Attracting and retaining good tenants is a property owner's most important business goal. Even in the best rental markets, it’s cheaper to retain a good tenant than to fill a vacancy. In a poor market, retaining tenants is the best way to avoid losses. When a tenant leaves, making the property rent ready costs money. Finding another good qualified tenant also takes time. In real estate, time is money. The national average cost of tenant turnover is equal to three month’s rent. This doesn't include the lost rent during the vacancy. It makes good business sense to put your effort into retaining good tenants.
"Tenants are the heartbeat of buildings.
Without them, buildings are just bricks and mortar."
A satisfied tenant is not always a loyal tenant
Much research indicates no connection exists between satisfaction and long term loyalty. A high level of tenant satisfaction does not mean they are, or will become loyal. Satisfied tenants stay until a better alternative presents itself, regardless of if their expectations are being met. Leaving is easy when there is no emotional connection or investment to the building. There is no long term commitment without loyalty.
Tenant loyalty is what drives tenants to utilize your building services and remain longer. A tenant that feels connected to the building is “all in” and committed. The emotional connection is what makes all the difference.
What leads to tenant loyalty is a good experience and having their expectations met. Bad experiences lead to the tenant leaving and more turnover.
How do owners drive tenant loyalty? Start with identifying the “gap” between desired and delivered experiences. Do you know what your tenants want and need? Don't guess, ask them. Delivering a better building experience than the competition is the ultimate competitive advantage. A postive tenant experience has pronounced affect on loyalty.
For example, Buildingvibe uses analytics to measure if tenant expectations are being met.
This helps focus on removing dissatisfiers. Property managers can’t drive tenants to loyalty if they’re dissatisfied.
3 Key Tenant Retention Strategies
1. Streamline communication
Today’s tenant wants faster and transparent communication. It's how they expect to communicate today. One way communication is not enough. Tenants are more satisfied when ownership shows genuine interest in listening. Staying in touch with what the tenant needs improves quality of service. Listening and taking appropriate action to address the tenant need is key. It's a continuous process and not something that occurs only when there's a problem. Replace email with a tenant portal to communicate, broadcast notifications, emergencies and announcements.
2. Tenant engagement
An informed tenant feels more engaged. Develop tenant loyalty through building a sense of community. Offer building events, parties, or informative seminars. Deliver content on what’s happening in surrounding area and cultural events. Keep tenants up to date with new building amenities and resources. Provide social gatherings for tenants to network and get to know each other.
3. Collect and measure tenant feedback
Know what matters to your tenants. Provide a simple way to survey, ask questions and measure tenants' responses. Collecting tenant feedback demonstrates the owner's interest in what the tenant has to say. Use feedback to make informed decisions about how to address what the tenant wants and needs. This helps take the guesswork out where improvements will make the most impact. Capital improvements are better aligned with what the tenant needs and wants.
Tenant expectations change
Increasing pace of innovation changes expectations for what represents good tenant service. It also influences what the tenant experience comprises of. Today’s tenants bring their experiences with them. This includes expectations of “the best” experiences to every other experience they have. The bar is set high with all the great amenities offered by the competition. Property owners need to act on the evolving nature of such expectations.
What once was a “nice to have” amenity is now a basic requirement. As expectations change, so must property owners. They need to understand what their tenants want today to avoid playing catch up for tomorrow.