Top Ways To Attract And Retain QUALITY Tenants
Last week we weighed in on the tangible nature of real estate assets vs. equities and bonds. While real estate owners don’t have control over market conditions, they do enjoy the freedom in how to respond to those conditions by taking actions that will maximize the cash flow and ultimate value of their properties. In this post, we discuss the importance of focusing on things you can do to improve your property’s position in the marketplace.
To Tenants, It’s All About Value
Providing a quality workspace experience for your tenants is a key component of maximizing the return on your office building investment. Given the strong demand for space and the limited amount of new construction confined to expensive Class A space, most small business owners are looking for real value when searching for a new location. Occupancy cost is one of the largest line items for businesses of all kinds, and discerning business owners are looking for space that has the image and amenities to attract and retain the best employees.
Setting Yourself Apart
For your building to attract the serious attention from discerning business owners, it needs to compare favorably to the best-in-class properties in your area. When you have space available, you want it to lease up as quickly as possible to financially qualified tenants. As you know, vacant space has a huge impact on near term cash flow, and the leasing history of the property will figure into the underwriting process when buyers evaluate your property for potential acquisition.
So, what does it take in today’s market to provide a quality experience? There’s no short answer to that question, as there are a number of items that figure into the quality equation. First and foremost is location, but your building is where it is and that won’t be changing.
Taking Control Where You Can
Next in order of priority is the overall physical condition of the property, and that is something you do have control over. A building with strong curb appeal that is properly maintained is crucial to the decision-making process for every tenant. As the saying goes: “you never get a second chance at a first impression”. Well-maintained landscaping with trimmed trees and lots of color go a long way, as does a freshly slurry-coated and striped parking area and a newly painted exterior. Before your prospective tenant even gets out of the car, you want him or her to have the feeling that there is pride in ownership.
Interior common areas are just as important as your exterior. Perhaps even more important. Is your lobby, common area hallways and restrooms in top condition or are they looking tired and in need of attention. Each of your tenants interact with the common areas multiple times a day, so it’s paying attention to details in those areas that can really make a difference. Are the plants well-maintained, are the restrooms clean and properly lit and ventilated? Is the carpet and other floor treatments in good condition and are the windows clean and clear? These things may sound obvious, but you might be surprised how many property owners don’t pay proper attention to them. Then they wonder why their space takes longer to lease and why they aren’t getting the most creditworthy tenants to choose from.
Appealing to the Younger Generation
Amenities also figure into the equation. The workforce is getting younger by the day and the millennial crowd has a different set of priorities than their baby-boomer counterparts. Armed with all the latest communication technology, workers these days like to move around and change the scenery during the workday. They also like having walkable amenities like restaurants and service retailers. If your building is well located, you have an advantage over some of your competitors. If not, you may want to look for ways within your control to bring them to the building. Food trucks, outdoor seating, laundry service, scheduled tenant appreciation events and common areas designed for socializing will go a long way toward making your building a great place to work. Workplace ambience, according to a recent report published by Deloitte, had this to say about WeWork, a company that has grown to 237 locations around the world in short order:
WeWork’s goal appears to be to create not only a functional experience but also a memorable one through a vibrant ambience, varied open-seating options, amenities, and networking opportunities for the on-the-go Millennial and Gen Z workforce.
It’s All About Service
The importance of responsiveness cannot be overstated. Whether it’s completing the build-out on time or simply changing a light bulb, your tenants need to know that they are important to you. Your building needs constant maintenance and your willingness to move quickly and professionally when your tenants are in need will improve their experience at your building. They will be less likely to complain about the little things if you take care of them in short order. If you don’t, the small things will become big things and you may lose the opportunity to renew tenants when their leases expire. Keeping good tenants is a lot less expensive than suffering the loss of income and cost of new build-outs associated with securing new tenants.
We Can Help
There is certainly more to discuss when it comes to creating a quality experience for your tenants. It’s a topic we keep in mind all day as professional asset and property managers. If you would like our input on how your building’s position in the marketplace could be enhanced, we are just a phone call away at (949)668-1110 or you can contact us here.