What are the latest trends in the field of property management? What should building owners expect from their providers?
The property management industry continues to evolve. What was considered excellent service in the past is no longer sufficient to meet the expanding requirements of today’s building owners. There is no doubt that great results are still driven by committed property managers who bring professionalism, passion, energy and expertise to serving tenants and owners. In addition, property management teams must incorporate asset management practices that address building performance and the owner’s financial objectives to be effective in today’s business. It’s becoming more common for buildings owners to request services that correlate to their internal measurement and reporting standards, and the best property managers will provide them. In addition to operating a building efficiently, managers must reduce operating and energy costs to generate a positive impact on the asset’s net operating income (NOI). Many clients are measured within their organizations by how their buildings perform, so a property manager may be required to enhance an asset’s return on investment to meet the client’s objectives. The more a provider aligns the property management function with reducing cost and increasing NOI, the greater the asset’s potential value. Institutional property owners may also have broad, company-wide initiatives and objectives connected to their portfolios. Those client targets must be incorporated into the property management strategy. The most effective property management platforms are continuously establishing initiatives that ensure buildings operate more efficiently so clients reach their financial objectives and property values increase.
McCarthy and Foery:
Since occupancy rates have the most impact on ROI, how can property management improve tenant retention in a building?
Tenant retention begins with a property management team that operates an efficient building, which includes enhancing the tenant experience through sustainability and energy-efficiency initiatives. While tenants prefer a nicely appointed office environment with the latest building amenities, a building with the lowest possible total occupancy costs in the market remains a critical factor in retaining tenants. When property managers drive a reduction in operating expenses, those results likely reduce total occupancy costs for tenants. At Transwestern, tenant retention is heavily impacted by an investment in the property management team. Each team member undergoes extensive training and participates in a corporate-wide career development initiative orchestrated by Human Resources. Tenants report higher satisfaction when they are engaged by well-trained teams. The training extends to all legacy staff members hired following a new building assignment. Team members who have endured multiple property management regime changes complete a comprehensive onboarding process that teaches them Transwestern’s principle of legendary service and indoctrinates them with the Transwestern culture to ensure client expectations are exceeded. Tenant retention is also improved by a manager’s quick response to work order requests and meticulous monitoring of client satisfaction. Property managers must be even more intentional in serving buildings that don’t have onsite management. The Kingsley satisfaction survey is an important tool, not simply to identify tenant experiences, but to improve upon them. Transwestern analyzes Kingsley data on tenants’ intentions for staying in a building to create an environment that increases the likelihood they will renew when their lease expires.
McCarthy and Foery:
How can property managers achieve continuous improvement beyond day-to-day maintenance of an asset?
A property manager’s goal should be to create the best possible work environment for tenants that occupy their building. A successful tenant retention strategy should offer the best possible occupancy value, not necessarily the lowest rental rates in the market. A management team must ensure the asset is best positioned in the marketplace, which means it may need to proactively determine whether a capital improvement plan is needed. Years before the lease of a large tenant is set to expire, a property management team must examine the competitive building set to ascertain what environments, services and amenities are available in the area. In order for the client’s building to compete, does it need a new fitness center, café, secure bicycle storage, landscaped gathering places outdoors or updated retail mix? If enhancements are deemed necessary, property management advises the building owner on instituting a mid- to long-term capital improvement plan that will provide additional assurance of tenant retention. As major capital improvement projects are considered and implemented, property management teams associated with a large, diversified platform are able to provide value beyond what can be delivered at the individual property level. Managers can leverage other elements in their firm’s storehouse of special services. Transwestern Sustainability Services, for example, provides data, best practices and training that can benefit all assets in the firm’s managed portfolio. A capital improvement plan coupled with energy efficiency expertise can result in a LEED® designation that will further elevate a building’s profile, in addition to reducing operating expenses and increasing asset value. Ultimately, today’s property management team must act as a strategic steward of its client by protecting their assets and serving tenants.