In this competitive commercial real estate market, retaining tenants is key for maintaining a stable revenue stream. Having as little vacancy as possible makes the property more attractive to tenants, their customers, and prospective tenants.
Today’s changing work habits and evolving market expectations have presented new challenges for property managers and owners. Achieving high tenant retention rates requires focusing on more than securing leases. They must create environments where businesses want to stay and grow.
For property managers and owners, adapting to these shifts means moving beyond traditional commercial real estate property management practices. Savvy property managers and owners have a deep understanding of what current tenants want. Some top priorities include flexible lease terms, security, property upkeep, advanced technology, and sustainability initiatives.
By implementing these elements, you can exceed the demands of modern tenants while ensuring your commercial real estate property remains competitive in a fluctuating market.
Here are tips to fortify your commercial real estate property’s retention strategy to help retain tenants and promote long-term commitments.
1. Know Your Numbers
Are you tracking key performance indicators? These tell the commercial property’s story. Start by tracking occupancy and vacancy rates. This gives you an overall picture of how much your property is leased at any given time. You’ll know whether vacancy rates are climbing or dropping.
Another figure is the average number of days to lease. It indicates the number of days any unit stays empty. This key performance indicator provides the average rate of empty units. The goal is to keep it as low as possible. If it trends upward, then it could affect income.
Pay attention to this number as you implement your commercial property retention strategy. If the average days to lease numbers go down, then it’s a good sign the retention strategy is working.
One of the best practices in real estate is to try to hold on to your current tenants. It’s less expensive to retain them than to find new tenants. When companies don’t pay attention to retention, they risk longer-term occupancy.
The tenant turnover key performance indicator tracks how many tenants have moved out and how long they’ve stayed in the commercial property. It helps answer questions related to who is leaving. Is it short-term tenants? Long-term tenants? If it’s the former, you need a strategy that compels them to stay.
Sometimes short-term tenants are pop-up shops or seasonal businesses. Is it worth attracting them? Of course, a short-term tenant is better than no tenant. Can you attract another business that isn’t seasonal or short-term?
2. Offer Amenities
No retention strategy is complete without amenities. If you don’t know what tenants want, then ask them. They might surprise you with their answers. They may want an onsite coffee shop or gym. These can attract non-tenants to bring in a stream of people. Stay on top of maintenance and upkeep to improve the property. A simple paint job can give the property a fresh look.
3. Provide Flexible Pricing and Incentives
Inflation has put off many businesses from investing in real estate. Every business has their preference when it comes to pricing. Having only one pricing structure can cause you to lose tenants who need a different pricing structure. Commercial property managers and owners need to be flexible with pricing. Incentives can entice a new tenant to sign up.
Incentives go hand-in-hand with flexible pricing. For example, provide incentives for those who commit to a longer lease. Incentives can be a discount on rent, unit upgrades, or free utilities.
4. Build Relationships with Tenants
A high turnover rate can be expensive and requires more staffing resources. Any vacancy puts a hit on the bottom line. An effective way to retain tenants and ensure they are happy is to build relationships with them and prioritize customer service.
How easy or hard is it for tenants to report a problem? How does the property respond to those problem reports? Are they slow or fast? Friendly or gruff? Does the team make the tenants feel valued and heard? Subpar customer service is a surefire way to lose tenants. It’s important to have a process for reporting problems and following up on them.
Bring tenants together by hosting events. When tenants get to know each other, they’re more likely to look out for each other. Consistent communication and encouraging transparency go a long way toward strengthening the relationship between tenants and the commercial property management team. Ask tenants for feedback by creating a process that lets them leave anonymous feedback. They’re more likely to be open if they don’t fear reprisal.
5. Be Active in the Community
The community isn’t just the commercial property team and the tenants in the building. It’s also the surrounding area. Businesses that build relationships and give back show they care about the community.
When the community is successful, the business will be too. The more people who shop, live, and play in the community, the more resources the community will have. It takes everyone — businesses and citizens — to help a community thrive.
More and more businesses are prioritizing conscious capitalism. This is an extension of social and environmental responsibility. With conscious capitalism, businesses look beyond serving their management and shareholders. They expand the definition of stakeholders to include employees, the environment, and humans.
Conscious capitalism also means the business works to run ethical operations and their purpose isn’t limited to profits. Being an active contributor to the community makes this possible. It turns out companies that adopt conscious capitalism gain many benefits including happier and more productive employees. The community is likely to do business with the company if their values align.
6. Add Video Surveillance with Monitoring Services
Tenants value security. They want their employees, clients, and visitors to feel safe coming to the building. But it takes the right kind of security system to do that. Traditional security cameras no longer achieve this because they’re a reactive security system. They don’t have the ability to deter commercial property crime. In some cases, they don’t alert anyone of a potential crime that took place.
One of the recommendations for amenities is advanced technology that has a purpose. Video surveillance with monitoring services can be a game changer. Remote video monitoring utilizes artificial intelligence and trained human monitoring operators. This partnership allows them to help deter crimes and unwanted activity. In other words, it’s proactive.
The best artificial intelligence surveillance systems don’t work alone. They need humans involved. Artificial intelligence and monitoring operators watch the cameras in real-time. The technology of artificial intelligence and machine learning scans many surveillance cameras continuously and simultaneously for anomalies.
When it picks up an activity, trained monitoring operators, located in remote monitoring centers, can assess the situation and jump into action. For example, if a suspicious person approaches the property, the monitoring operator can issue a warning through a speaker. Sometimes this works, but not always. The person may not hear the warning, or they choose to ignore it.
The operator can continue to follow the person’s movements. If the situation demands it, they can call local authorities and report the intruder’s activities until the situation is resolved. This helps protect the police as they will know what awaits them on the commercial property.
Everything the cameras catch on the property can be stored as recordings. These help with identifying information, which can lead to an arrest. The recordings also serve as evidence for police and insurance investigations.
Invest in a Commercial Property Retention Strategy
It’s good business practice to have a tenant leasing and retention strategy. An effective place to start is identifying and tracking key performance indicators. These tell your commercial property’s narrative. They provide hints to help you adjust your strategy.
After identifying the KPIs, you can put a plan in place to retain your tenants. You achieve that by offering amenities, providing flexible pricing and incentives, building relationships, participating in the community, and incorporating security.
Together, these help strengthen your retention strategy and your connections with many stakeholders. To be successful here means asking tenants for feedback. Property management tends to make assumptions about what tenants want and they are often wrong.
Video surveillance with remote monitoring that includes artificial intelligence is more affordable than most realize. Commercial properties that work with a company like ECAM often see a return on their security services investment within months. Surveillance and monitoring technology comes with multiple layers of security built in. Your tenants, their employees, and customers will feel safe on the commercial property.
Another advantage of working with ECAM is you gain access to law enforcement. ECAM has developed relationships with law enforcement agencies across North America. Law enforcement knows when they get a call from ECAM that it’s a real emergency because they have video verification.
ECAM’s security experts can design a security solution that meets your requirements and budget. Upgrade your business with commercial-grade video surveillance and monitoring. To learn more, contact us.
