Tenant Relations, Tenant Retention

 I learned a long time ago that Landlords and Tenants were basically "partners."  The success of each was predicated upon the success of the other.

In what has undoubtedly been the worst down-cycle for commercial real estate in over 80 years, landlords have been busy doing workouts with existing tenants and offering higher incentives to fill the vacant suites in their office, retail and industrial projects.

Unfortunately, a lot of tenants are not coming back anytime soon.  Many have gone out of business; and, many have relocated to better locations, or projects with lower rents.

Landlords and Tenants that have acted like partners, seem to be doing better than those acting like adversaries.  Those Landlords and Tenants that had been talking with each other from the very start, and those that maintained that interaction, found it easier to communicate when things started going downhill. 

From a historical standpoint, leases and Landlord/Tenant relationships, have evolved from a one page hand written document to documents containing up to 15, 50, and more pages.  Most of the changes can be traced back to the need to better define the relationship or expectaions of the parties, or to include provisions required by governmental "authorities."  As commercial real estate grew in size, scope, and complexity, everyone tried to mold the lease document into an agreement that took care of THEIR need(s).  Yen and Yang.

Whether a "balance" has been achieved or not, will probably be always debatible, depending on which side of the fence you're on.

The best lease is the lease that is never referred to.  It sits in a cabinet collecting dust.

Each party to the lease has done what they said they would do.  Tenants pay their rent and adhere to the provisions of the lease and Landlords meet their obligations under the lease. A perfect world.

I suppose it's possible to have a great Landlord/Tenant relationship without having to communicate with one another; but, I suspect that over time, those not willing to have an active relationship may be surprised when the tenant leaves for greener pastures.

Ten years ago, I surveyed my clients on what they perceived to be the top ten duties of our commercial management firm.  Most chose tenant relations and tenant retention as being the most important services. Leasing, Property Inspections, Reporting, Operational issues, Accounting, Budgeting, Strategic planning, and Tenant improvement oversight followed behind, in no discernible order.

Whenever the weather gets nice in Phoenix, Clients flock to the city to visit their properties, get in a little golf or some R & R.  

March has been such a month.  Five of our clients have visited in the last two weeks. All five have applauded our managers' relationships with the tenants, their communication skills and their abilities to resolve tenant and operational issues quickly and professionally.

The next time you visit your property, visit your tenants.  Ask them the name of the manager and when the last time the manager visited them.  If the answers are "I don't know who the manager is" and "I haven't seen him/her since I moved in," then your management company is not doing the job it's paid to do.  They are not taking care of your partner.