In this busy world of commercial real estate, tenant management that is critical to your CRE business’ sustainability can inadvertently become an afterthought. Many CRE professionals with retail property investments choose to move tenant relationships lower on the priority list than they should. But the truth is, keeping good tenants will be more profitable than attracting new ones and dealing with the rigor of turnover – most of the time.
From lease negotiations and optimizing tenant performance to the implementation of technology and understanding the market better, there are several ways CRE pros can manage their retail tenants better.
Here are the best practices for managing portfolios with retail tenants.
Understand Retail Tenant Needs and Trends
First, you have to know what your tenants really want so you can build rapport with them. Understanding their needs, preferences and current trends in the retail industry will go a long way toward effectively managing portfolios with your best retail tenants. Engage them regularly to gather feedback, identify opportunities for improvement and tailor your property management strategies to meet their unique needs. Furthermore, keeping track of consumer behavior and market dynamics will help you not only anticipate tenant requirements, but proactively address challenges as well.
Diversify the Tenant Mix of Your Portfolio
Few want to put all of their eggs in one basket, but many forget that focusing your portfolio on one retail tenant type is a form of this. By diversifying the mix within your portfolio, you mitigate risk and are in position to improve its resilience. Depending on any single tenant is going to make you over-rely on them, losing your advantages during negotiations and potentially impacting tenant turnover if they don’t promote a positive environment. Consumers also love having options with retail spaces, so be sure to aim for a balanced mix of anchor tenants, national retailers, local businesses and experiential tenants to create a vibrant and appealing location that attracts a broader customer base.
Be Proactive with Your Lease Management
Minimizing vacancies, maximizing rental income and optimizing occupancy can all result from being a little proactive with your lease management. To plant the seeds for future growth, developing robust lease administration processes is paramount. The good news is that this comes with several benefits when it comes to tracking expirations, negotiating renewal options and dealing with rental escalations properly. If you anticipate lease changes well in advance, it helps with tenant retention and stabilizes cash flow. With Quarem’s lease management software, for example, you can centralize your lease data, streamline lease administration and ensure compliance with lease terms—all of which helps with proactivity.
Don’t Ignore Tenant Communications
It’s almost impossible to foster strong relationships without communication, whether personal or professional. This is why it’s crucial to establish open lines of communication with tenants to quickly address concerns, provide timely updates on property developments and get feedback on your management practices. If you’ve attempted to do this and haven’t made much progress, consider other strategies like organizing tenant appreciation events, creating networking opportunities and hosting educational workshops that provide value to your tenants. The more you can foster a sense of community and collaboration between you and your retail tenants, the more satisfied they will be and all of your lease-related outcomes will be in a better position to thrive.
Keep up with Property Maintenance
Of course, you can have a great tenant relationship and still lose them if the physical condition of your property wears down and loses its aesthetic appeal. A tenant’s space is a reflection of their business and not doing property maintenance due diligence on your part could even impact their bottom line (which isn’t exactly good for tenant relationships). Some ways you can improve your property maintenance practices include:
- Developing preventative maintenance schedules
- Repairing issues promptly
- Investing in property upgrades and renovations
- Adding amenities that enhance curb appeal and modernize the space
- Regularly inspecting common areas (including exteriors) for deficiencies
Embrace Technology and Data Analytics
Leverage technology and data analytics to optimize portfolio management processes, drive informed decision-making and gain actionable insights into property performance. Property management software solutions like Quarem, for example, give you all of the portfolio management tools you need, including data analytic tools to help you stay informed about tenant demographics, track leasing trends and identify opportunities for optimizing revenue and reducing costs. Plus, it’s easier to stay transparent with tenants and enhance efficiency with any tasks related to them.
Stay Compliant with Regulatory Requirements
Finally, make sure you’re maintaining compliance with regulatory requirements, industry standards and legal obligations governing retail property management. Stay informed about local zoning regulations, building codes, environmental laws and lease accounting standards to ensure compliance and mitigate legal risks. This includes best practices like implementing internal controls, policies and procedures to uphold ethical standards. The more you protect tenant rights and safeguard the interests of stakeholders, the fewer potential compliance issues you’ll experience.
At the end of the day, if you understand your retail tenant needs, it will go a long way toward managing portfolios with higher tenant retention. This involves all of the strategies above, which are much easier with the right CRE portfolio management software on your side. To see how Quarem can be this solution for you, request a demo today.
