In today’s economy, it is crucial to keep good tenants. The following nine points will help you maintain maximum occupancy in an uncertain environment:
- Understand the tenant’s business. Research their industry so you can credibly talk about their business, and make them feel that you understand their concerns in today's economic conditions.
- Respond reasonably to rent relief or downsizing. This entails a two-step process consisting of listening to the request, and then formulating a personal response within three days. Establish limits to these requests and button down your parameters. If the tenant is downsizing, request their financials or tax returns to understand that their current financial position warrants this action. Make sure not to open the floodgates to requests every month, however.
- Happy tenant employees means happy tenants. This is as easy as keeping the common areas clean and neat.
- Go green, well. Reducing the amount of water or soap could get employees irritated. Also, automatic motion lighting in conference rooms or offices could be more of a hassle than a money saver, whereas they may work well in a hallway or a closet. Find other ways to go green that will help the environment and not hinder employees. Also, watch individual tenant leases when attempting to pass-through Green costs.
- Follow up with tenants. Make sure to follow up with your tenants on a timely basis. There is a difference between "quick response" and "at their beck-and-call."
- Be consistent with responses to tenants. Tenants talk to each other. Tenants get angry when your message is not consistent, whether it be costs, timing of an event (like cleaning), rent relief, management deferred maintenance plan, etc.
- Tightly manage your broker’s promises. The easiest way to do this is to make sure that the broker and the property manager are on the same page – enforce constant and effective communication. Understand what the broker wants or needs so you can deliver. Also, promising occupancy before the tenant has signed the contract can get you into trouble – never anticipate a tenant's intentions until it is in writing.
- Keep current with billing. Tenants need predictability for cash flow purposes. Keep them updated and give them an estimated time frame when to expect the invoice if it will be late. Consider personally communicating changes in pass-through estimates each year – tenants appreciate the personal touch and the advanced notification.
- Be strong, be fair, be smart. Remember that retaining the tenant may not be in the best interest for both parties involved. Also, don’t give up too easily, but if it is clear the tenant will not make it financially, come to an agreement. If the lease is more than 10 years old, update the lease to the way the property is operated today. Items specific to the lease that could have changed are holidays, weekend hours of operation, pass-through costs, timing and collection of rents; prohibited activities, sub-leasing, etc.
***This summary was based on a webinar from the members-only section of the NAIOP website. Most of the points have been modified pursuant to the blogger's experience.
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