Cummings Properties recently made a series of comprehensive capital improvements to 800 West Cummings Park in Woburn and its other properties in an effort to maintain long-term relationships with its clients.

Replacing a lost tenant is always a costly endeavor. But it’s particular expensive and difficult during challenging real estate markets like the current one.

Making matters worse is the fact that marketing and capital improvement budgets normally used to retain and attract tenants tend to erode during extended flat business climates. In most instances, “reactive” property management is simply not enough. Property management firms must actively foster long-term business loyalties.

This effort can take many forms. For example, on a windy late November afternoon, the CEO of a large financial services company looked out his suburban office-park window and saw a maintenance truck driving past. The truck stopped unexpectedly. The driver (who the CEO later learned was a plumber) got out and sprinted around the parking lot. Squinting into the sun, the CEO saw the driver chasing a loose plastic bag. A week later, after signing a long-term lease renewal to remain in the office park, the CEO recounted the story to his property manager, noting “you have a dedicated field worker who really cares about your property’s appearance to thank in part for this renewal.”

While the timing of the plumber’s efforts could not have been better, much of the battle to meet and exceed client retention goals is won or lost based on the attentiveness, diligence and creativity of the entire property management staff. These qualities often make their presence known long before the lease negotiation begins.

This is particularly true today. At their recent market forecast conference, the National Association of Industrial and Office Properties and Society of Industrial and Office Realtors projected a flat market in the short- to mid-term, even though there have been modest gains in the bottom of the market.

“We see light at the end of the tunnel for the Boston economy, and are not at all bearish about it,” said the conference’s keynote speaker, Arthur Margon of Rosen Consulting Group. Several panelists indicated that commercial building owners can expect continued aggressive competition for tenants since supply and demand conditions will favor tenants for quite a while.

Invest in Your Building

Though considerably more involved and much more expensive than having a conscientious plumber take the initiative to chase down trash in a parking lot, embarking on a well-considered capital improvement plan can be an effective way to help increase the chances of retaining clients. This is especially applicable today when interest rates are still near historic lows, many material prices remain quite competitive and contractors are readily available.

These conditions have prompted a noteworthy surge of reinvestment activity, like the major interior renovations and exterior facelifts at many of Cummings Properties’ 40 or so buildings in Woburn.

According to company officials, dramatic facades, highlighted by expanded windows and glass curtain-wall entries, and enhanced landscaping, as well as new carpets, ceilings and lighting, have modernized the 1980s vintage buildings and helped retain several national clients. These types of investments, especially when they are not tied to a particular lease transaction, reportedly can cement the loyalty between landlord and tenant and reinforce to new tenants that they chose the right place to locate their business.

“Our clients were delighted to see the capital improvements being made without any increase in their rents,” said Stephen Drohosky, who directs Cummings’ property management operations. “They appreciated our reinvestment in the properties, particularly in a weak market.”

While capital-intensive solutions are often the most noticeable, property management firms also have less expensive solutions at their disposal. They can provide cost-effective tenant appreciation programs which can significantly brighten the morale of the tenant firms’ employees, and give the property a more welcoming feel.

Novel ideas include bringing holiday carolers around the buildings and delivering poinsettias during the holidays, providing free ice-skating time at a local rink, hosting a casual breakfast for building occupants or organizing community-based events such as blood drives, health fairs or road races. Providing temporary conference rooms on a rent-free basis is another unique offering. Each effort distinguishes a property management firm from its competitors and establishes a multi-dimensional relationship that will endure. Indeed, every opportunity to spend time with and serve your clients forges a stronger connection.

It is also very important to know each tenant’s current and anticipated future needs. Frequent face-to-face meetings allow property managers to identify problems and needs and actively develop solutions before they affect the tenant. These personal interactions can address myriad subjects and prompt changes ranging from improving common-area lighting to the addition of an express courier drop box or fixing a squeaky entrance door, all of which provide daily value to clients and can be accomplished with minimal, if any, expenditure.

‘Blend and Extend’

A creative look at re-working existing financial arrangements in a lease agreement can also be quite fruitful. Property managers with a keen eye for client retention can employ a “blend and extend” formula to renew mid-term leases. This results in a rental reduction by averaging the remaining months of an existing lease at a usually higher rent, with the additional months of new term at a usually lesser rent. Using this weighted-average formula, clients receive immediate monthly savings and the building owner gets the security of a longer lease term, resulting in “wins” for both parties.

Details Count

There is no end to the range of issues that can impact a tenant’s satisfaction and subsequent willingness to renew a lease. Careful attention to details no matter how small, an awareness of underlying client needs and a willingness to initiate improvement programs can create solid tenant-owner relationships.

“Renewing a tenant’s lease starts the very first day after a new lease is signed,” said Drohosky. “Whether it’s something as major as an early restructuring of a firm’s lease, or as small as a field worker picking up a piece of trash in a parking lot, each moment of contact with a client presents an opportunity for a property management firm to build client loyalty. Once your tenants are aware that you’re willing to invest time, money and effort in your relationship with them, they are more likely to do the same on your behalf.”

Those firms that seize these daily opportunities will be the ones most likely to thrive in current market conditions.