The requested news item does not exist. Please return to News
White paper quantifies costs of retaining versus losing tenant
CHICAGO, Dec. 19, 2012 – The cost of losing and subsequently acquiring a replacement tenant can cost building owners up to three times more than renewing a lease, according to Jones Lang LaSalle’s recent white paper, “The Economic Cost of Losing a Tenant.” That disparity motivates property managers and owners to develop and invest in tenant retention programs to drive value and satisfaction.
“Tenant retention is a top priority because an occupied property allows owners to maximize the value of an investment,” said Dan Pufunt, President of Property Management for Jones Lang LaSalle. “Without renewing tenants, properties can become more costly to operate and eliminate potential returns to investors, showing the importance of generating focused programs that help drive renewals and retain tenants.”
By comparing costs associated with renewing leases versus acquiring a new tenant, which include lost rent, free rent, construction time, tenant improvements and leasing commissions, “The Economic Cost of Losing a Tenant” goes beyond stating the mere importance of tenant retention to quantify the potential price tag associated with losing tenants.
To demonstrate how to calculate the cost of losing a tenant, the white paper introduces a hypothetical scenario based on real market conditions in Chicago’s Central Business District. The scenario shows just how costly losing a tenant can be; in this case, about $1.5 million — nearly three times more than the cost of renewing a tenant. “This formula can be applied to markets all over the country,” said David Hopwood, a Jones Lang LaSalle General Manager and Senior Vice President in Chicago. Property managers just need to plug their market- and building-specific metrics into the formula and make the calculations from there. They will consistently be able to show their owners how expensive losing a tenant can be, affirming the importance of tenant relations programs that encourage renewals.”
“The Economic Cost of Losing a Tenant” highlights proven elements of a successful tenant retention program, generated by detailed tenant surveys, open communication from the top down at tenant organizations and the creativity of the management and ownership teams.
“While there may be a formula that exhibits the cost of losing a tenant, no one formula exists for the ideal tenant retention program,” Hopwood said. “Every property and every tenant is different, and so are their needs. Keeping tenants satisfied means catering to those individualistic needs and consistently delivering on promises. In return, managers and owners will be rewarded with renewals and an improved bottom line.”
You can learn more about the cost of losing a tenant and innovative tenant retention programs by reading the white paper or visiting the Jones Lang LaSalle’s Property Management web site. For more news, videos and research resources on Jones Lang LaSalle, please visit Jones Lang LaSalle’s U.S. Media Center web page.About Jones Lang LaSalleJones Lang LaSalle (NYSE: JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2011 global revenue of $3.6 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 2.1 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with $47 billion of assets under management. For further information, please visit www.joneslanglasalle.com.
+1 312 228 3127