Similar to the office sector, multitenant industrial properties require a hands-on approach and superior service. Pictured here is Inverness Exchange, located at 14 Inverness Drive East in Englewood.
Much has been written about the importance of office owners and managers developing strong relationships with their tenants. Those stakeholders who have made positive tenant relations a priority often reap the benefits of these connections in user loyalty, which can lead to reduced vacancy rates and encourage tenants to remain at a property longer.
The focus on offering the amenities and services office users have come to expect has sharpened. But this trend is not exclusive to the office sector – industrial tenants also have come to expect a certain level of amenities and services at the properties where they lease space. This highlights the significance of tenant relations in the industrial sector, particularly in multitenant industrial properties.
With a history of outperforming single-tenant big-box properties, multitenant industrial buildings typically house a mixture of warehouse and office spaces in suite-style units. They tend to attract entrepreneurs, startups and small businesses, among other businesses. Property managers often are on the front line and are the “boots on the ground” in nurturing these relationships to encourage retention and aid in attracting new tenants.
That said, because industrial properties tend to be very costly to build, few developers are building them, and most property managers are not trained in effectively managing them.
So why do effective tenant relations matter and how can property managers decrease rollover and ensure a property’s long-term stability?
Superior service and a hands-on approach. Similar to the office sector, multitenant industrial properties require a hands-on approach and superior service. These properties have lease terms that move more quickly and require sophisticated managers who can address the needs of a variety of tenants. This differs from big-box industrial properties where managers tend to be more passive or manage properties from afar.
Hands-on managers are focused on ensuring that tenants thrive. This means treating tenants courteously, responding to them in a timely manner, working to meet their needs, and resolving any concerns quickly and efficiently. It also means exceeding their expectations to help them achieve success in their space. Tenants who have a good customer service experience with a property or facility management team will want to stay with that team after their lease term expires.
Real estate is all about relationships, and relationships are built on consistent light touches. Local property managers should be consistently checking in with tenants on a regular basis to ensure they have everything they need. In doing so, managers can address any issues in advance and head off bigger problems before they arise. This approach also communicates to tenants that their success is the management team’s priority, which aids in long-term tenant retention.
Property managers need to be adept at addressing the structural amenity needs of each of its tenants across multiple industries and to do so quickly with superior service regardless of whether it’s a question about the tenant’s build-out, maintenance, etc.
Beyond structural amenities, creative amenities are shifting into industrial space, which include kitchens, lounge areas, food services and outdoor recreational areas. Tenants depend on these types of amenities to attract and retain good employees to their companies. It is also a major factor in tenant retention and drawing new tenants to a property. Property managers need to understand the importance of these types of amenities and ensure they are staying up to date with the latest trends. A few examples include modern exterior painting and murals, bike racks and outdoor seating areas.
One way that property managers can demonstrate their appreciation is through a variety of tenant appreciation events. Hosting a summer barbeque or ice cream truck, a tray of treats or a simple holiday card can go a long way.
By taking the time to show your tenants appreciation, it reminds them that management cares. The more touch points property managers can have with tenants, the stronger the relationships and bottom line for owners.
Engaging tenants. One benefit to leasing space in a multitenant industrial property is synergies among tenants. These companies can take advantage of economies of scale, network with other companies in the building and learn from each other as they grow. Property and facility managers can help facilitate these synergies by engaging tenants to interact with each other in common areas of the property, through social gatherings and through business referrals. Providing opportunities for tenants to mingle can help them improve their businesses while creating a beneficial community within the property. It’s one more service management can offer simply for being a tenant at the property.
Overall, tenant relations are a vital line item in owning and managing multitenant industrial properties. Incorporating all the above elements in a tenant relations program makes for a well-rounded system that helps keep tenants happy, primed for success and eager to remain with their current management and ownership team.
Featured in CREJ’s July 2019 Property Management Quarterly