When you are working as a property or leasing manager on commercial investment property, it is wise to implement a tenant retention program for the property itself but also for the landlord in the greater portfolio they may own.
A tenant retention plan will help the overall income strategy for the subject property and minimise vacancy downtime. In this property market and economy a retention plan within the tenant mix will help the income and expenditure budget for the property. It's simply a great idea and tool for the property manager to use.
So the tenant retention plan can become a specialised service for the real estate agent that specialises in commercial and retail investment property. It can be called a number of things, all of which help the marketing of the concept to the property owners the agent represents.
The key benefits of a tenant retention plan or program are:
- Income stability through planned lease options, rent reviews, new leases and tenant placement
- Allocation of leased space to the tenants that most need it
- Maximised rental given local market rental trends in comparable properties
- Directed lease strategies to sitting tenants that retain their occupancy
- Expenditure recovery from a more stable and predictable occupancy and outgoings base
- Lease terms and conditions that help the landlord match their investment holding plans
- Renovation and relocation programs that can be integrated into the retention plan
The tenants in a property will usually cooperate with a retention program for the simple reason that they appreciate the focus of the landlord and property manager on their needs as a business.
To get the retention program up and running a simple staged approach is best. Here are some ideas:
- Set up a questionnaire for the tenants to complete and talk to you about each month or quarter; meeting frequency is depending on the activity in the property and the surrounding area.
- Expect that other agents will be chasing your tenants to change property lease. The retention program helps keep this pressure under control.
- Review all leases in the property so you know the critical dates that will impact the retention plan. They are usually rent reviews, lease options, lease expiry, and renewals.
- Check out the supply and demand for leased space in the local area as it will have impact on the choices you make with your property.
- Changes to the community and businesses surrounding the property should be monitored on a monthly basis at the local planning office.
- Negotiate early with any desirable sitting tenant. This prevents them getting rental offers and proposals from other nearby properties.
A tenant retention plan is a good property management or leasing tool. The property owner will see solid advantages in implementing the plan into their tenant mix and investment plans.