In commercial real estate, there’s nothing more expensive than an empty space. An unrented unit doesn’t just fail to produce income, it requires marketing expenditures and lowers NOI, making the building look like a riskier investment and potentially lowering its value. As a result, there are few areas that are more important than tenant satisfaction.
So why do most property managers spend so little time on it?
Getting the most out of tenant feedback is easy, it just requires a concrete plan of action. That means breaking the job up into its component tasks and working through them systematically.
Gather tenant feedback
When you consider tenant feedback, it’s important to realize that no single channel will reveal the whole picture. Business owners and their employees may see different concerns or have different priorities. The most effective approach at this stage is to cast a wide net and gather all of the feedback available.
For large groups of low-level stakeholders, like employees, surveys are an excellent tool for assessing satisfaction and identifying important areas for improvement.
Writing an effective survey is somewhere between an art and a science. Surveys that are too shallow frequently don’t result in useful information. For example, if your survey asks employees to rate a few basic categories out of five, it’s common to get back surveys that are generally all positive or worse, negative. Either way, not much actionable information can be drawn. Conversely, surveys that are too granular will deter employees from taking the time to fill them out.
Take the time to figure out about ten areas in which you want to assess tenant satisfaction and ask for both a number (out of five or ten) and an optional written response on how satisfaction can be improved. Typically this approach leads to the best results – a short survey attracts a larger number of respondents and those with more to feedback to give have an avenue to do so.
Distribution is just as important as design for a survey. Too many property managers create a perfect survey, only to have it limited by a low response rate because too little was done to distribute it. Generally, a prominent placement for physical surveys, an email with a digital survey, and/or an announcement from the key decision maker asking employees to fill out the survey will be enough to make sure that you get a decent response rate. Bonus points for all three.
For key decision makers, it makes sense to invest more time and effort in understanding their concerns.
This process begins before speaking with them; a little bit of research into a tenant’s business goes a long way. Are they planning on expanding? Perhaps this is something you can help with. Are they a heavy user of digital resources? An investment in high-speed internet might be in order. Do they or their investors have an interest in sustainability? A green lease, LEED certification, or submetered billing might make them happier in the space.
When you schedule a meeting with a decision maker, give them a detailed picture of what you want to discuss and why. They will likely appreciate your professionalism and commitment to their satisfaction. It will also give them a chance to prepare more detailed feedback, which is what you want.
Monitor online reviews
If your building involves retail space, restaurants, or any other units that face customers, it’s a safe bet that sites like Yelp! will carry reviews. Generally, these reviews will focus on the tenants’ businesses, but if you read closely, you may find actionable information about the space. This may be an especially powerful area to add value: Tenants won’t forget it if you respond to a problem they’re having before even they know about it.
Examine your feedback
Your feedback from one-on-one meetings will be fairly easy to interpret. Responses from surveys and online reviews may require a more nuanced approach.
One of the simpler and more successful approaches is to work through every piece of feedback that identifies a concern and tally totals. One or two pieces of feedback on an issue, depending on sample size, may mean that it is not an area that requires immediate action. A trend means that something should be done soon.
Dealing with negative feedback is frustrating and difficult, but they are an important part of tenant retention. Perhaps unsurprisingly, a 2011 Kingsley survey found that satisfied tenants are about three times more likely to renew their leases. Considering the high cost of replacing a commercial tenant, satisfaction is an important area in which to focus your resources.
Act on what you’ve learned
When you receive feedback from either avenue, it is important to make a response. Failure to act on feedback given by your tenants – particularly key decision makers – may lead to an even lower level of tenant satisfaction.
Obviously, you won’t be able to fulfill every tenant desire. If your building is far from commercial centers, it may not be immediately feasible to provide access to a broader array of dining options, for example. Opening a dialogue will help you to gauge decision makers’ priorities and to explain which changes you will be able to implement in the near future and which are more long term.
It may be helpful to separate changes into short-, medium-, and long-term projects. Within those categories, identify which are priorities and which can wait. This helps in communicating with tenants and with internal planning. While you’re doing this, consider whether some long- or medium-term projects can be moved down the hierarchy through innovative means. Building a new parking lot is never going to be a quick fix, but tenants might be equally satisfied if you can partner with an apartment complex for use of their parking facilities during the work day or with a shuttle to public transit options.
Promote your accomplishments
When you finish a project, let people know about it! It isn’t uncommon for tenants to take the complexities of running a building for granted, but they are far more likely to be excited about your efforts if you keep them in the loop.
Sending out a friendly email once every month or so letting tenants know about the efforts you are undertaking and reminding them about those that you’ve recently completed is a great way to maintain tenant engagement. It also gives you a useful avenue for the next time you want to collect feedback.
Maintaining tenant satisfaction isn’t rocket science. Most tenants will be thrilled if you take the time to listen to their concerns, understand them, and act on them. Some level of turnover is inevitable, but by demonstrating your commitment to working with tenants, you can cut down on it significantly and add value to your building.