the others must adapt.
- Use approval thresholds and holdbacks to control TI spend and avoid scope creep.
- Make reserve rules explicit: funding, draws, outcomes, and replenishment.
- Track a short list of KPIs that drive weekly decisions, and assign clear owners.
- Standardize workflows so approvals and reporting are fast and auditable.
Before You Manage This, Check This:
- Do you have a written TI/LC policy tied to lease exhibits? If not, draft it now.
- Is there an approval matrix for capex and TI draws? If not, map roles and thresholds.
- Does your reserve policy define funding, draw rules, and replenishment? If not, build the sections and test them in the next budget cycle.
- Which three KPIs will you report monthly, and who owns each? Assign them and build a one-page dashboard.
- Do you run post-project reviews and use them in vendor selection? If not, add that step to close the loop.
FAQ
How strict should TI approval thresholds be?
As strict as your portfolio can tolerate. Be pragmatic: thresholds should prevent large surprises without slowing routine maintenance. Tie thresholds to decision impact — anything that changes underwriting or the capex plan should require higher sign-off.
What is a practical reserve replenishment rule?
Pick a rule you can enforce and document it. The rule should state when to replenish, how much to take from the next year, or when to cut discretionary capex. Consistency avoids last-minute funding scrambles.
Which KPIs should I start with if I have no dashboard?
Start with KPIs that expose pain: leasing velocity, TI spend per lease, and budget vs actual for capex. Keep the list short and present it monthly until the team uses it to make decisions.
How do we stop vendors from inflating change orders?
Prequalify vendors and set contract terms that require documented scopes and unit pricing. Use holdbacks and require lien waivers on final payment. If a vendor repeatedly hits your threshold, remove them from the preferred list.
How often should we run post-project reviews?
After every material TI or capex job. Keep reviews short: objectives, outcomes, variance to budget, lessons, and vendor rating. Store results centrally and use them in the next procurement cycle.