Key points
Downtime
Every month a space sits empty is a month of lost rent.
Incentives
JLL notes incentives for a new office tenant can total roughly a third of annual net rent.
Retention protects value
Keeping a good tenant is usually far cheaper than replacing one.
What it really costs when a tenant leaves
When an office tenant leaves, the landlord loses more than the rent. There is the downtime while the space is marketed and re-let, the incentives offered to secure a new occupier, leasing commissions, and often reinstatement and fit-out contributions.
An illustration with hypothetical numbers: a 10,000 sq ft tenant paying S$10 psf a month generates S$1.2 million a year. Six months of downtime costs S$600,000. JLL notes incentives for a new tenant can total roughly a third of a year’s net rent, adding as much as S$400,000 more before commissions.
Why experience is part of retention
Tenants decide whether to renew based on how well the building serves them and how it reflects on their business. Property management quality and the everyday experience of the building are part of that decision. A premium arrival experience is one of the things a tenant gives up when they leave.
Costs of losing a tenant
Every departure carries several costs at once. Applied through scenting for REITs and landlords and portfolio scenting.
Lost rent during downtime
Incentives to attract the replacement
Leasing commissions and marketing
Fit-out contributions and reinstatement
Where scent fits
Scent is one part of the experience that supports renewal decisions.
Experience
A consistent, premium arrival every working day.
Satisfaction
Occupiers feel the building reflects well on them.
Renewal
Better experience supports the case for staying, which protects NOI.
Frequently asked questions
1. Will scenting stop tenants leaving?
No single amenity decides a renewal. Scent supports the overall experience that renewal decisions are based on.
2. Are these figures real?
The illustration uses hypothetical inputs. Use your own rent, downtime and incentive assumptions.
3. How does retention affect value?
Retention protects net operating income. Capital value is NOI divided by the market cap rate.
4. What does a scenting programme cost by comparison?
Fees depend on scope. Request a site assessment for a proposal you can compare with your own churn costs.
5. Which tenants notice scent most?
Occupiers who host clients, such as banks, law firms and headquarters, tend to value the arrival experience most.
6. Where can I read more?
Get started
Protect the tenants you have
Request a site assessment and a proposal you can weigh against the cost of a single departure.