By: Jeff Adams, Vice President, JLL
Building ownership and management is a business. Thus, losing tenants, like clients, can directly impact your ultimate sucess.
It can take two years to regain lost income if a single tenant leaves according to our study, The Cost of Losing a Tenant. You must also account for construction costs and the absence of rent during leasing downtime.
As a landlord, it’s important to maintain a healthy portfolio of consistent, long-term tenants. To increase tenant retention and earn a consistent profit, you should put a strategic action plan in place to maintain current tenants. Through strategic management, the ultimate goal is to achieve building-wide tenant satisfaction.
Why? According to a survey done by Kingsley Associates, the likelihood of lease renewal is tripled when tenants are sufficiently satisfied with management.
Here’s how you can increase your chances of maintaining tenants and winning new ones.
Boost Tenant Satisfaction With a Tenant Management Program
The key to a successful management program is strategic communication. Make the management team available to tenants, and respond quickly to problems or questions.
First, get to know your tenant’s business. Understand what amenities help them run their businesses more efficiently. Start by asking yourself (and them):
- How does their space contribute to their brand?
- Do they require special technology?
- Do they hold large meetings on a daily basis?
- Are they likely to expand?
- How do they communicate best?
Once you have a pulse on your tenant’s business goals and needs, create a suitable program to streamline ongoing communications.
You can begin by hosting annual property management meetings to obtain direct feedback on what your tenants like, dislike and address any specific issues. But, you and your management staff shouldn’t solely rely on annual meetings. Consider the following strategies to keep communication a regular occurrence in your property:
- Publishing monthly or quarterly building newsletters.
- Send weekly, bi-weekly or monthly email blasts to tenants to inform them of updates, changes or events.
- Survey tenants on prospective capital improvements or amenity adjustments to the building.
But, to create a comprehensive program, you should strive to increase engagement and let your tenants know they are top of mind. Consider hosting engaging tenant-related events like food and beverage events, annual holiday parties, or hosting watch parties for major sports events in the building’s lobbies, or tenant lounges.
Ask the Right Questions and Prepare a Solution
As workplace design continues to evolve, the most important questions for property managers and leasing agents should focus on how the tenant’s existing space is working for them. The space they chose five, seven or especially 10 years ago may not be ideal for their needs today.
Most landlords already have an understanding of the needs related to current day amenities and building deficiencies. But, if you don’t know what tenants need within their individual space, it’s likely they’re already looking elsewhere.
With meaningful suggestions in hand, take action.
A timely follow-up to a tenant’s question or problem can have a major impact on whether or not they renew their lease. Tenants will remember the effort you put forth to address their concerns quickly when it comes time for a renewal discussion.
Measure Program Results
It’s crucial to benchmark tenant happiness and retention prior to launching your management program. Every six months evaluate the impact that you have made.
One way to do this is with a survey measuring tenant satisfaction. Don’t simply ask for yes or no answers related to happiness. Elicit valuable feedback by asking open-ended questions, and questions with scaled answers (e.g. “On a scale of 1-10 …”).
You should also monitor your tenant retention, and ask for feedback from tenants who decide to leave. The feedback from unsatisfied or former tenants can help guide you in the direction you need to take in the future.
Depending on the strength of your market and flexibility of your client, incentives can be a great way to give your tenant satisfaction ratings and extra boost. Tenants will likely appreciate the perks and extras they receive, and they can be a great way to differentiate your property from others.
If your budget and location allow it, consider implementing one of the following building-related incentives:
- Tenant lounges
- Outdoor plazas or rooftop decks
- Community conference rooms
- Fitness facilities
- Attached parking garages
- Onsite restaurants
- Dry cleaning pick-up and drop-off
- Car washing services
Or opt for one of these premises-related incentives:
- Offer free rent and / or early beneficial occupancy.
- Turn-key construction for tenants that want to agree on a floor plan, then move in on a predetermined date.
- Tenant improvement allowances for tenants that want to control their own construction process.
- Complete selective or total demolition of obsolete layouts in existing vacancies prior to tenant construction work.
With regular communication and timely solutions to their challenges, happy tenants will likely remain. This will increase the value of your property and maintain consistent returns.
About the Authors
As Vice President, Jeff’s primary responsibilities are to provide strategic leasing initiatives and accountable results for regional and institutional landlords and developers throughout Western Pennsylvania. View Jeff’s full bio to read up on his experience, or connect with him on LinkedIn.