No doubt, attracting and retaining tenants is one of the biggest challenges for any building. Yes, there are factors that cannot be controlled by landlords. One example of this is the change in the competitive landscape especially now with the rise of co-working and players like Knotel or WeWork. Another example is the demographic changes in the target market (we’ve heard that millennial word so many times it is almost like we are studying an alien species). It is true, however, that the so-called “mobile generation” has changed how we think about economy and product or services. Why should that be different in real estate?
Everything as a service
“People don’t want what you make. They want what it will do for them. They want the way it will make them feel.” This is a famous quote from the blogger and marketing guru Seth Godin. This applies well to the change that is happening in real estate since space, after all, is more akin to a service than a product. The gig economy has taught us the efficiency that comes from selling a service-on-demand rather than through a long-term contract.
Here is a funny peculiarity of our industry: modern society has become obsessed with peer reviews but somehow real estate has been immune to this process. As Enrico Faccioli of Gyana points out: “Most of us spend at least 50% of our day in an office but so far we have cared more about reviewing restaurants or Uber drivers.” What if there is Tripadvisor for offices? Imagine what would that mean for the value of buildings.
Killing the generic approach
The hard thing about this change in mentality from product to service is that it needs a personalized approach. We all want a product to “make us feel” a different way so it means that different tenants need to be treated uniquely. To deliver the best experience property managers should know the needs of each individual tenants and what will make an impact on each unique community. But do they?
The reality is still typically outdated technology, with limited communication and generic approach. A multi-tenant building, for example, should be using technology to constantly gauge each tenant’s needs. Even within organizations needs can vary. In an office setting, this might mean that a single tenant can have different needs for their legal team as they do for their customer service reps.
Could you lose $1M?
The cost of losing a single tenant is too high to ignore. $1.25 million for every 10,000 square feet to be precise (according to simple math that our company, Spaceflow, done together with Colliers, where we calculated refurbishment cost and 6 months of lost income from lease).
What can we do about this? These three statements illustrate the importance of customized amenities for every stakeholder in a building.
- 92% of building owners believe that amenities positively affect attracting and retaining tenants.
- 81% of tenants perceive amenities as integral to the employee experience and engage landlords and other service providers to enhance these offerings.
- 82% of employees claim they want their workplace to feel more like a community.
Amenities, communication, community
We combined results of all of these surveys with our experience with community managers to put together five easy strategies to keep tenants engaged and increase loyalty:
Start adopting technology: At the last Propmodo conference during New York Real Estate Tech Week, Chris Kelly, co-founder of Convene repeated a famous quote from management expert Peter Drucker: “What is connected gets measured, and what gets measured gets managed.” Technology allows companies to easily collect and measure performance. Using data allows building owners to understand their tenants’ needs in a better way. Ultimately, it does not have to be sophisticated. At first, try running polls or implement analytic tools that help you understand which of your spaces are used when. Do you have too much vacant space? Is yoga room used all the time but two of the large meetings room rarely? The data supports better decisions.
Engage tenants in your communication flow: At Spaceflow, we believe in curated content. Most tenants are only ever contacted by their building’s management when something goes wrong: a water outage an out-of-order elevator. What if you were able to also bring them positive news about the perks of residency like events and benefits in addition to the bad news? The result is that people enjoy the space more and form a greater bond with the community.
Create a collaborative environment: This means creating a place where everyone feels encouraged to participate. Tenants love to be engaged and involved in the communication – everyone is used to provide feedback these days. Ask them what they like and make future decisions based on digitals surveys. When tenants have a say in their building’s benefits, they are happy to participate in conversations, events and other experiences which brings life to the property.
Invite outside amenities in: This is the number one area that your tenants require. Amenities are not only in your building but nearby as well: coffee shops, restaurants & bistros, laundry service, fitness, the list goes on. Bringing them closer to your tenants through an app or a different tool is another level of convenience.
Another thing to point out is that typically, landlords think of amenities as fixed space-based things, like fitness facilities, showers or bike racks. This is proven by numbers: 80% of landlords offer some type of them. Interestingly, 65% of tenant companies think service-oriented amenities are more important than fixed space-based amenities. However, flexible, service-oriented amenities are offered much less: dry cleaning (32% of buildings), curated fitness classes (31%), hospitality services (25%), wellness service (19%).
This significant imbalance between supply (approximately 25%) and real demand (65%) for flexible services brings massive opportunity to improve the overall experience.
Customize: This is something retail and e-commerce learned long ago but real estate is only now starting to accomplish. People have diverse needs so the space that they inhabit needs to reflect that. We also want to live in a place with a human connections that make us feel connected to our community. Technology enables us to provide both of these by providing the data that can create customized services and curate connections.
With these steps, owners are able to start with a tenant-oriented approach and constantly improve the experience that their properties create. This can result in vibrant places full of possibilities that will satisfy tenants’ needs and ultimately lead to a noticeable boost tenant retention.