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How To Attract And Retain Tenants

How To Attract And Retain Tenants

Six ways to attract and retain quality retail and hospitality tenants in 2021, with JLL head of retail and metro Nilesh Patel.

By: Nilesh Patel

1 February 2021

The retail and hospitality sectors are no strangers to disruption, having had to constantly adapt to technological evolutions and changing customer behaviours. However, even their resilience has been severely tested by a global pandemic which has brought lockdown restrictions and generated fear and anxiety .

And yet despite these unprecedented challenges, many commercial investments have retained their tenants and continued to provide strong returns to landlords through 2020. But how?

Here are six key principles that can help you attract and retain quality retail and hospitality tenants to protect your investment in these uncertain times.

1 A Book Is Judged By Its Cover

First impressions count – and with the majority of new tenants drawn towards modern, clean looking buildings, focus on appealing to their tastes with both the exterior and interior presentation.

In order to make the best first impression, arguably the simplest and most effective step you can take is to give your property exterior a clean and a fresh coat of paint – and don’t underestimate the significant amount of planning and organisation this will require. You want prospective tenants to feel comfortable and welcome – so aim to create an environment they can see their business and employees thriving in.

Design features such as art, statement walls, living walls and bold interior choices will make a huge difference to your property’s overall appeal and feel. You should make sure that they appeal to the kind of tenant you’re hoping to attract, developing a theme around a main focal point such as a large wall mural or feature window.

Enhancing appeal through design doesn’t have to break the bank. Plan well and buy in bulk – you can often get far better deals on products such as commercial flooring and furniture if you place a large order.

2 Use Less To Get More

The built environment accounts for approximately 36% of global energy consumption, and nearly 40% of total direct and indirect carbon dioxide emissions. With the Government announcing a climate emergency in 2020, this is something tenants are becoming acutely aware of.

Increasingly we’ve seen tenants veer away from cheaper properties to pay premium rent for buildings that have superior energy efficiency and more sustainable management. Not only do they feel they are doing their part to slow climate change, but they often benefit from improved health and wellbeing, reduced operating costs and heightened marketability as a result of their social responsibility.

While implementing more sustainable measures involves upfront investment, these costs are more often than not offset by the returns and benefits for all involved. There are some very simple ways to make your property more energy efficient, including:

• Double glazing will not only keep your tenants and their customers warm come the colder winter months (while using less power), but it will also give your property a premium look and feel.

• LED light bulbs are undeniably the more energy efficient choice when it comes to choosing the lighting for your commercial property and they also provide a crisp light, unlike a standard yellow hue bulb.

• At $8-$16 per square metre, insulation is an extremely cost effective way to boost the energy efficiency of your commercial building.

If you’re seeking assistance in sustainability, we specialise in delivering strategies that yield substantial savingsin utility bills to our clients.

3 Square Pegs Need Square Holes

Market research is essential not only to help you target the most suitable tenants for your location, but also inform you of any improvements you should make to your property.

While the internet can provide you all sorts of broad data for your area, it’s better to gather this information yourself as the location, size or age of your property can drastically change the demographic profile of your potential tenants.

For example, if your building is in a more tech-heavy area you will need to focus on factors such as internet speed, while if your market employs a wide range of parents you will need to consider on-site or nearby childcare facilities.

Your existing tenants or those in the direct vicinity likely have the best perspective on how you’re doing at meeting their needs. By regularly surveying your tenants on your customer service and amenities, you can gain critical insight into what matters most and how you can capitalise on it.

Prioritising these improvements for your tenants can improve loyalty and increase your chances of winning referrals.

4 Build A Network And (Name)Drop Your Anchor

Put time into building relationships with local businesses and vendors, and encourage them to offer your tenants discounts or other benefits. This can be anything from cafés, drycleaners or gyms – companies that your tenants are likely to use repeatedly.

Landlords should consider negotiating discounts with as many vendors as possible to devise an impressive list of recommended local amenities that can help to attract prospective clients and retain them through positive experiences.

Also don’t be afraid to leverage the pulling power of your (or your neighbour’s) anchor tenant in positioning the attractiveness of your proposition. A good anchor can draw in other customers, and therefore other businesses - this is especially true with retail and hospitality leases.

5 Mates Rates

If your current tenants are happy with your building’s high-speed internet, energy-conservation methods, property upgrades and secured work community, many of them will share their satisfaction with their family, friends, acquaintances, and even strangers.

In order to encourage this behaviour, it’s a good idea to offer your tenants a referral rewards programme. For every qualified referral that results in a new tenant, you could offer the client a discount on rent and/or a gift card to local entertainment attractions. Third party endorsement through extremely satisfied tenants can be a great marketing resource.

‘Put time into building relationships with local businesses and vendors, and encourage them to offer your tenants discounts or other benefits’

6 Put It Up In Lights

Finally, we come to the marketing of your property. This is where it’s vital to speak to the experts and get an agency to market your property appropriately to secure the optimum tenant, terms and returns.

As well as the full suite of marketing tools, we have a constantly-updated database of tenants that are seeking their next space to thrive in, and are skilled match-makers to create happy landlords and happy tenants. This includes conducting a strict vetting process to make sure we get the demographic correct and to ensure the tenants have a history of paying their bills on time.

While the full impacts of the pandemic on the retail and hospitality sectors are probably still yet to emerge, incorporating these core principles for attracting and retaining tenants in the short-term could lead to the long-term success of your investment.