I received a card today congratulating me on my purchase of a vehicle. This was a follow up from a company that bent over backwards to help me. I went through the hands of three people and all of them treated me with respect, dignity and gave me the feeling that I was their only customer. I felt like a king.
Unfortunately I do not feel like a king very often. Most of the time I am treated like a number. One could even say that the era of customer service is almost dead.
Why this is important?
Tenant Retention.
Looking at the costs of re-tenanting should motivate you to try to keep tenants. In office and commercial buildings you have vacancy costs plus leasing commissions, tenant improvements as well as the challenges of the construction coordination that will affect other tenants.
We know that you will not be able to keep every tenant.
Some tenants don't pay their rent or pay their rent late. Some tenants are just not the right fit. Just this last month we asked a tenant to move from a building because their clients were harassing other tenants in a building. But the landlord's objective needs to be to keep every tenant they can.
Tenant Mix
This leads us to the concept of tenant mix. Many years ago before I knew better, I leased a large space to an office tenant in an industrial park. My client's were very happy, the rent was low, and the location was great. Even the parking was good. They were happy until the new neighbor moved in. The new neighbor was a metal stamping operation. Their equipment went bang-bang all day long. My client's employees were very frustrated. The walls and the floors were shaking with every stamp. Those people located within 20 feet of the wall they shared could not make phone calls anymore. We learned a big lesson then about how to combine tenants with similar uses, to keep them all happy.
Bad Economy and Pressure to Pay the Mortgage
There are times when the tenants have opportunity and can motivate landlords to offer low rent because landlords still have to pay the mortgage. This is balanced by times when the landlords have opportunity and can raise the rents to keep up with costs in the market place. In both cases there is opportunity for landlords to keep their tenants.
If you treat your tenants with exemplary service, they will want to stay. This can help create additional opportunities for landlords. For example if a company is growing, a landlord might be able to build a new building for them or expand them in their existing location.
Relationships
This is the key to successful ownership and management of properties -- great relationships. Many landlords forget that they need to care about their tenants. This does not need to be expensive. Some landlords throw holiday parties for their tenants. Some give holiday gifts.
Some landlords go the extra mile to make sure the property the tenant leases stays in first class condition. This may sound expensive. But bear in mind that if your building is well taken care of, the tenants and their visitors will notice. Visitors will comment. The tenant will be happy because they picked the right building and will extend their lease if they can, or ask the landlord if they have another building they can lease. Our tenants spend more time in our buildings then they do at home. It is their "home away from home" and that is why we can have so much impact.
The holiday cards, the birthday cards, the personal site visits, the building improvements the personal service, the quick responses all tell a tenant that they are appreciated.
Of course not all tenants appreciate you going the extra mile or might take advantage. But we should not let the minority spoil the positive aspects of our relationships.
Just this month we installed exterior lighting at an industrial building that had been broken into recently. The landlord paid the $3000.00 bill and did not pass it through the common area maintenance charges.
Why did the Landlord do this? Because he is sending the tenant a signal that he cares about the tenant and their security. This kind of small investment pays large dividends. Sometimes you can negotiate a lease extension, when you improve the property.
Bureaucracy
As companies get bigger and landlords have more assets, they tend to lose that personal feel for the tenant. It is critical for the landlords to encourage their property managers to listen to their tenants and be proactive in their management activities.
Property managers should have thank you cards or personal stationery at their desk that they can use to send to tenants. They need to make it easy to solve problems. The quick resolution to problems shows a tenant that their problems are important and that they are appreciated. Let's put it in perspective. When you stay in a four star hotel, you expect to pay more and receive special attention.
Applying this concept to commercial real estate can work the same way. Tenants will pay more if they are taken care of. For example in a four star business park you might be able to offer a tenant a better Internet back bone, an emergency location or a generator if they have a flood or power outage. Maybe you offer a small portion of your office while they get back on their feet after an emergency, or a shared conference facility, extra parking, or a park newsletter that highlights the tenant accomplishments.
Anything you can do to make a tenant feel special will help keep that relationship into the long-term.
I could go on, but I think you get the picture. Treat the tenant like a king (or queen) and you have a good shot at keeping them as a tenant and profit from them renewing their lease. That is what tenant retention is all about.
