Andrew B. Zezas, SIOR
Relationship Manager,
Strategist, President
(908) 245-5999 x11
andrew.zezas@realstrat.com

In the new millennium, the vast majority of commercial property is no longer controlled by mom and pop builders or small-time investors, as was the case in most of the last century. In fact, most significant office buildings today are controlled by sophisticated real estate players, often backed by savvy multi-national capital sources.

What Business are Landlords Really In?

However, in many instances, we encounter a similar trait in commercial landlords...the misbelief that they're in the real estate business, or that they're in the investment business. Granted, the investment in real estate may be the vehicle by which commercial property owners generate returns for themselves and for their investors. But, therein lies the misunderstanding. You see, returns on investment are not actually generated by the buildings or even by their owners. The annual cash flow yielded by real estate investments is most often generated by the rents paid by tenants. This is true in most commercial real estate projects, except for those where properties are quickly bought and sold, or flipped, as it is commonly known.

So, if cash flow is generated not by bricks, mortar, and land, but by the commercial tenants that occupy them, wouldn't it make sense that commercial landlords focus not so much on the real estate itself, but in providing service excellence to those that pay those rents and generate the returns on investment that keep the landlords in business? Surprisingly, too many landlords miss this very obvious point.

Customer Service and Satisfied Tenants

Companies, like people, are pretty easy to satisfy. Provide them with what they were promised; respond quickly, expertly, and intelligently; care about their businesses and their challenges; let them know how important they are to your success; and then, give them more then they expected; and, they'll sing your praises. Remember, that a satisfied customer can be a landlord's best marketing tool. And, a dissatisfied customer, in any business, will typically be the loudest person in the room! These are the very basic principals of customer service.

These Guys Get It!

Here's the good news: Some very smart commercial landlords have gotten out in front of their industry, having recognized this very obvious issue. As a result, these bright, sophisticated, and knowledgeable landlords have consistently grown their portfolios, increased their businesses, generated greater returns for their stakeholders, and typically expand and retain their tenants longer than their competition. One such firm is New Jersey based Advance Realty Group.*

In representing corporations seeking to acquire office space over the years, we've had the pleasure of sitting across the table from Advance Realty Group in multiple negotiations. Their approach to deal-structure and negotiations, while outstanding, collaborative, and best-in-class, was only outstripped by their devotion to tenant service excellence. This became apparent to us in 2005, when we represented the interests of Odyssey Pharmaceuticals, a company that was seeking a new corporate headquarters.

A Quick Case Study

After considering multiple alternatives and reviewing competing proposals, Odyssey selected a building owned by Advance Realty. Odyssey chose Advance Realty's building for a multitude of reasons, including its quality, amenities, location, access, floor size, design, and so on. In fact, Advance's transaction was not necessarily the least expensive alternative available to Odyssey. Since Odyssey was seeking to recruit the best and the brightest talent in their industry, they sought to create an environment where people would enjoy coming to work, one where they could attract and retain a high caliber labor base. Consequently, one of the most important drivers in Odyssey's decision making process was Advance Realty's commitment to customer service excellence, as it supported the Company's business objectives.

Advance Realty's extreme focus on providing their tenants more than they expect became evident to us by their "Tenant's Bill of Rights". Odyssey achieved its business objectives by selecting a landlord who "got it", one who understood that commercial real estate is more about serving tenants than owning buildings. In Advance Realty's case, they competed for and won a much desirable and sought-after transaction that helped them achieve the returns they sought, and had many positive residual effects, as well.

The above was proven again when, in 2006 Odyssey engaged us to dispose of their headquarters, a move necessitated by a major change in their business. In a very short amount of time, we succeeded in securing a replacement tenant for the entirety of Odyssey's headquarters. One of the reasons cited by the incoming tenant...Advance Realty's commitment to Tenant's Rights!

The most successful commercial landlords are those who recognize that they're not in the real estate, investment, or cash flow business. But, that they're in the business of providing great service to their tenants, whose satisfaction will, in turn ensure the success of their properties.

Andrew B. Zezas, SIOR, is Relationship Manager, Strategist, and President & CEO of Real Estate Strategies Corporation, Publisher of "Business, Profits and Strategy", a monthly online publication read by thousands of business, financial, and real estate executives nationally, and, is the author of two new real estate books, The CFO's Guide to Understanding Corporate Real Estate Transactions and The CFO's Guide to Hiring the "Right" Real Estate Service Provider, both of which will be available shortly at www.thecfosguide.com.

Mr. Zezas is well-known for his ease and informative style of public speaking, and has given talks, presentations, and has lead educational programs for business, professional, government, and trade associations, including the Building Owners and Managers Association, American Management Association, the U.S. Postal Service, RealComm, Society of Industrial and Office Realtors (SIOR), and others. Andrew is National Chairman of the SIOR Tenant Representation Specialty Practice Board, and is a licensed real estate instructor in Texas and Indiana. He can be reached at 908 245 5999 or via email.

Real Estate Strategies Corporation, located in Kenilworth, New Jersey, and serving clients throughout the country, helps companies create and execute Business DRIVEN Real Estate Solutions...and Opportunities, faster and with less risk. Visit www.realstrat.com.

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