In commercial and retail property today, a tenant retention plan should be part of the services provided by specialist commercial leasing agents and property managers. The retention plan can be a value-add service for the clients that we work for.
It is no secret that the commercial and retail property investment market is under some strain. That is all due to the pressures on the local business community. This will change and improve over time. Up until then, we need to approach the property market with system and focus to help the clients that we work for. The tenant retention plan is one way of doing that.
That’s presume you have a good property to work with and the client to assist when it comes to tenant retention. Here are some tips to help you build the program and the system of retention.
- Review the property comprehensively to determine which tenants are more important to the future of the property. Those high priority tenants should receive special treatment when it comes to lease renegotiation and occupancy. The other tenants in the property may be retained although some form of priority needs to be determined.
- Review all the leases relative to all tenancies. Those leases will contain critical dates and terms and conditions that will have impact on the property function and tenancy mix. Ensure that those dates and factors are allowed for when it comes to tenant negotiation and tenant planning.
- Keep in close contact with all tenants within the building to ensure that any needs of expansion or contraction are fully understood. If you do not do this, it is quite likely that the tenant will look elsewhere to other agencies for assistance and relocation. Before long you will have a vacancy to deal with which could have been avoided?
- To formulate a good retention plan, you need a strategy of rental and lease documentation. The rents for the property can be either gross or net and should be determined based on the trends of the local property industry and the age of the property. The rents should assist the landlord to recover property operational costs (also known as outgoings). Any rent reviews applied to the leases will be based on the rental type and lease term. Strategy is everything with rental choices, so make sure you have the right information to help you with the correct rental choices.
- Lease incentives will vary throughout the year from property to property and with relevance to any new property developments coming up. Incentives will potentially attract your tenants to move elsewhere. For this very reason, your client, the property owner, needs to be quite flexible when it comes to the setting of lease incentives for existing sitting tenants. Failure to provide an incentive to a sitting tenant may very well see them move elsewhere. The cost of a vacancy in a property is significant and most inconvenient at most times.
- As part of the retention plan, review the local area with due regard for competing properties. They will have an impact on your tenancy mix and also market rental. Some of those competing properties will be influencing your tenants to move elsewhere. Be careful and respectful of these competing properties.
So these are some tips and ideas that can apply to the tenant retention program. As a specialized leasing agent, you can establish some real strategy here to help the landlord with their property momentum and property focus. When the property market is slow or tough, the value of a retention program is high. You simply need to structure your fee for service into the appropriate appointment to act.