Since the sixth century B.C., Proverbs of Ahiqar, we have known that a bird in the hand is worth two in the bush. This ancient proverb can be related to almost all aspects of our lives, but I want to focus on how it relates to tenants in our buildings. Simple logic dictates that the most-likely tenants to occupy a building in the future are the existing tenants. They are our symbolic bird in the hand. Add in the fact that these “birds” can be renewed with zero downtime and lower costs, they are more like a golden goose.
While it is a higher probability that existing tenants stay at the building, it is not a certainty. Many factors play a role in the occupancy decision of a tenant. However, there is one aspect as property manager we can control: the tenant occupancy experience. From the moment they enter the garage until they leave, we have the opportunity to set the standards of the tenant experience. This experience is broken down into two distinct categories – tangible and intangible.
Tangible aspects of the occupancy experience are based on the conditions of the asset and amenities it provides. Many times people think the tangible aspects are impossible or too costly to change, which is true for some items like parking count or location. However when it comes to amenities, we have the ability to be creative.
As an overall industry, we do a good job understanding tenants’ needs. These needs may include having conference rooms, a fitness gym and bike storage areas. These are a great start to a building’s amenity package. However, if you want to reach a higher level of tenant satisfaction, the building must provide more. In the end, we as landlords need to learn what elements our tenants would enjoy, not just focus on their needs.
The great thing about focusing on enjoyment is that it actually is fun. You can see your tenants get excited about the possibilities, and it involves everyone in the building. While you will get some crazy and expensive ideas, there is some lower-hanging fruit that will allow you to separate your building from the others. For example, maybe you have some extra turf area that becomes a putting green or bocce court. Maybe there are some parking spaces in the garage that never get used – you can make a self-service car wash by simply adding a hose. Many of these ideas are based on using what you already have and activating an area that currently is not used.
In one of our buildings, for example, we converted basement storage that was not being used into a speakeasy and bowling alley. While this example is not exactly low-hanging fruit, it highlights how we all can be creative in selecting an amenity package. Adding enjoyment into the tenant mix will separate your building and make it less of a replaceable commodity.
The other side of the tenant experience is more intangible. This is based on being the ambassador, the concierge and, even sometimes, the therapist for the building. In the end, this is customer service 101 with a simple goal of helping tenants feel at home.
In 1976, Ebbesen, Kjos, and Konecni investigated the critical factors in predicting friendship formation. The research concluded that whether people became friends was most strongly predicted by their proximity to one another as proximity serves to amplify the information that is relevant to the decision of becoming friends. As property managers, we have proximity to our tenants that allows for us to form a positive relationship, however, we have to be careful.
As humans we have a tendency to hold on to negative interactions with more conviction than positive ones. I have seen this ratio be anywhere from one negative interaction offsetting five to 30 positive interactions. While we may all have a different number for this ratio, it shows that a negative interaction is powerful and time-consuming to rectify. This is why we should focus on how many quality tenant interactions we can create. It’s vital to put ourselves and our teams out in the buildings, talking and socializing with the tenants. Work with them to understand their desires for their tenancy and show them why their wishes and needs are important to us. If we only call tenants when we need something or something is wrong, it is not surprising that we end up with a negative relationship.
It is a complex mixture of both the tangible and intangible aspects of tenant relations that creates an overall successful tenant occupancy experience. It takes creativity to come up with a custom program to bring joy to your tenants and consistency to form the trust that the joy will last throughout the entire renewal term. If either aspect of the program is off balance, it will increase the amount of work and concessions the leasing team has to provide to keep the tenants satisfied. That is why truly focusing on the overall tenant occupancy experience can help limit the number of your golden geese migrating to other buildings.