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Article
Publication date: 17 July 2020

Danielle Claire Sanderson and Dustin C. Read

The purpose of this paper is to increase awareness of the value that can be derived from embracing customer service and ensuring tenant satisfaction.

Abstract

Purpose

The purpose of this paper is to increase awareness of the value that can be derived from embracing customer service and ensuring tenant satisfaction.

Design/methodology/approach

This literature review synthesizes the results of research conducted around the world to examine the value proposition of customer-focused property management. The literature was identified through a search of academic journal articles and industry publications, together with the authors' experience of working with industry practitioners. Drawing on these sources, the authors identify five emerging trends that are likely to make customer service an even more critical part of property managers' jobs and propose best practices to help property managers actualize the benefits.

Findings

Three themes emerge from the literature. First, property managers can add significant value to real estate portfolios by delivering high-quality customer service to tenants. Second, emerging trends in the real estate industry are creating new opportunities for property managers to participate in the value creation process. Third, there are a number of steps property managers can take to leverage customer service to benefit the real estate investors they represent.

Practical implications

Real estate investors, and the property managers working on their behalf, can realize the advantages of customer-focused property management by adopting a series of straightforward best practices, which are discussed in the paper.

Social implications

The trends identified and practical steps proposed are likely to be all the more relevant in the aftermath of the Covid-19 pandemic.

Originality/value

This research should increase awareness of customer-focused property management and the mechanisms through which it can affect real estate returns. The ten best practices proposed should help property managers deliver effective service to tenants and achieve the associated financial benefits for investors.

Details

Property Management, vol. 38 no. 5
Type: Research Article
ISSN: 0263-7472

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Article
Publication date: 25 January 2019

Danielle Claire Sanderson

The purpose of this paper is to help landlords and property managers to understand what they can do to increase tenants’ satisfaction and propensity to renew their lease…

Abstract

Purpose

The purpose of this paper is to help landlords and property managers to understand what they can do to increase tenants’ satisfaction and propensity to renew their lease, and their willingness to recommend their landlord to other people.

Design/methodology/approach

This paper analyses almost 5,000 interviews with private rented sector (PRS) tenants in the UK, conducted over a four-year period, to investigate determinants of resident satisfaction, loyalty (lease renewal) and willingness to recommend their landlord. Statistical analysis is performed using respondents’ ratings of satisfaction with many aspects of their occupancy as explanatory variables. Comparisons are made between interviewees who renew their lease and those who do not renew.

Findings

The research finds that “ease of doing business” with their landlord is a strong predictor of residents’ satisfaction, loyalty and advocacy. Other key indicators for lease renewal include relationship management, rent collection and residents’ perception of receiving value for money. Tenants’ willingness to recommend their landlord depends mainly on their relationship with their landlord, how the landlord compares with tenants’ previous landlords and the property management service they receive.

Research limitations/implications

Limitations to this research include the fact that the residents have a single landlord and live on a single estate, one with particular cultural significance, therefore potentially restricting the general applicability of the findings. Although the sample size is large, the number of residents who have reached the end of their lease is relatively small, because the estate has only been occupied by PRS tenants since 2014.

Practical implications

Over the past five years, the PRS has become a significant asset class for institutional investors in the UK. This research should help to improve the landlord – tenant relationship in the PRS, and to increase occupancy rates without compromising rents.

Originality/value

The large sample size in this research, and the use of repeat interviews at various stages of a resident’s occupancy, highlight early signs of discontent that a landlord can act upon to reduce the risk of a tenant moving elsewhere.

Details

Property Management, vol. 37 no. 3
Type: Research Article
ISSN: 0263-7472

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Article
Publication date: 6 March 2017

Danielle Claire Sanderson and Steven Devaney

The purpose of this paper is to investigate the relationship between occupiers’ satisfaction with the property management service they receive and the financial…

Abstract

Purpose

The purpose of this paper is to investigate the relationship between occupiers’ satisfaction with the property management service they receive and the financial performance of commercial real estate.

Design/methodology/approach

The study uses occupier satisfaction data for 240 UK commercial properties collected over a 12-year period and the annual total returns achieved by those properties. Various statistical techniques are employed to assess whether increasing occupier satisfaction leads to greater returns for investors. These include comparing excess returns and risk-adjusted returns with occupier satisfaction at each property to assess whether superior property management generates outperformance (“positive alpha”). The study also investigates whether the relationship between occupier satisfaction and returns is the same across all sectors and whether it is affected by market conditions.

Findings

A positive correspondence is found between benchmark outperformance and occupier satisfaction. The relationship is similar for all sectors of commercial property and is particularly strong during the Global Financial Crisis, indicating that paying attention to satisfying the needs of occupiers has particular benefits during periods when the supply of commercial real estate exceeds demand.

Research limitations/implications

The sample of properties was restricted to those for which occupier satisfaction data had been collected by RealService Ltd and whose owners permitted access to the financial performance results. This meant that the properties belong to only three landlords, all UK REITs that care sufficiently about occupier satisfaction to commission studies. Thus the findings might not apply to all commercial properties. The mechanism by which the positive relationship between satisfaction and financial performance occurs is not tested, but the conventional mechanisms of reputation and customer loyalty (the “service-profit chain”) are discussed.

Practical implications

The findings suggest that it is worthwhile for landlords, or property managers acting on their behalf, to understand the needs of their occupiers in order to deliver the level of service that those occupiers desire. Leases in the UK are generally “triple net” and the total returns used for this analysis are net of property management costs, so the positive relationship between satisfaction and performance is not the result of economising on service delivery. A further implication is that valuers should take more account of occupier satisfaction when assessing the capital value of a property, from which total returns are assessed.

Originality/value

Demonstrating the links between customer service, customer satisfaction and business profitability is rarely attempted because of the many confounding factors that affect profitability. UK listed real estate companies are typically reluctant to reveal the financial performance of individual properties, and information about occupiers’ satisfaction is not generally available. The authors were fortunate to be granted access to a time series of such data, and to be able to demonstrate that attention to delivering a property management service that satisfies occupiers is likely to bring financial rewards to the owners of the property.

Details

Journal of Property Investment & Finance, vol. 35 no. 2
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 26 August 2020

Dustin C. Read and Danielle Claire Sanderson

Motivated by behavioral theories of the firm, this study aims to consider the extent to which knowledge gaps, organizational inertia and conflicts of interest prevent…

Abstract

Purpose

Motivated by behavioral theories of the firm, this study aims to consider the extent to which knowledge gaps, organizational inertia and conflicts of interest prevent large real estate investment management firms from approaching asset management in a comprehensive manner.

Design/methodology/approach

Results of 93 semi-structured interviews conducted with real estate practitioners working in the USA are thematically analyzed.

Findings

All of the aforementioned factors are found to influence real estate asset management practices and serve as potential obstacles to operational excellence.

Research limitations/implications

The qualitative analysis is limited in the sense that it focuses exclusively on the perceptions of real estate practitioners in the USA who work for relatively large organizations. However, it offers compelling evidence that comprehensive asset management is difficult under the best of circumstances, and becomes even more so in the presence of knowledge gaps, organizational inertia and conflicts of interest.

Practical implications

Those working in asset management or with asset managers must be mindful of the obstacles discussed if they hope to encourage and facilitate process improvement.

Originality/value

The study contributes to a small but growing, body of research examining the challenges large real estate investment management firms face when trying to derive value from their asset management platforms.

Details

Journal of Financial Management of Property and Construction , vol. 26 no. 1
Type: Research Article
ISSN: 1366-4387

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Article
Publication date: 9 May 2016

Danielle Claire Sanderson and Victoria Mary Edwards

Corporate occupiers require offices and services which meet their business needs, while landlords must attract and retain occupiers to maximise occupancy and rental…

Abstract

Purpose

Corporate occupiers require offices and services which meet their business needs, while landlords must attract and retain occupiers to maximise occupancy and rental income. The purpose of this paper is to help landlords and property managers understand what aspects of property management matter most to corporate occupiers, so that they can achieve a mutually beneficial relationship.

Design/methodology/approach

This paper analyses interviews with 1,334 office tenants in the UK, conducted over an 11-year period, to investigate determinants of occupier satisfaction, loyalty and advocacy. Structural equation modelling and regressions are performed using respondents’ ratings of satisfaction with many aspects of occupancy as explanatory variables. The dependent variables include satisfaction with property management, value for money, overall occupier satisfaction, lease renewal intentions and occupiers’ willingness to recommend their landlord.

Findings

The aspects with most impact on occupiers’ satisfaction are the office building itself, its location and amenities, and also communication with their property manager, a belief that their business needs are understood and the property manager’s responsiveness to occupiers’ requests. Occupiers’ loyalty depends mainly upon feeling that their rent and service charges provide value for money, an amicable leasing process, the professionalism of their property manager and the corporate social responsibility of the landlord. “Empathy” is crucial to occupiers’ willingness to recommend their landlord, and clear documentation and efficient legal process improve occupiers’ perception of receiving “Value for Money”.

Research limitations/implications

The sample is skewed towards occupiers of prime office buildings in the UK, owned by landlords who care sufficiently about their tenants to commission studies into occupier satisfaction.

Practical implications

This research should help to improve the landlord – tenant relationship, benefitting the businesses that rent property and helping building managers understand where to focus their efforts to achieve maximum effect on occupier satisfaction, loyalty and advocacy.

Originality/value

There has been little academic research into the determinants of satisfaction of occupiers of UK commercial property. This large-scale study enables the most influential factors to be identified and prioritised.

Details

Journal of Corporate Real Estate, vol. 18 no. 2
Type: Research Article
ISSN: 1463-001X

Keywords

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