by real estate thinker | November 23rd, 2009
In financial times such as these it is imperative to cut costs wherever the opportunity exists. It is important now more than ever to spend less to remain competitive in the marketplace and better support your tenants. Finding the right property manager to work with you to achieve this goal is one of the keys to the success of your real investments.
Most commercial real estate owners don’t think much about their tenants’ occupancy costs. Why should you? These costs are paid by the tenant in the form of CAM charges or direct billing so there is little incentive for the owner to identify and implement cost savings to their tenants. Maybe in flush times you can get away with that attitude, but in a down market, wouldn’t you rather do a little extra to keep tenants instead of trying to find new ones? Happy tenants want to renew leases, tell their colleagues about the benefits of being a tenant in your building and ultimately can help to keep your building(s) fully occupied.
This is where your property manager can help. If you’ve signed a quality property management company, they’re already concentrating on tenant relations. The underlying philosophy is pretty basic: management of the daily costs saves both the tenant and the owner.
If your property manager isn’t already on top of things, schedule a meeting to discuss ways to minimize tenant costs as a way to improve tenant relations. We urge you to really question them about their approach related to managing these costs: Is there a program they can implement? How can you save costs? Do your tenants have concerns and/or ideas to hold the line on costs? If they still don’t get it or can’t offer any ideas, it’s time for a new property manager.
Fundamentally, it comes down to securing a competitive advantage, or a least negating a competitive disadvantage. Think about it: Do you want poor relations and high costs dropping your property to the bottom of the list? Turnover might be good for your real estate agent, but it’s expensive and disruptive for you. Find a way to work with tenants to meet their needs, and you’ll find your building occupancy and property value going up.
