Automating Commercial Real Estate Due Diligence with Claude Cowork

Due diligence (DD) is the "trust but verify" phase of commercial real estate. It is an exhaustive process of cross-referencing thousands of data points across legal, financial, and physical documents. A missed lease termination clause or an overlooked expense discrepancy can cost an investor hundreds of thousands of dollars.

Claude Cowork acts as an automated second set of eyes, capable of ingesting the "data dump" from a seller and systematically checking it against your underwriting criteria. This guide explores how to deploy Cowork during the critical 30-day DD window.

The Data Room Strategy

When you enter contract, you receive access to a virtual data room (VDR) full of disorganized files. Your first move is to mirror this structure on your local drive and point Cowork to it.

Structure:

• /Due_Diligence/Financials (Tax returns, T12s)
• /Due_Diligence/Leases (Executed leases, amendments)
• /Due_Diligence/Third_Party (Appraisals, PCAs, Phase I)

1. The Lease Audit (Commercial/Retail/Office)

In commercial properties, the lease is the asset. Manually abstracting 20 office leases to verify the Rent Roll is tedious but essential.

The "Lease Abstraction" Prompt:

"Process the 10 PDF lease agreements in the 'Leases' folder.
Create an Excel sheet named Lease_Abstract.xlsx with the following columns:

1. Tenant Name
2. Lease Start Date
3. Lease Expiration Date
4. Current Base Rent (Monthly)
5. Rent Escalations (Describe the formula, e.g., '3% annually' or 'CPI capped at 4%')
6. Renewal Options (Yes/No and terms)
7. Tenant Improvement (TI) Allowances Outstanding

Critical Check: Compare the 'Current Base Rent' in your abstract against the 'Rent_Roll.xlsx' provided by the seller. Highlight any discrepancies in yellow."

Why this is powerful: It performs the reconciliation instantly. If the Rent Roll says $5,000 but the Lease says $4,800, you have immediate grounds for a purchase price credit.

2. Expense Verification (The "T12" Audit)

Sellers often categorize capital expenditures (CapEx) as operating expenses (or vice versa) to manipulate Net Operating Income.

The "OpEx Scrub" Prompt:

"Review the 'General_Ledger.csv' and the 'T12_Statement.pdf'.

1. Identify any single expense line item greater than $2,500.
2. Flag any items that appear to be non-recurring Capital Expenditures (e.g., 'Roof Repair', 'HVAC Replacement', 'Renovation') that are currently listed in Repairs & Maintenance.
3. Calculate the utility expense per unit for the summer months (June-Aug) vs. winter months. Is there an unexplained spike?"

3. Physical & Service Contract Review

You inherit the service contracts of the previous owner. You need to know which ones act as liens or have termination penalties.

The "Contract Summary" Prompt:

"Read the 5 contracts in the 'Service_Agreements' folder (Waste, Landscaping, Elevator, Internet).
Summarize the 'Termination' clause for each.

• Can we cancel on 30 days' notice?
• Is there a penalty for early termination upon sale of property?
• Does the contract auto-renew if not cancelled by a specific date?"

4. Estoppel Certificate Preparation

Before closing, you need tenants to sign Estoppel Certificates verifying their lease terms. Cowork can draft these based on the data it already extracted.

The "Estoppel Generator" Prompt:

"Using the data from Lease_Abstract.xlsx, draft a standard Tenant Estoppel Certificate for 'Tenant A'.
Fill in the Lease Date, Current Rent, and Security Deposit amount automatically. Leave placeholders for the tenant to sign."

Conclusion

Automating due diligence does not mean skipping steps; it means digging deeper. By offloading the data extraction to Claude Cowork, the investor can spend their time investigating the anomalies Cowork uncovers—turning due diligence from a box-checking exercise into a true risk mitigation strategy.