X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

WASHINGTON, DC-It is self evident that a bigger focus on tenant retention in these–and indeed all–real estate cycles is key to any building owner’s success. Surprisingly, though, not enough building owners are proactive in property management outreach as they should be, according to participants in a Building Owners and Managers Assoc.’s webinar, held Wednesday afternoon. Called “The Road to Renewals: Keep Tenants Happy in a Depressed Economy,” the event was the first in what will be a series this fall from BOMA.

Marc Fischer, director of management services at Transwestern and Jim Woidat, Principal of Kingsley Associates, led the discussion. Keeping tenants happy, of course, is a no-brainer, the two agreed.

The reduced cash flow resulting from just one departing tenant can be significant–and have a multiplier effect across an entire portfolio, they point out. At an average rental rate of $40 per square foot, a departing tenant that occupied 20,000 square feet could deliver an $800,000 hit, assuming it takes a year to replace it with another company. Commissions paid out for renewals–as opposed to new tenants–further erode a landlord’s bottom line; ditto for TIs, which can be as much as $35 per square foot for a new lease, compared to $10 per square foot for a renewal. Bottom line for that hypothetical 20,000 square foot tenant: a total of $1.4 million over the course of the year.

“Property management is one of the most closely correlated factors to tenant retention and satisfaction,” Woidat said. “You want to create such a good tenant experience that they will immediately think of the property management service when it comes time for the lease renewal.”

How exactly to do that, however, is less clear. Leaving aside the obvious–keeping on top of maintenance, responding to complaints, etc.–the duo suggested proactive outreach on an ongoing basis as a start. Surveys–conducted by third parties if possible–top the list of best practices in this area. “Don’t assume that because you never hear from your tenants that everything is okay,” Fischer said. “It may be that they have gotten so discouraged from the service they receive they don’t try anymore.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.