Mariwyn Evans writes about commercial real estate for REALTOR® Magazine. You can reach her at email@example.com.
10 Tips for Tenant Retention in a Lessee's Market
March 1, 2012
Approach tenants early. In a market with vacancies in the high double digits, start lease renewal negotiations 12 to 24 months in advance.
Don’t bring in competing tenants just to earn an extra buck. In a tough market, it’s tempting to take any lease, but ignoring noncompete lease clauses can cost you a tenant, get you in a lawsuit, and undermine percentage rents.
Invest to avoid functional obsolescence. Spending on upgrades may hurt the bottom line over the short term, but improvements will pay dividends in long-term tenants.
Educate tenants and owners about what the market is doing. Market knowledge about vacancies and any new properties coming online will help keep rent negotiations realistic on both sides.
Avoid guessing games. Offer a fair deal, use comps to explain your offer, and communicate your position clearly.
Keep the decision makers happy. The boss and office manager will notice factors such as HVAC and janitorial services. It’s a lot easier to replace a poor cleaning service than a tenant.
Don’t slack on face time. It’s not enough simply to provide a lot of services to tenants. Being available in person can sway that renewal decision.
Never go on the defensive. When a tenant calls to complain, you should listen, empathize, and solve the problem. Don’t make excuses.
Treat an existing tenant the way you’d treat a new one. Take an interest in each tenant’s business and stay in touch with tenants regularly, not just when they complain or it’s time for a renewal.
Put the real estate first. If a property is well-maintained, it gives tenants a reason to stay.
Sources: David Zimmer, SIOR, Zimmer Real Estate Services, Kansas City, Mo.; Paul Waters, CCIM, CRE, NAI Global, New York; Chris Teesdale, SIOR, Supply Chain Real Estate Advisors, Dallas; Greg Gunn, SIOR, Coldwell Banker Commercial, Salt Lake City; Jo Anne Corbitt, CPM, The Mathews Company, Nashville, Tenn.; Elizabeth McSweeney, Colliers International, Atlanta; Ian Grusd, CCIM, SIOR, Sperry Van Ness Richter Grusd, Iselin, N.J.; Beau Beery, CPM, CCIM, Coldwell Banker M. M. Parrish, REALTORS®, Gainesville, Fla.