FEATURE ARTICLE, OCTOBER 2005

THE ADVANTAGES OF A TENANT COUNCIL
Property managers that use a tenant council can help improve tenant satisfaction.
Marc Fischer

Fischer

More and more property management companies are using formal and informal tenant surveys to understand the unique needs of their tenants, and there is a substantial body of evidence from these surveys that points to a tenant satisfaction process:

Frequent, memorable interactions with property management à Increased tenant satisfaction à A higher percentage of tenant renewals

Tenant renewals can yield enormous monetary savings and decrease the risk for building owners by eliminating the period of time where the space sits vacant while waiting for a replacement tenant. In addition, leasing commissions and tenant construction allowances for renewals are often substantially lower than the same costs for a new tenant moving into a space. Even though the rental rate for renewals is often slightly lower than the rates that would be charged to a new tenant, it is not hard to see that the renewal of a 10,000-square-foot tenant can yield an owner hundreds of thousands of dollars in cost savings compared to having to find a new tenant to replace the owner's existing occupant.

Kingsley Associates, a professional survey firm serving many property management companies worldwide, found that tenants are 22 percent more likely to renew their leases when the property manager is in frequent contact with them. Because of this high correlation to tenant renewal intentions, property management companies are increasingly paying attention to tenant satisfaction scores, and some of the most proactive firms are learning that vendors are intimately involved in maintaining high levels of tenant satisfaction.

As a means of improving tenant satisfaction scores (and, ultimately, tenant retention percentages) in our portfolio, Transwestern Commercial Services created an entity called a Tenant Council. The Tenant Council concept is decidedly simple: the tenants, major vendors, property manager and chief engineer meet on a monthly basis. All tenant representatives in the building — no matter how big or how small — are invited to the Tenant Council meeting. In addition, the supervisor and the regional contact for the major vendors attend each month. Usually, this means that the janitorial and security vendors are represented, but we also add other vendors as needed to advance the tenant satisfaction in the building.   For example, we typically invite our landscaper at the start of the landscaping season and our snow removal vendor just before our first snowfall.

For scheduling flexibility, we typically hold the meeting from 9 a.m. to 10 a.m. on a Tuesday, Wednesday or Thursday. We found, through trial and error, that Monday and Friday mornings do not work well — nor do lunch meetings. We send out an agenda at least a week before the meeting, and we keep the ownership entity informed about the content of the meeting beforehand and the results of the meeting afterwards. Surprisingly, several owners or asset managers in our portfolio attend these monthly meetings on a routine basis. Imagine the problem-solving power of having the property management team, the major vendors and all of the tenants in the same room on a monthly basis!   Meeting minutes are sent electronically to all parties within 24 hours.

The Tenant Council is, first and foremost, a two-way information sharing opportunity for all parties. The property management team talks about upcoming projects in the building and discusses building operations. During the meeting, vendors receive feedback about their team's performance during the past month. While this does not replace other communication venues (like a nightly janitorial logbook, for example), we have found that the tenants communicate different information in person at the Tenant Council than they would by phone or email.

Each tenant may have markedly different needs — which can be communicated easily in the setting of the Tenant Council meeting. For example, the janitorial vendor might find that the tenant on the sixth floor is particular about the appearance of the main conference table. The conference table for the tenant on the fifth floor is not their major concern. Instead, their “hot button” is that the restrooms run out of paper products when they have a large meeting. The magic of the Tenant Council is that the tenants, the vendors and the property management team then can work together to make certain each tenant's unique needs are addressed. In the prior example, the janitorial vendor might work with the night crew to make sure the conference table on the sixth floor is expertly polished each night, and the day crew might make a point of checking throughout the day to make sure the table is maintained to the tenant's satisfaction. At the same time, the day crew might be tasked to check the restrooms on the fifth floor more frequently during the day, and the property manager might have additional or different paper product dispensers installed to make sure the supplies are adequate during meetings. Our combined goal is to understand, address and eliminate the tenant's complaints about the building — immediately and once and for all. In the end, the property management team and the vendors have the opportunity — through the Tenant Council — to find out exactly what the tenants want and to deliver service that exceeds their expectations.

The final question asked at the end of a Tenant Council meeting is to uncover what we call “success stories” — those times when a Transwesterner or a vendor employee went out of his or her way for the benefit of a tenant. This is where we hear about the janitor who did a special project without being asked to do so or the building engineer who took the time to make someone's day special. We strive to make the experience of working in a Transwestern building a series of success stories, and we use the Tenant Council meeting as an opportunity to hear about the exceptional performance of our team. More importantly, we use these stories of legendary service as a means to reward the team members who performed exceptionally that month and as a teaching tool to help our team members understand what service above and beyond the team member's job description is all about.

We had such great success with the Tenant Council as a communication tool that we looked at other benefits that could be gleaned from this concept. We found that the tenant council can be an incredible asset when soliciting bids from vendors for service in the building. For example, we now typically ask the Tenant Council to assist us in writing the specifications for services in the building. After sending out the request for proposals using a bid list of approved Transwestern vendors, the Tenant Council is then invited to participate in interviews of the finalists. In the end, the Tenant Council often chooses the vendor that will be awarded the service contract in their building. Recently, one building's Tenant Council even wanted, in preparation for the final interview, to inspect the work of the three janitorial bidders who made our short list. So we commandeered the campus van and included our tenant representatives in our inspection. Talk about an empowering experience for our tenants!

The reaction from our tenants has been enthusiastic and very positive. With the exception of tenants on vacation, we typically have more than 90 percent of our tenants at each monthly Tenant Council meeting. Overwhelmingly, our tenants are thrilled that the property manager sought their opinions and input. And, they see the immediate results of our increased communication because issues are resolved by the next monthly meeting. We have found that the face-to-face nature of the meetings has made the resolution of problems take on a higher level of urgency than when we communicate by email or phone. Most importantly, our tenants look at the relationship with the vendors and the property management team as a collaborative partnership. Our experience is that the Tenant Council offers an efficient and highly successful means to improve communication between the stakeholders in a commercial building.

Marc Fischer, CPM®, RPA, CCIM is a senior vice president with Transwestern Commercial Services and serves as the immediate past president of the Building Owners and Managers Association of Baltimore.


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