CREJ

July 2021 — Property Management Quarterly — Page 23 www.crej.com Management W e all know losing tenants costs property owners and managers money. Depending on the tenant size and the market, losing one tenant can cost from thousands to hundreds of thousands of dol- lars. Lost rent, tenant improvement allowances and lease commissions add up quickly – not to mention the potential funding required to pre- pare the newly vacated space for showings, the effort of physically listing the property on information exchanges and the time require- ment of showing the property to potential tenants. This post-tenant situation can drag on for months and sometimes years, which can further compound a problem that’s already financially devastating. Con- cisely, retaining existing tenants is instrumental to operating a success- ful investment property. Successful tenant retention begins with the first contact between the tenant and the owner or its repre- sentative, and not when the lease is approaching expiration. This relationship strengthening pro- cess continues after first contact as a full-time job of responding to urgent and minute items, providing frequent and open communication, and maintaining consistent profes- sionalism. If it’s not disruptive to the businesses within the building, having cleaning and main- tenance operations performed during business hours is a practical means of providing evidence of good and respon- sive management, increasing the tenant’s perception of a professionally run property. In circling back to responsiveness to tenant inquiries, it’s crucial to note that communication from ownership and/or management is a substantial factor in driving tenants’ percep- tions; it’s imperative that owners and managers respond as quickly and as professionally as possible when ten- ants reach out, even if simply provid- ing a quick note such as: “Thanks for reaching out. I don’t have an answer for you right now, but I will get back to you as soon as I know more. I appreciate your patience.” Some landlords go so far as provid- ing little “extras” such as periodical newsletters, welcome gifts, seasonal treats, global Wi-Fi, security cameras and tenant outings. Remember, the tenant is your customer. Treat them well and provide them the service that will make them want to do busi- ness with you again. If you don’t, someone else will. As Warren Buffett said, “It takes 20 years to build a repu- tation and five minutes to ruin it. If you think about that, you’ll do things differently.” Even when factoring the costs of tenant turnover, there are situations when it is simply not in the best interest of the owner to retain cer- tain tenants. The overall tenant mix and whether financial obligations and other lease terms have been met could be reasons to not renew. And occasionally, you might have a tenant that’s so challenging (impolite, bellig- erent, consciously defiant, perpetually displeased, etc.) that you just don’t want to (and really shouldn’t have to) deal with it any longer. As always, current market conditions also should be considered when making the decision of nonrenewal with a given tenant. s byoder@dormanrealestate.com Lessons learned for tenant retention and relations Benjamin Yoder Director of commercial management, Dorman Commercial Real Estate Retaining existing tenants is instrumental to operating a successful investment property. Treat them well and provide them the service that will make them want to do business with you again.