In commercial and retail property leasing, a tenant retention plan is well worth the time and effort required to establish it. A good retention plan will help you with income stability, tenancy choice, and tenancy placement. Ultimately that’s means better property performance. (NB – you can get plenty of tenant mix tips in Snapshot right here – it’s free)
In any medium to large property, the property manager and the leasing executive should establish a retention plan as part of the annual property business plan. Here are some ideas to help with that:
- Review the existing tenancy mix to ensure that any income threats and lease terminations are identified early. Get on top of any tenancy problems where vacating could be a real possibility or threat.
- Understand the competing properties in the local area that could be attracting the tenants away from your property.
- Look at the market rentals in the region to understand just where your property sits when it comes to rental rates, vacancy rates, occupancy charges, and lease terms. It is essential that your property is competitive and realistic when it comes to these factors.
- The landlord will have certain priorities and targets when it comes to investment performance. The rental income for the property will be impacted by tenant selection, tenant retention, rental types, incentives, and market rentals. Most medium to large properties will have an income budget that addresses these issues. The retention plan is therefore integrated into the income expectations in the property budget.
- Connect with the anchor tenants in your property to ensure their success and stability. Whilst most leases for anchor tenants are relatively long, watch those ‘anchor’ leases that are soon to expire. The loss of an anchor tenant can be extremely disruptive to the balance of the property. Also look for problems in trade when it comes to the performance of an anchor tenant. Their stability and ability to create sales will have a direct flow through to the speciality tenants.
- Split your speciality tenants into high priority and low priority groups. The high priority groups are those that you will be encouraging to stay in the property over time. To do this you will need special leasing strategies to assist the process. The lower priority tenants are those that you may encourage to leave the property at lease expiry. That being the case, you will need some replacement tenants to fill the vacancy.
- Assess and monitor the market rentals that apply through the region for your property type. Those market rentals will be impacted by other property developments, vacancy factors, incentives, and occupancy costs. Understand where your property sits given those financial factors.
- Every lease will have critical dates applying to occupancy changes, rentals, and other special terms and conditions. For this reason, every lease needs to be carefully assessed and tracked when it comes to those critical dates. In a large property, this can be quite a challenge for the property manager and leasing manager. You will need a good lease tracking system and software package to help you with the critical dates tracking process. Action all of your critical dates early.
You can see from these factors how important a tenant retention plan can be to the stability of the property for the landlord. Preparation and taking strategic decisions early will always help you with property performance. A successful property is a reflection of the stable tenancy mix, good market rental, and landlords support.
If you want more tips on tenant retention you can get them in our Newsletter right here.