foundations of real estate management boma international ® module 1: real estate administration...

Foundations of Real Estate Management

BOMA International®

Module 1: Real Estate Administration

Tenant Relations and Tenant Retention

®

Foundations of Real Estate ManagementModule 1: Real Estate Administration 2

®

Objectives

Demonstrate why retaining tenants benefits a building owner more than replacing tenants

Describe at least five tactics to improve tenant satisfaction in his building


®

Remember:

You work for the owner,

But you serve the tenants.


®

Tenant Satisfaction

Satisfaction = needs are met

What about exceeding tenant expectations?


®

Creating Raving Tenants

Would your tenants go this farto show their appreciation for your

company’s service?


®

Satisfaction

Your definition of satisfaction is not as important as

your tenant’s definition


®

Listen to Your Tenants

That which is not measured cannot be managed.

Conduct annual tenant satisfaction survey!


®

Performance Measurement

Tenant satisfaction benchmarks

Prior scores for the building

Other buildings managed by the PM company

Other buildings surveyed this year


®


The goal:

No matter how good (or bad) your survey results are…

Continuous Improvement


®


Frequent, memorable connections

yield

Higher levels of tenant satisfaction

yield

Tenant renewals


®

Yet…

Year after year,

20%

of tenants report they never heard from their property manager

in the past year


®

Goal

None of your tenants should respond that you did not have proactive communication with them in an

entire year.


®

Building Relationships

Relationships with your tenants are important…throughout the lease…not just the month before the renewal


®

Tenant Meetings

Why are tenant meetings hard to schedule?


®

Tenant Meetings

Don’t go to them!

Bring them to you!


®

Tenant Council

Comprised of tenants, vendors, property management team, and chief engineer

Three-way communication

To/from tenants

To/from vendors

To/from PM staff

Purpose: communication, problem solving, joint decision making


®

Tenant Council

Meets monthly for no more than 1 hour

Invite all tenants

Send an agenda ahead of time

Send meeting minutes afterwards

Hold everyone (vendors, tenants, and PM employees) accountable

No one wants to come back to the next meeting without resolving this issue


®

Typical Tenant Council Meeting

Review capital and major projects

Feedback about vendors, service levels, and building operations

Review items on the agenda

Invite dialogue from participants

Obtain “success stories”

When team members and vendors have exceeded expectations


®

Typical Tenant Council Meeting Vendor reps usually area managers or

supervisors who can implement changes/manage issues that are brought up Janitorial vendor attends every meeting

Security vendor attends every meeting (when there is an on-site security)

Other vendors added as needed


®

Typical Tenant Council Meeting

Tenant Can Even Choose Vendors Provide an “ownership” stake for tenants

Typically for larger bids at a property (janitorial, landscaping, security, etc.)

PM bids to competent vendors

Invite “short list” of vendors to present to PM and Tenant Council

Tenant Council and PM choose vendor


®

Improving Tenant Service Levels Walk around and look for problems Answer phone Return calls promptly Provide your mobile and pager number

for emergencies Call your own number and/or answering

service number after hours - what happens? Are you treated well? Can you get the help you need after hours?


®

Improving Tenant Service Levels Track work orders Fix problems once so they do not recur Make sure your team members are

Friendly, helpful Service oriented

Be “easy to do business with” Over-communicate. Do what you say you will do – when you

say you will do it


®

Improving Tenant Service Levels

Over-deliver Recognize and reward team

members

Never stop learning. Never stop teaching. Never stop improving.

Combination of email, personal visits, flyers, and telephone calls to

communicate with tenants


®

Improving Tenant Service Levels

Two biggest tenant complaints are Janitorial HVAC

Use Tenant Council and a proactive approach to eliminate these problems leading to Service call volume reduced by 50-60% Better use of engineers’ time

Manage Strategically!


®

Putting It Into Practice

What Best Practices can you

employ to make your tenants Raving

Tenants?


®

Putting It Into Practice

Think outside of the box – what are someAMAZING things you can do to deliver exceptional customer service to yourtenants?


®

What About the Picnic?

The picnic is once a year – neither “frequent” nor “meaningful”

Decision makers typically don’t attend Time compression makes interaction “meaningless” for many tenants Who is paying for this?

Often the tenants – and they know it!


®

Tenant Picnic

Face it: The annual tenant appreciation

picnic is a great party, but it does little to improve tenant satisfaction.


®

It’s All About Tenant Renewals

Frequent, memorable connections

yield

Higher levels of tenant satisfaction

yield

Tenant renewals


®

Renewals v. Re-tenanting

Owner Perspective Reduced commissions Reduced TI costs No lost revenue from downtime Renewal rental rates (while lower) often

mean higher profits


®


Tenant Perspective No moving costs No disruption of business Able to stay in a well-managed

building Renewal rental rates can be lower


®


Even moderate-sized tenants who renew

can save an owner $$$,$$$


®


In a 300,000 sf office building, a 20,000 sf tenant has the option to renew (or not). Assume:

$27 rental rate (new) v. $25 (renewal)

5 year lease term

$20 TI allowance (new) v. $5 (renewal)

4% leasing commission (new) v. 2% (renewal)

12 months marketing time for vacancy

$0.02 per square foot for marketing costs Source: Kingsley Associates


®

Cost of Keeping or Losing a Tenant

1.8 years0.3 years2.1 yearsPayback

$44.60$7.50$52.10Cost (PSF)

$892,067$150,000$1,042,067Total Costs

$400$0$400Marketing Costs

$91,667$50,000$141,667Commission

$300,000$100,000$400,000TI

$500,000$0$500,000Lost Rent

Property Savings

Tenant Retained

Tenant Lost


®

Tenant Still May Move...

...Even if you do everything right Decision made by “corporate”

Decision purely economic

Not able to accommodate tenant’s expansion or contraction or other business changes


®

Tenant Still May Move

But, it’s a game of odds…

Raving tenants tend to renew leases

Mediocre or average performances may mean lost leases

foundations of real estate management boma international ® module 1: real estate administration...

Documents

building slide

tenant retention slide

tenants definition slide

renewal slide

past year slide

property management

tenant council

tenant expectations