Tenants are at the center of every building. And their satisfaction rates can help determine the success of a commercial real estate (CRE) property.
One simple way to track tenant satisfaction is through surveys. Surveys provide data on what tenants think of your property. And by collecting this tenant data, CRE owners and operators can see if satisfaction rates ebb and flow or are consistent over time. With this information in hand, CRE teams are able to make informed decisions to create the best tenant experience at their buildings.
We put together four things every tenant satisfaction survey needs in order to collect the best data, create lasting relationships with tenants, and increase net operating income (NOI) at buildings.
1. Benchmark goals
Starting any survey begins with setting goals. An example of a tenant satisfaction goal could be to improve satisfaction by 10% over a 1-year period. You could start by sending out a survey to your tenants to establish current satisfaction levels and ask for feedback to see how you can improve.
Then, put strategies in place and implement them over the next year – after which you’ll conduct another survey and see if tenant satisfaction has improved.
Once you’ve established your key performance indicators (KPIs) around tenant satisfaction, turn them into goals and measure them over time. Your goals should keep getting more ambitious with each period, helping your business achieve and manage sustained growth.
2. The right questions
Next is establishing what questions to ask tenants in order to receive the best information. This step is where CRE owners and operators interact directly with tenants. Make sure the questions you ask will supply you with the information needed to fully gauge tenant satisfaction levels.
Tenant survey questions you could ask to measure satisfaction include:
- (On a 5-point scale) How satisfied are you with your overall experience at the property?
- (Yes or No) Would you recommend the building to other businesses?
- (On a 5-point scale) How would you rate the condition and maintenance of your space?
- (On a 5-point scale) How satisfied are you with the communication from the property management team?
- (Yes or No) Do you feel informed about what’s happening in the building?
- (On a 5-point scale) How satisfied are you with how quickly and efficiently maintenance requests are handled?
The above are just a few examples of metrics to measure and track. Other metrics could include tenant satisfaction with safety and security, the building’s community, tenant amenities, cleanliness, and more.
3. Ongoing pulse surveys
Most CRE owners and operators aren’t strangers to tenant satisfaction surveys. Many teams send their tenants a survey once a year to gauge satisfaction. However, an annual survey isn’t enough anymore. By the time the feedback gets to property teams, satisfaction could have dipped too low to retain your tenant.
Today, especially as things can change quicker than ever before, it’s important for property teams to be continuously connected to their tenants. To bolster your tenant satisfaction data, implement pulse surveys. The ability to get continuous feedback from your tenants is vital to better building management and tenant relationships. Open and ongoing conversations with tenants can help:
1) Make better investment decisions to attract and retain tenants. When you understand how (and where) your building is being used, or if tenants are satisfied with their work order requests, you can use this information to refocus future investments and improve tenant satisfaction rates.
2) Understand whether a tenant will renew based on their survey responses. If you know which tenants are unhappy, you can get ahead of it and work with them to make sure they get what they need to help ensure lease renewals. And you can use this information to replicate that same positive experience for other tenants.
4. Tenant data (to boost NOI)
Did you know tenant satisfaction rates can have a direct impact on growing NOI? Access to real-time data on tenant preferences and behaviors is paramount. When this data is harnessed correctly, it can directly boost NOI.
For example, if there is inconsistency in what tenants say they want (sentiment) and the space and amenities they actually use (usage) throughout the year, CRE landlords can use this insight to make decisions that improve tenant satisfaction. An increase in tenant satisfaction leads to tenant retention. Happy tenants attract other tenants. The end result? A boost to NOI.
Here are ways tenant satisfaction can impact your building’s NOI:
- Lease renewals: Tenant satisfaction is a major factor in lease renewals. Happy tenants are more likely to renew their leases, providing a steady and predictable income stream that contributes positively to NOI.
- Less vacancy: Satisfied tenants are less likely to leave, reducing the vacancy rate. The costs associated with vacant properties, such as marketing costs for new tenants, loss of rental income, and maintenance costs, can severely impact NOI.
- Reputation: Happy tenants can refer other potential tenants, reducing marketing expenses and time spent filling vacancies. Plus, a good reputation can justify premium rent prices, which can directly increase NOI.
- Lower maintenance and turnover costs: Satisfied tenants are more likely to take care of the property, leading to lower maintenance and repair costs. Also, with fewer tenant turnovers, costs associated with renovations or repairs between tenants are reduced.
- Potential for rent increases: If tenants are satisfied with their commercial space, they may be more willing to accept reasonable rent increases, especially if they feel the level of service and maintenance justifies it.
How to measure tenant satisfaction
With this information in hand, CRE owners and operators can build a robust tenant satisfaction measurement program. Because making sure your tenants are satisfied is directly correlated to your property’s success. And by measuring tenant satisfaction rates over time, your property can make actionable decisions that will help increase your property’s NOI.
For more metrics your property should be measuring, and why they matter, download the free guide, “Metrics that matter for modern property management.”