Tenant retention plans: Why bother?
During a distressed economy, reducing costs is a no-brainer for owners and operators of office buildings. Many industries justify spend on customer support and relations by comparing the cost of keeping a customer to the cost of acquiring a new customer. With few to no exceptions, the new customer is a more expensive proposition. Real estate is no different: acquiring a new tenant brings with it a number of costs, like building out a space, costs associated with a broker (internal or external), and concessions. Retaining a tenant, however, brings significantly fewer costs. Consequently, a strategy for driving tenant retention is an important tool for improving your bottom line.
Achieving your tenant retention goals
A tenant retention plan provides a set of goals (typically stated in percent of tenant retention) and a list of the tools that the property manager in question intends to use to achieve those goals. In order to determine the retention goal, consider the number of leases which are due to expire in a given year, as well as those which you know the tenant will vacate. Tools for driving lease renewal rates higher can include:
- Survey – St. Louis-based property managers, the Cozad Group recommends surveying tenants in order to understand what their concerns are, and gain insights into how you can better serve their needs. The survey will demonstrate your commitment to your tenants.
- Analysis – which tenants are satisfied? Which have encountered problems with their space, and how happy were they with your response? Can you put together a plan demonstrating how you will address issues in a more timely or otherwise appropriate way in the future?
- Concessions – they’re not just for new arrivals anymore! Consider offering lease concessions specifically for lease renewals.
- Communication – make sure your tenants are aware of all the available amenities, nearby attractions, and resources at your property with efficient tenant communication software.
By setting out retention goals, and a plan to meet them, you’ll put your organization in a much better position to ensure that your lessees renew, driving acquisition costs and vacancy down.
Market Insights: Impact of COVID-19 on the Multifamily Industry, July 2022
Multifamily industry data July 2022 The MRI Software Market Insights team continues to track the trends of the multifamily industry. This report looks at data from the 2020 pandemic era through July 2022 and provides year-over-year comparisons. The multifamily sector has seen a strong rebound from the effects of COVID-19, but the busy summer 2022 … Continued