The economics of tenant retention

When a tenant leaves, the asset takes on several cost lines at once: void period, search costs, incentives for the incoming tenant, reinstatement works and management time. Added together, these frequently exceed the amount the parties failed to agree on at renewal.

What a tenant change costs

• The void period before a new tenant moves in.
• Agency fees and marketing costs for the space.
• Rent-free periods and other incoming incentives.
• Bringing the unit back to a lettable condition.
• Team time spent on viewings, negotiations and documentation.

What actually keeps a tenant

Rate matters, but a relocation decision is rarely driven by rate alone. More often it is accumulated frustration: slow responses to requests, an unreliable climate system, parking, security issues. Regular contact with the tenant well before lease expiry is not a formality but a way to see problems while they are still cheap to fix.

In practice, the renewal conversation should start well before the final month — that gives both sides time to find a solution and leaves the management team room to resolve outstanding issues.