The lease has been signed, the tenant's moved in - now how do you make sure he or she doesn't go anywhere?
In San Diego's changeable commercial real estate industry, it's not only about attracting tenants to your building, it's also about keeping them there.
According to Glenn Fibiger, RPA, property manager for Landmark Asset Management Group and president of BOMA San Diego, tenant retention is key to maintaining a profitable building.
"Retaining a tenant keeps costs down and insures a steady income stream," Fibiger said. "Generally speaking, the landlord will spend much less in tenant improvements by retaining an existing tenant, sometimes just replacing the carpet and providing a fresh coat of paint, whereas they would likely have to complete more costly TIs [tenant improvements] to attract a new tenant to the space."
While property managers cannot control factors such as market rental rates and location when tenants are considering renewing their leases, they can control the level of customer service a tenant receives, which plays an integral role in the tenant's overall satisfaction.
"Tenants want to have a personal connection with the company who owns the building in which they lease space, and the property manager is that connection," said Cybele Thompson, RPA, FMA, regional vice president for PM Realty Group. "To ensure tenant retention, the manager must provide a superior level of service which typically equates to quick response time from management on a variety of potential issues, from lease administration questions, to accounting questions, to something as simple as getting a light bulb changed or a thermostat repaired."
Property managers are a service provider, and it is their job to create and maintain positive relations throughout the lease term.
"Keeping the lines of communication open and negotiating honestly and fairly sets the basis for good tenant-manager relations and increases the chances for tenant renewal," Fibiger said. "Building a level of trust takes time and cannot be accomplished overnight - if a manager waits until the year before a tenant expires to extend their efforts, they have not been doing their job."
Excellent customer service on the part of the property manager can at times overcome areas where a building may be lacking, such as price or location - similarly, an ideal location can be overshadowed by a negative customer-service experience in the tenant's mind.
"A tenant will naturally be more concerned with a building's functionality and amenities than with its management company," Thompson said. "However, we have many examples of properties which have had real physical and location challenges and yet have some of the highest tenant retention rates in the market simply due to the management style and attention to detail of the property management company on that building."
There will always be reasons outside a manager's control for a tenant's non-renewal. However, the property manager's goal is to ensure that if a tenant does not renew, it's not for lack of customer service.
The following are some important tenant relation tips for property managers that may help increase retention rates:
* Always return phone calls and e-mails the same day.
* Provide a real response to the tenants' question or problem so that they feel they've come away from your interaction with a true solution to their challenge.
* Maintain a schedule of planned regular contact with tenants so that they know you're thinking about them, even when they're not thinking about you. Some tenants will not reveal their issues unless directly asked, and yet those same issues could prevent tenants from renewing or from enjoying their experience at your building if the issue is not resolved.
* Accountants, security guards, engineers, day porters, and janitors all must be committed to providing the highest quality service. Their work is a direct reflection of your service delivery, and if you can build a team dedicated to delivering service you're on the right road.
* Maintain a positive attitude and enjoy your work. If you don't enjoy your job, it will negatively affect your performance. You can't make other people happy if you're not happy yourself.