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]).
For more information on the issues covered in this column, please e-mail Scott
MacIntosh at ([email protected]) or check the BOMA International website (http://www.boma.org).
