The most profitable customer is the one you already have. This is never more true than in commercial real estate, when replacing customers can cost millions of dollars in lost rent, broker fees, and tenant improvements.
But too often, commercial property owners put too much attention on finding new tenants to fill vacancies and end up neglecting their current tenants. They see property management as a commodity — any company is as good as the next. But in commercial real estate, your property manager is your customer service team. If you treat the tenant like a commodity, they’re going to treat you like a commodity and switch to a new building when their lease ends.
A successful landlord must balance the two priorities of keeping your current tenants happy and filling vacancies. And the best way to manage both priorities is to hire a top notch property manager.
Here are three things to keep in mind to make sure you’re working with the right property manager.
Align expectations
As a landlord, you need to have a clear management strategy for your building, and you need to pick a property manager to match. If you position your space as a Class A space, your tenants will expect Class A service from the property management. That means regularly investing in building upgrades and maintenance, being responsive to tenant requests, providing 24-7 emergency service, and having regular conversations with the tenant about things they’d like to see in the building. If you cheat on that, they’ll feel cheated.
What great property management looks like
A great property management company keeps the owner up-to-date with what’s happening in the building. A great property manager knows the tenants well enough to anticipate their needs.
Some property managers take a short-term view of a building and simply manage its needs according to an annual maintenance budget, without planning ahead for major expenses. If you’re a long-term investor, you need a property manager who will help you manage your investment for the long-term so you can plan for major expenses.
When it’s time to change property managers
The biggest sign that it’s time to hire a new property manager is if your tenants are unhappy with the management. Unhappy tenants will likely leave when their lease ends, jeopardizing your investment. If you believe their complaints are valid, then you need to fire your manager.
Other reasons to change include sloppy or late reporting of issues in the building, and disagreements about the management strategy.
At Culmen Real Estate Services, we know the pain of losing a tenant, or seeing a building become obsolete. We’ve owned and managed buildings for 40 years, and we know that a property is worth a lot more to the owner than to the service company. If the property manager does a poor job, they could lose a contract, but the owner could lose millions of dollars of value. We bring an owner’s perspective to all of our property and asset management clients.