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The very thing that makes real estate successful – location, location, location – can also make it difficult to manage. Any retailer with multiple properties knows that lease administration, program management, percent rent calculations, audits, construction, compliance and other disparate pieces of data would be tough enough to handle with just one location, much less dozens, hundreds or even thousands.

An SaaS offering from Virtual Premise, however – including an updated version for retailers with greater analytics capabilities – provides a virtual one-stop shop for all things real estate. Virtual Premise Retail Edition, a vertical offering of the Virtual Premise Global Real Estate Management System, helps retailers look at real estate as not just a cost item, but as a means to increase profits through strategic use of data.

“The key thing we’ve focused on is that retailers are first and foremost about increasing profits,” says Andy Thomas, Virtual Premise’s president and COO. “That can come from lot of sources. They can increase profits based on their supply chain, or they can increase profits by having higher-margin goods and matching them successfully from a merchandising perspective. But what we’ve really seen is that when you put yourself in a position to exit poor-performing stores based upon real estate alternatives that exist, or you have the components necessary within your leases to be able to renegotiate if sales targets aren’t hitting proper levels or lock in longer-term leases where you have particularly strong stores. There are lots of alternatives in and around the management of real estate that can have a dramatic effect on a company’s profitability.”

‘It’s all right there’
In 2004, Verizon Wireless was juggling “a lot of conference calls, spreadsheets and reports” concerning real estate, and the data wasn’t kept in any common structure. It investigated several potential solutions and found that Virtual Premise’s management system was a clear leader, even though the company had yet to develop an edition specifically for retail. The implementation in Verizon’s southern region was so successful that it was rolled out nationwide within two years.

“The main thing is that it gave us a collaborative environment to work in, where the entire real estate organization can pull up Virtual Premise and use it as a look-up tool for lease information,” says Joe Flenniken, an area manager for retail development with Verizon Wireless. “Before, we’d have copies of the leases in different offices in different places and we’d have to FedEx a lot of things around. Everything is now 100 percent in Virtual Premise, and right off the bat it was a big win to have access to everything we do.

“The other side of that is that we do all of our project management tracking in Virtual Premise, too — activities we try to plan out for new stores, the moving of stores, the tracking of renovations,” he says. “It’s all right there.”

And everything that’s “right there” also is available to outside partners, albeit in a security-conscious manner. “Some of our external counsel has access to Virtual Premise so they can look up information if they’re renewing a lease, or working on a lease for us,” Flenniken says. “And some of our external contractors have access to Virtual Premise to fill out project information. ... But it’s set up in a way that we can allow a vendor access to just one part of one project or one set of leases.”

The most recent version of Virtual Premise’s Retail Edition boosts capabilities with a strategy and analytics module, which “allows companies to pull in their store operating information and be able to evaluate performance on a store-by-store basis with regard to alternatives that may exist at the real estate level,” Thomas says. That can drive decision making and impact the overall profitability of a store portfolio.

The recent economic downturn has shown retailers that there’s a significant need to optimize the store portfolio, “first and foremost getting rid of poor-performing stores,” Thomas says, and retailers have begun “holding to the discipline” of regularly reviewing store performance.

“We’ve focused heavily on connecting the real estate operations to a company’s objectives,” Thomas says. “That’s a key element of all this. They may have the functionality that helps them do their lease administration, manage their projects and manage their deals, but the strategy and analytics module is something we haven’t seen anyone else bring to the table. It’s what allows a company to go from being reactive with regard to store real estate to being much more proactive.”

Consider, for example, a company that uses three, five or 10-year leases; if there’s 20 percent turnover in the portfolio every year, there may be new ways of making the process more effective and, therefore, more profitable. And then there are issues with compliance: Virtual Premise can help companies keep track of current FASB requirements and be prepared for the coming changes.

The Retail Edition incorporates portfolio management; lease administration; real estate accounting; operating expense and CAM management; project and construction management; program management; transaction and deal management; Sarbanes Oxley, FASB and GAAP compliance; advanced management reporting; and electronic document management.

Flenniken says Virtual Premise takes “a bootstrap mentality” to working with clients “that we really like.” Verizon Wireless is “a big company, but we still like to think of ourselves as more of a startup because of how the wireless industry changes. We liked their approach from the beginning, and so far, it’s been a big hit.”