HOW TO BOOST COMMERCIAL REAL ESTATE TENANT RETENTION AND HAPPINESS
Commercial real estate investments are major projects and should be run as a business to achieve successful profits. Prosperity of the leased premises depends on the ability to stabilize cash flows and improve the bottom line.
One major factor in commercial real estate investment success is cultivating positive tenant retention and happiness. Maintaining rentable space for financially sound tenants are the fundamental principles for continuous cash flows.
Customer retention is often an underestimated factor in real estate success and not given nearly enough attention.
Plenty of effort is spent finding and marketing to new tenants, but investors and landlords often neglect to take care of existing customers and make them happy.
Unhappy tenants eventually move out, and turnovers can be expensive in commercial real estate: lost rent opportunity as the property sits vacant, potential repair costs that exceed the deposit, build-out or relocation costs for upcoming tenants, and fees or commissions for brokers and property management companies.
This could be a headache for both commercial landlords and property managers.
The general rule of thumb is that your cheapest customers are your current customers.
Working to keep your current tenants happy should be top of mind for your leased premises.
That includes knowing your tenants, what services they really value, how to provide those services, and ultimately, how to deliver an overall good experience in your building space for both landlord and tenant.
Let’s get started with the best ways to boost relations and retention with your commercial tenants.
BUILD A GENUINE RELATIONSHIP
Typically tenants are predetermined to have distaste for their landlords, often times due to previous experience with other living situations.
Tenants only think of landlords when something breaks or as the people taking their hard-earned money every month.
Be the exception!
In fact, with preconceived notions often being negative, it doesn’t actually take much to flip the script between landlords and tenants.
Cultivating an honest and sincere relationship with your tenants is the first step to creating a positive experience for them, leading to increased retention rates.
From the start, develop and provide channels of open communication with tenants outside of just the lease agreement.
Keep in touch on a regular basis and show your tenants that you genuinely care about their success.
One idea is hosting an annual property management meeting to generate face-to-face feedback from all your tenants.
Have an open discussion about what they like about the property, what aspects they dislike, and any specific issues they want to address regarding the commercial premises.
Following up on in-person meetings, publishing monthly or quarterly newsletters regarding the building and surrounding community can build positive goodwill between you and your tenants.
The frequency of newsletter updates depends on the amount of exposure you want with your tenants.
It’s important to use regular communication channels to share information about building updates, maintenance, or new amenities.
If you want to help boost your tenants overall experience in the building and surrounding area, keep an eye on fun events happening in the neighborhood and community.
Include these in your newsletter updates to get your tenants interacting with the community and help them grow roots in your building.
BE RESPONSIVE AND ON TOP OF YOUR GAME
Again, the majority of tenant communication with landlords comes in some sort of negative situation: something breaks and needs fixing, monthly rent is due, or maintenance is causing a ruckus around the building.
The key to leaving a positive lasting impression on your tenants is responsiveness and timeliness.
With limited contact, this is your primary opportunity as a landlord to impress tenants and provide superior service.
Being quick to help tenants solve problems shows your attentiveness and sincere desire to help.
Responding to and completing maintenance requests promptly is essential to retaining tenants in your building.
The little things make all the difference when providing tenants with the best overall experience.
If you really want tenants to come away amazed when the maintenance crew comes around, instead of the usual feelings of being burdened, ensure the maintenance staff are friendly, properly dressed, and can get the job done right the first time.
Having a positive interaction with the maintenance staff can go a long way in turning a potentially disastrous situation into a feel-good experience.
RESEARCH YOUR TENANT BEFOREHAND
This is where a landlord’s due diligence comes in to save the day.
You want to know as much about your tenants as possible to determine if they are the right fit and partner for the next several years – especially when it comes to commercial leases.
Start with screening any potential tenants that are interested in your building and do it diligently.
If you miss something that points to an inability to pay rent down the road, you might have a situation that requires evicting the tenant and creating an unwanted vacancy.
On top of possible commercial eviction, you could end up with tenants who consistently pay rent late, cause damage to the property, create endless hassles for landlords or property managers, or might be likely to break a lease early.
As a landlord invested in their tenant’s success, get to know the tenant’s business and understand how the building and amenities could help them grow and expand. Ask leading questions:
- How are they utilizing the building space?
- Can the layout be optimized in a different way?
- Do they hold large meetings often?
- Are they hiring more employees and looking to expand?
Ask your tenants other open-ended questions as well related to their ideal landlord and building experience:
- What would the ultimate tenant experience look like?
- What are the ideal characteristics you would want from a landlord?
- What is your preferred method of communication?
- What kind of community and events would you want from your building space?
Get to know your tenants and how they operate as a business.
Let them drive the conversation and tell you what they want and expect from the landlord and tenant relationship.
Once you have an idea of their ideal situation, you have a benchmark to strive for going forward.
DIVE DEEP, GO ABOVE AND BEYOND
To develop the ultimate tenant experience, take it to the next level.
The objective is to increase tenant engagement within the building and let them know they are a priority.
This could lead to a tenant improvement through word of mouth, and bringing more viable and responsible tenants looking to sign commercial leases.
Tenant-centric events can build relationships within the building among various tenants and with the landlord or property manager.
Hosting holiday parties, lunch and snack events, or regular meetups in the building lounge can encourage interaction among your tenants.
Another idea is to find out what your tenants like, for example their favorite restaurant or events in the area.
Keep this information tucked away, and if there’s ever a major problem requiring maintenance or your staff handles a situation poorly that leads to a frustrated tenant, give them a gift card from the restaurant or special gift to show your sincerity in the situation.
Rather than just bandaging the problem with a cash refund or discount, this can work towards building customer loyalty.
Remember, the goal is to keep your tenants happy.
You want them to feel a positive experience as tenants in your building.
It’s crucial to know your tenants and their business for a multitude of reasons that all lead back to tenant retention and happiness.
If you can develop a healthy relationship with tenants and help them succeed, that will ultimately impact your bottom line as a landlord and investor.
If tenants are engaged and receive an overall experience related to your building space, you could have stable customers for years to come, and reap the benefits of consistent cash flow on your commercial real estate investments.