Ever since the first glistening office buildings and corporate headquarters were built, property managers have worked hard to keep their windows spotless, granite polished and toilets working. Those tasks remain paramount to quality property management, but today the expectations are much higher. Owners, especially office landlords, are asking their property managers to cut costs so they can pass on the savings to tenants who might otherwise consider moving to abundant new space.
Building owners are pushing property managers to be at the forefront of tenant retention. Managers who work in tandem with owners to control costs can become an indispensable team member and likely will be positioned to fend off other third-party management service providers.
Emphasis on Communication
Property managers can start by having a tenant retention program in place, which typically includes a customer service program, a calendar of tenant events and social activities, and a communications strategy. Tenants increasingly are looking to property managers as their key contacts, and with the ubiquity of e-mail and popularity of Blackberrys, this can be accomplished easily and for little cost.
Technology has leveled the playing field and most property management firms enable tenants to make requests for service on the Internet and send instant messages to their staff via Blackberrys and other handheld devices. To differentiate itself, a management company must remember that its relationship with tenants involves personal interaction and a commitment to going the extra mile.
Last fall, when four hurricanes battered Florida, Carter's property and facility management teams in metro Orlando went beyond standard duties to keep customers informed. Our teams called tenants at home to let them know whether their buildings or offices sustained damage during the storms. We also delivered bottled water to the homes of executives and contacts whose homes had lost power and water.
Beyond standard tenant retention programs, landlords call on property managers to find ways to cut costs. High vacancy rates nationally are putting pressure on lease rates — pressure that is trickling down to property managers. The average asking rents for office properties was flat at $21.74 per sq. ft. at year-end 2004, reports CoStar Group. By comparison, at the end of 2000, the average asking rates were $23.75 per sq. ft.
It might sound paradoxical to be able to continue offering top-notch customer service to tenants while cutting costs. In essence, property managers are being pulled in two directions. While maintaining an optimal level of service and reducing expenses is possible, some painful actions must be made.
For example, Solvay Pharmaceuticals recently charged Carter with finding ways to reduce costs at one of Solvay's buildings in metro Atlanta. Carter then implemented a three-pronged approach to solving Solvay's problem.
First, Carter cut costs by establishing and implementing an energy-management program that reduced climate control consumption. Second, Carter leveraged its bulk purchasing power to secure discounts on services provided by subcontractors. The third piece of the puzzle involved reducing the number of employees at the facility by restructuring the facilities and property management team.
Reducing the staff was a tough decision, but it had to be done to accomplish the client's goals. If cost-cutting measures such as restructuring a facilities management team are used, it is vital to maintain the previous level of customer service. Property and facilities management teams often represent the only regular interaction tenants have with building representatives, so property managers must be there to serve.
If a property manager can earn a tenant's trust, that tenant likely won't consider going elsewhere. In fact, that trust can increase business opportunities. At Carter, our property management team for Solvay introduced that company's representatives to our transaction services division, which then represented Solvay in a new office lease. Then, Solvay selected Carter's interior project management and relocation services group to oversee the build-out.
The extra efforts undertaken by property managers reflect this simple fact of the business: In today's competitive office market, property managers who want to stay at the head of the class must raise the level of their performance to keep both landlords and tenants happy.
Holly Hughes is a senior vice president of Atlanta-based Carter, where she is responsible for day-to-day operations of the company's property management portfolio.