Today's real estate CEOs are faced with rising operating costs, declining profits, extended lease-up periods, a black hole called technology expenditures, and a tenant base that is demanding and expecting more services and attention. Compounding a CEO's dilemma are regional and national economic, energy, and corporate challenges that have yet to achieve their full impact on operating statements. Not a day goes by that one does not read about declining earnings, failure to meet dividend targets, and layoffs in corporate America. Guiding a real estate organization through this maze of challenges and opportunities requires leaders who are skilled at building and nurturing teams and lasting tenant relationships. Unfortunately, when "markets become soft," when revenues and profits are "not what we expected," the often untapped gold mine is the company's tenant base.
According to a recent study by CEL & Associates Inc., Los Angeles, building lasting, valued relationships with tenants was one of the top five priorities of most real estate CEOs. The recent and accelerating shift by many real estate firms from a geo-centric to a client- or tenant-centric business model is beginning to register added profits. Real estate organizations that have developed and deployed tenant relationship management (TRM) programs are discovering that their renewal costs have declined. The emergence of ancillary income as a viable component of each property's income statement is based primarily on the trust and relationship tenants have with their on-site management team.
However, the key challenge for most real estate organizations is not whether we should build better relationships with our tenants, but how we can build lasting relationships in a time with limited resources to do so. To solve this problem, there are six actions, which, when fully implemented, will result in valued tenant relationships. These actions include:
1. Develop a comprehensive tenant profile.
2. Regularly measure tenant satisfaction (using the national BOMA/CEL Tenant Satisfaction Survey) and hard-wire the voice of the tenant into your organization.
3. Develop and deploy a set of performance standards, expectations, and benchmarks that can be measured.
4. Take an objective and thorough look at your talent and determine where improvements can and should be made.
5. Tie compensation promotions, raises, and bonuses to a Performance Scorecard.
6. Develop a comprehensive tenant retention or tenant relationship management program.
When markets get soft, when the economy slows, and when competition for a limited number of tenants heats up, those real estate companies that have existing (or are building) relationships with tenants will have a far greater opportunity to emerge unscathed. Building tenant relationships requires more than a slogan and lasts longer than a one-day training class. It is a company mindset that realizes the importance of and is committed to providing valued solutions, services, and products to a tenant base that wants more.
Christopher Lee is president and CEO of Los Angeles-based CEL & Associates Inc. For more information on CEL & Associates Inc., the BOMA/ CEL Tenant Satisfaction Surveys, or the National Customer Service Award For Excellence, please contact Lee at (310) 571-3113, via fax at (310) 571-3117, or by e-mail ([email protected]).