TECHNICAL UNIVERSITY OF KENYA

FACULTY OF ENGINEERING

SCHOOL OF CONSTRUCTION AND PROPERTY STUDIES

DEPARTMENT OF REAL ESTATE AND PROPERTY MANAGEMENT

A REVIEW OF TENANT RETENTION IN COMMERCIAL OFFICES DURING

THE COVID 19 PANDEMIC

A CASE STUDY OF UPPER HILL, NAIROBI.

STEPHEN WAITE

EARQ/00826/2017

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A RESEARCH PROPOSAL SUBMITTED IN PARTIAL FULFILMENT OF THE

REQUIREMENTS FOR AWARD OF A BACHELORS DEGREE IN REAL ESTATE AND

PROPERTY MANAGEMENT

DECLARATION
I declare that this proposal is my original work, and as far as I am aware, it has not been presented for

the award of a degree in any university

Name: Stephen Waite Kamau_______________ Reg Number: EARQ/00826/2017

Sign: ___________________________________Date: __________________________

This proposal has been submitted with the approval of Mr. Patrick Njiiru my project supervisor for the

award of a bachelor’s degree in Real Estate and Property Management.

Name of Supervisor: Patrick Njiiru_________________________________________________

Department: Real Estate and Property Management___________________________________

Sign: ___________________________________Date: __________________________________

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 DEDICATION
The work is devoted to my family, friends, classmates and lecturers who have unwearyingly
tolerated and applauded me during the long period it has taken me to finish the project. I have no
words to share my feelings for them for the sacrifice they have made, but this token gesture is the
least I can do. May God bless them and help them to grow to achieve all their desires and goals in
life.

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 ACKNOWLEDGMENT
All the glory and honor to the Almighty God for allowing me to study at The Technical
University of Kenya and earn my Degree in Real Estate and Property Management. I am
grateful to God for the power, strength, knowledge and wisdom to carry out this research
project to advance my education and career.

The most profound appreciation to my supervisor, Mr. Patrick Njiiru, for his supervision,
critique, inspiration and assistance while conducting this research project. His dedication
and timely review played a substantial role in its completion. God bless you.

Many thanks to all my lecturers at the Department of Real Estate for their lectures that
provided me with knowledge used for developing, implementing and presenting this
research project. Other appreciation goes toward all my classmates and friends who have
contributed to me physically, socially, spiritually, morally and financially. May God bless
you.

Special thanks to all librarians who have provided me with information, access to study
areas, reference books, profiles, journals and guidance during the preparation of this project.

To those who contributed to this project's accomplishment, I sincerely say "THANK YOU".

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ABSTRACT

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 TABLE OF CONTENT

Contents
.........................................................................................................................................................1

DECLARATION.................................................................................................................................2

DEDICATION.....................................................................................................................................3

ACKNOWLEDGMENT.....................................................................................................................4

ABSTRACT........................................................................................................................................5

TABLE OF CONTENT.......................................................................................................................6

Table of Figures...................................................................................................................................1

LIST OF TABLES...........................................................................................................................1

LIST OF FIGURES.........................................................................................................................2

Figure 4.4: Duration respondents had been working in their respective organizations……….29..2

Figure 4.10: Extent to which the organization face challenge in financing the business………38 2

INTRODUCTION...............................................................................................................................3

Overview..........................................................................................................................................3

Background Study...........................................................................................................................3

Problem Statement...........................................................................................................................5

Research Objectives.........................................................................................................................6

Specific Objectives......................................................................................................................7

Research Questions..........................................................................................................................7

Research Hypothesis........................................................................................................................7

Scope of the study and Study Location...........................................................................................8

Significance of the study.................................................................................................................9

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 Assumptions..................................................................................................................................10

Limitations.....................................................................................................................................10

LITERATURE REVIEW..................................................................................................................11

Introduction....................................................................................................................................11

The concept of Tenant Retention...................................................................................................11

Factors that influence Tenant Retention....................................................................................12

The Importance of Tenant Retention.........................................................................................14

Theoretical Framework..................................................................................................................15

Relationship theory....................................................................................................................15

Wants and needs theory.............................................................................................................17

Theory of Planned Behavior..........................................................................................................19

Conceptual Framework..............................................................................................................20

Conclusion.....................................................................................................................................21

Section 3: RESEARCH METHODOLOGY.....................................................................................22

Introduction........................................................................................................................................22

Study Area.....................................................................................................................................22

Research design.............................................................................................................................22

Target population...........................................................................................................................23

Sampling design and sample size..................................................................................................23

Data collection...............................................................................................................................23

Reliability and validity..................................................................................................................23

Ethical Considerations...................................................................................................................24

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 INTRODUCTION
Overview

This chapter mainly presents the background study of the research paper. It also provides the

problem statement of the study, the scope of the study, the significance of the study, the objectives

of the study and the research questions. It also deals with the limitations as well as the assumptions

of the study.

Background Study

Upper Hill has gradually been transformed into a business hub with a majority of the colonial

bungalows being replaced by skyscraping towers. Major foreign embassies and government

authorities are now located in the approximately 700-acre district (Musonda, 2017)

This district was initially a single-dwelling residential area and has been rezoned to a commercial

district, which resulted in the area experiencing unprecedented construction of high-rise buildings,

and conversion of old residential buildings to modern high-rise offices. (Kanyeki, 2012).

This was because it provided room for expansion where offices had access to parking spaces, which

was a huge problem for offices in the CBD. It also provided access to a variety of amenities from;

schools, hospitals, banks and other financial institutions, hotels and leisure, administrative

headquarters as well as churches. It also has proximity to CBD as well as access to both Jomo

Kenyatta International Airport as well as Wilson Airport.

With the increase in demand for office space, investors looking to generate rental income moved to

Upper Hill. Without zoning regulations, Upper Hill saw an oversupply of office space. According

to Paul Maurice Syagga, a Senior Lecturer at the Department of Real Estate and Construction Mana

gement at the University of Nairobi, “developers started mega constructions on the premise that Ke

nya’s economy would continue to expand and thus would require office space, between 2013 and 2

018, the country experienced a construction boom from both the State and the private sector as a

result of this gross domestic product doubled from Sh4.7 trillion in 2013 to Sh8.9 trillion in 2018”.
However, with these recent developments, most buildings in Upper Hill currently struggle to get

tenants. As of 2020, two years after the Prism Tower in Upper Hill, which was launched by

President Uhuru Kenyatta, the building was at 0% occupancy (Wambu, 2020).

When taking a spot check tour in Upper Hill District, many commercial office buildings have a “To

Let” banner, and only a few buildings have a “Fully Rented” banner. The oversupply was a result

of many buildings coming up at the same time.

According to a report by Cytonn Investments, (Arora, 2019) as at 2019 before the pandemic, the

supply of office space was 6.7 mn sqft against a demand of 0.38 mn sqft, and therefore oversupply

of 6.32 mn sqft. This resulted in a decline in asking rents by 4.3% to an average of Kshs. 97 per

sqft from Kshs 101 per sqft in 2018. This was because of an oversupply of 6.32mn sqft it created a

bargaining chip for tenants forcing developers to reduce or maintain prices and rents to remain

competitive and attract occupants to their office spaces.

When the first case of Covid-19 was discovered in Kenya on 13 th March, 2020, the Health Cabinet

Secretary Mutahi Kagwe invoked the Public Health Act that resulted in a ban on public gatherings

to curb the spread of the Covid-19 virus. There was a nationwide lockdown, curfew and the issue of

social distancing. This resulted in major companies having to lay off their employees due to hard

economic conditions. Some companies opted for remote working to maintain minimal physical

contact to curb the spread of the Covid-19 virus. There was a need to restructure the office space to

implement government health regulations of social distancing (Merab, 2020). These measures

resulted in a decline in demand for office space as most businesses were forced to close down and

could not maintain their operations. This resulted in occupancy rates declining by 2.6% points

from 80.3% in 2019 to 77.7% in 2020. The asking rents and prices declined by 3.0% and 2.8%

respectively from Kshs 96.00 and Kshs 12,638 per SQFT in 2019 to an average of Kshs 93.00 and

Kshs 12,280 per SQFT in 2020. (Wambu, 2020)

According to Nairobi Metropolitan Area commercial office report by Broll Investments (Mugweru,

2021), the commercial office sector performance in 2020 recorded a 0.5% decline in average rental

yields from 7.5% in 2019 to 7.0% in 2020. This was as a result of numerous challenges attributable

to the covid-19 pandemic, which brought about reduced demand for office space as well as the high

supply. This led to declines in both rental rates and occupancies.

The subdued performance was largely driven by an increased supply with the introduction of 0.8

Mn SQFT office space to the market resulting in reduced occupancies and hence an oversupply of

7.3 Mn SQFT from 6.3 Mn SQFT in 2019. (Wambu, 2020)

A review of tenant retention during the Covid-19 pandemic is important because this study will

provide insights to commercial office providers on how to retain tenants, as well as attract new

tenants despite there being an existing problem of oversupply of office space as well as the Covid-

19 pandemic. The information gathered will be important because this being a very competitive

sector, firms try to outshine each other when it comes to tenant retention as well as seeking new

tenants.

Problem Statement

There was an existing problem of oversupply and reduced demand of commercial offices in Nairobi

before covid-19. A variety of reasons contributed to this. For starters, there was an excess of office

space in Nairobi as a result of the early-2000s development boom. This resulted in an oversupply of

office space and a decrease in demand, since firms were unable to occupy all available space.

Second, the 2008 global financial crisis reduced demand for office space as firms downsized or

shuttered entirely. This aggravated Nairobi's surplus situation. Finally, the recent expansion of the

home working trend has resulted in a decrease in demand for office space as more individuals work

from home.

Tenants' gross sales and footfall traffic within their individual stores/premises have decreased as a

result of consumers avoiding crowded venues such as malls, retail centers, and shopping malls
owing to social distancing guidelines. With the economy faltering and job levels under pressure, the

ensuing economic limitations have pushed consumer spending away from impulsive purchases and

luxury purchases and toward needed things, particularly food. then to add salt to injury a pandemic

that resulted in a Nationwide lockdown. Naturally, this increased vacancy rates. During that period

of economic downturn, it was very difficult for commercial office providers because they had to

compete for tenants. Consequently, many of them widened their focus from competing with others

in trying to attract new tenants, to putting increased effort into retaining their current tenants. They

realized more and more, that occupants should be treated as valued customers and high priority

should go to meeting their needs (Appel-Meulenbroek, 2020)

All these factors proved to be a tough problem for commercial office providers as they struggled to

retain tenants in their office space.

There were several reasons why I felt it was critical to undertake research on commercial tenant

retention during the COVID-19 outbreak. First and foremost, the pandemic has had a tremendous

impact on businesses of all sizes, and understanding how tenants are faring at this period may give

useful insights into the general health of the commercial real estate market. Furthermore, as

companies reopen and resume operations, recognizing tenants' requirements and preferences will be

crucial to ensuring a seamless and effective transition. Finally, commercial tenant retention

research conducted at COVID-19 can assist landlords and property managers in identifying best

practices for keeping renters happy and lowering turnover in the future.

Research Objectives

The main objective of the study was to review tenant retention in commercial offices during the

Covid-19 pandemic. The research aims to investigate whether good relationship between property

managers and tenants, as well as tenant satisfaction in commercial office building offices, can in

return influence tenant retention even during a tough pandemic such as Covid-19 in that good

relationship management can lead to increased tenant retention, even during a tough pandemic like
Covid-19. This is important because it can help landlords keep their properties occupied and reduce

vacancy rates. Additionally, good relationships between property managers and tenants can help

create a sense of community and improve the overall quality of life for tenants.

Specific Objectives
 To find out the unprecedented effects of Covid-19 on tenant retention in commercial

offices.

 To find out how improvised technology can influence tenant retention for commercial

offices despite the raging covid 19 pandemics.

 To find out the measures taken to retain tenants in commercial office spaces during the

covid-19 pandemic. Is the objective on improvised technology not part of the measures?

Harmonise the two objectives.

 To find out whether good relationship how will you measure good relationship management

between tenants and landlords can influence tenant retention even during tough economic

times

Research Questions

 What factors affect tenant retention?

 How did Covid-19 affect occupancy rates in commercial offices?

 What was the effect of Covid-19 on tenant retention in commercial office spaces?

 How did commercial office space providers adapt to Covid-19 to retain their tenants? What

measures did office space providers take to retain tenants during the Covid-19 pandemic?

Research Hypothesis

Good relationship management between property managers and tenants is vital in ensuring tenant

retention even in hard economic times such as Covid-19.

The null hypothesis of this research is that it is not important to conduct research on tenant

retention during covid 19 because the pandemic has not had a significant impact on the overall
retention rates of tenants. While there may be some areas where the pandemic has had an impact on

retention rates, such as in areas where there has been a decrease in demand for rental units, in

general the pandemic has not had a significant impact on retention rates.

Scope of the study and Study Location

The study focuses mainly on commercial office space providers that own commercial office

buildings in Upper hill. This includes major banks such as KCB, Insurance Firms such as Britam,

as well as Property Developers such as Kings Developers who developed the Prism Tower.

The study shows the measures which commercial office providers undertook to retain tenants

during the Covid-19 pandemic.

The location of the study was Upper Hill. Upper Hill is located 4 kilometres west of the central

business district of Nairobi. The coordinates of Upper Hill are: 1°17'59.0"S, 36°48'58.0"E

(Latitude: -1.299719; Longitude:36.816097). Upper Hill lies in two major Sub Counties; Kibera

Sub County and Dagoretti North Sub County. Ngong Road separates the two sub-counties.

Upper Hill was ideal for my study seeing that it has numerous developments of commercial offices

which have just been completed therefore providing quality Grade A offices.
Indicate the source of the map

Significance of the study

Tenant retention is one of the most cost-effective strategies property managers and owners can

implement. This is because a good tenant is your unofficial business partner as long as they’re

satisfied with the unit, you will benefit from uninterrupted rent payments. On the other hand,

recruiting new occupants involves spending money on marketing while losing money on a vacant

unit. (Zillows., 2008) Keeping occupancy rates consistent is one of the key challenges that many

property managers face.

The study will provide vital information to commercial office providers who let and manage

commercial offices as it provides insights on how to retain tenants during tough economic periods.

It also provides vital information to investors who like to conduct a market analysis before

investing in commercial offices as this report shows the Compound Annual Growth Rate of

commercial offices during the pandemic.

The study can also be useful to future researchers since the information gathered from this study

may provide an avenue for further research on the same subject or may be used as a starting point
for research on other office nodes such as Parklands, Westlands or Gigiri. The study could also

provide useful insight into government agencies and policymakers who may want to develop or

revise policies on the development of commercial offices to suit the regulations by the Health

Ministry to curb the spread of Covid-19.

This research will help landlords and managers of properties not only in commercial office space

but also in the retail and industrial sectors understand where to focus their customer relationship

management efforts to have the greatest impact on occupier satisfaction which in return influences

tenant retention and return it offers the greatest return on investment.

Assumptions

It is assumed that the respondents to be engaged in the study will be willing to provide the

information required for the research. The researcher also assumes that the information they

provide will closely depict the situation on the ground.

Limitations

The project was limited to commercial offices within the Upper Hill District and this research

focuses only on a specific period from 2020 to 2021 when the pandemic was at its peak.

The researcher is aware that also there are other commercial office zones other than Upper Hill but

chooses to focus on Upper Hill since in the recent past it has seen many developments within that

area with most developments being completed at almost the same time and because of its proximity

to the Central Business District.

The researcher is aware that some information collected from the research may be false or

exaggerated
 LITERATURE REVIEW
Introduction

This chapter comprises literature on previous studies related to tenant retention to critically
evaluate and identify the gaps on which this research was based. It provides an extensive
overview of theories related to this study which play a significant role in shaping the structure of
this study.
The aspect reviewed includes tenant retention, its merits and demerits in general, the theoretical
framework, the policies and legal framework and institutional framework which can be applied
to tenants in commercial office spaces and how covid-19 affected commercial office space
providers.
The concept of Tenant Retention

A satisfied tenant is more committed, resulting in a higher tendency to be loyal to the landlord
and not move (Dogge , 2004),. Therefore, it is important to know particularly what moves a
tenant and what increases satisfaction. Those aspects that can move a tenant are called push and
pull factors. Push factors are aspects of the current situation that are negative and therefore push
someone away. Pull factors are aspects of the competition that pull someone away. When these
factors fall below a certain level, there is a risk that the tenant will decide to move. Additionally,
there are also several keep factors which are aspects of the current situation that stimulate a
company to stay.
Push and pull factors are mostly technical aspects of the buildings like maintenance while keep
factors are aspects that are functional in nature example facilities. The chart below is a clear
illustration of the keep and push factors that influence the tenant.

(Dogge , 2004)
According to a journal of property management by Hartz published in 1992, to beat the
competition in tenant retention, office space providers have to distinguish between some
common basic strategies. These strategies are; to focus on the efficiency of the product, the
novelty of the product and identifying the needs of specific customers. Recently the real estate
market has shifted from focusing on the product to focusing on customer satisfaction which
when achieved helps create customer loyalty.
The customer’s overall assessment of the utility of a product is based on perceptions of what is
received and what is given (V. Zeithaml, 1988). From the moment they rent an office, the
customer starts to compare the expected and actual performance of the product. To achieve
customer satisfaction, the office space provider must deliver three elements of value. The first
element is the objective value which concerns the rational price-to-quality ratio of the office.
The second element is the subjective value which concerns brand equity and the third element
is the retention equity which is the value the customer gives to the relationship with the
landlord. Value equity can be influenced through good property management, but both brand
and retention equity is influenced only by accommodating specific tenant needs.
Therefore, occupiers are unlikely to express high levels of satisfaction if they feel they are
paying too much for the property and service they receive.
Factors that influence Tenant Retention
For a property to achieve superior financial returns than comparable properties, they require high
occupancy rates, at or above market rents. This, in turn, requires landlords to provide properties
and services which are attractive to occupiers.
There are cases where a tenant chooses not to renew a lease based on organizational needs. In
this case, it is not the fault of the property or management. However, there are some factors that
can affect tenant retention such as poor building maintenance, non-responsive management or
just overall poor customer service. These cases are avoidable and should be addressed to
maximize the retention of tenants.
There are more quantifiable factors such as rent, occupancy costs, economic conditions and
maintenance issues that can be tracked to boost the relationship between the tenant and landlord.
Regular visits with tenants can help increase retention through enhanced awareness of tenant
needs and expectations this will increase tenant satisfaction. Similarly, hiring amiable front-line
employees for customer service on standby will make the tenant feel appreciated.
Amenities are an important element of the building that influences tenant satisfaction. It is
believed that quality amenities provided within an organization have led to a more stable tenant
base. Services such as banking, and food on site can increase the contentment of tenants. These
variables are important and their effect on tenant renewal is simpler to justify.
Tenant contact, excellent service and value for money can influence tenant retention. Having
great customer service can enhance tenant contact. Having a tenant liaison that offers personal
communication as well as assigning a single representative to each tenant can help resolve all
tenant issues. Tenants not only feel as if they are more cared for, but also have someone who
understands their space and can be most responsive to their needs.
Furthermore, with the technology boom, many property managers are using web-based programs
to improve communication with their tenants. These applications increase management’s speed
of response while enabling virtually effortless recording and tracking of maintenance patterns
and recurring issues, augmenting the level of customer service.
Other ways to increase service are to send holiday gifts, provide a suggestion box so that all
inhabitants of the space can have input, or, produce a newsletter. Encouraging interaction
between tenants in a building can also boost tenant satisfaction through the establishment of a
community attitude amongst tenants.
While all these factors are relevant when it comes to tenant retention, a large factor will always
be the cost of the space. A tenant should feel that they are getting a good value. After all, the
costs associated with replacing them are high, so offering a fair deal is in the best interest of both
parties. However, rental packages should be competitive with other buildings for tenants to
renew their lease.
The Importance of Tenant Retention
Research conducted by Prince Pinder on 12 different business sectors, (Prince, 2003) it showed
that the retention of 5 % of customers would increase profit by 35-95%, depending on the line of
business. For office building management, the increase could be 40 per cent. This is because of
the volume effect that reduces vacancy between two consecutive tenants, the decrease in
acquisition costs as a result of lower marketing expenses and the decrease in operating costs
because the tenant is familiar with the services. Similarly, the costs of attracting new customers
are much higher than for keeping present customers (Li, 2003).
Today the average office lease term is five years, meaning that in any given year, approximately
twenty per cent of leases in a building will be up for renewal. This fact demonstrates the
magnitude of the importance of retention.
The costs and risks associated with renewal probability can be quite high. In the present market
conditions with peak tenant improvement allowances and high vacancy rates, retaining tenants is
a key factor in the profitability of commercial offices.
Assuming an average deal square footage of nearly 12,500 sqft and an annual office rent of
Ksh.2500 per square foot, with a six months vacancy, non-renewal could result in a loss of over
Ksh.15,000,000 in rent alone.
The following chart illustrates a simplified cash flow for an individual lease of 12,500 square
feet, an annual rent of Ksh.2500 per square foot, tenant improvements equal to one year’s rent
and a projected vacancy of 6 months in the event of non-renewal, under three different scenarios.
As you can see, with a 100% renewal probability, the cash flow is four times that of a property
with a renewal probability of 50%. If you can increase the probability from 50% to 75%, the
projected cash flow is 2.5 times greater. This provides clear evidence that these are significant
costs that can greatly alter the value of a property. Therefore, putting great significance on tenant
retention.

Renewal Probability: 50% 75% 100%

Rent Ksh.31,250,000 Ksh31,250,000 Ksh.31,250,000
Vacancy Ksh.7,810,000 Ksh.3,910,000 Ksh.0
Tenant Improvements Ksh.15,630,000 Ksh.7,810,000 Ksh.0
Cash Flow Ksh.7,810,000 Ksh.19,530,000 Ksh.31,250,000
(Cytonn, 2019)

If you were to look at the effect of renewal probability from the overall building perspective, you
would see the ramifications of renewal. For instance, as stated previously, approximately 20% of
leases in a building are up for renewal each year. If a 50% renewal probability were applied,
10% of leases would vacate per year. For a clearer illustration, assume that this equates to 10%
of the building. For the 10% who vacate, under average market conditions there are six months
of vacancy which equates to 5% of the annual rent roll. Additionally, to replace the 10% who
vacate, an owner will most likely have to pay one year’s rent in tenant improvements for the new
occupant. This would then equate to 10% of the yearly rent, for a total 15% loss in income per
year. Even with a 75% renewal probability, this would still equate to 5% of tenants vacating
resulting in a loss of 7.5% of the annual rental revenue. For large facilities, this can equate to a
substantial amount of money, and for smaller properties, this could be the difference between
making a profit and incurring a loss. Therefore, owners and managers of office space must have
a clear understanding of what factors are most conducive to tenant renewal.
Theoretical Framework

To succeed as a good property manager, one should treat tenants as valuable customers. This can
be by determining the preferences of your tenants to provide customized products and superior
services (Kennedy, & Schneider, 2000) This helps to capture customer satisfaction which in the
long term helps to develop a great business relationship (Tikannen & Alajoutsijarvi, 2002)
Relationship theory
Find citations to back up this section.
Relationship management is a strategy in which the business owner maintains an ongoing level
of engagement with their clientele. This management can occur between a business owner and
customers where the focus moves from the relationship being just transactional to creating
strategies that make the consumer feel like his needs are taken care of. This includes strategies
such as brand loyalty and customer relationship management.
This theory was introduced by Robert Waterman.He introduced nine principles of management t
hat are embodied in excellent organizations and help build good customer relationships which
are ideal for most property managers when it comes to tenant retention. These principles are; -
 Managing Ambiguity and Paradox
Managers must be able to entertain multiple ideas or situations at the same time while carrying o
ut managerial functions. Further, the manager must be able to reconcile opposing ideas simultane
ously. This can help them in adapting to tough economic conditions such as the Covid-19
pandemic.
 A Bias for Action 
An organization must be responsive and proactive. The culture must avoid complacency, inactivi
ty, lethargy, or inertia.
By responding to the needs of the tenant the tenant can feel that the landlord cares for their needs
and this will influence retention.
 Close to the Customer
This principle focuses on the customer as the centre of the organization. It must continually focus
on the individual wants and needs of its customers. This requires being proactive and anticipatin
g their wants and needs.
 Autonomy and Entrepreneurship
Organizations must promote creative thinking and a willingness to innovate. In the past rent was
collected manually, but with technological advancement, their electronic means to pay rent and
keep track using customer relationship management software. This software can help remind the
tenant when his lease is due. Similarly, there are other automation such as the use of keycards to
access, automatic gates, and biometrics. All these trends in technology when adapted will help
influence tenant retention.
 Productivity through People
Employees are the source of the company's productivity. The organization must invest in the qua
lity and increased productivity of these individuals.
 Hands-On, Value-Driven
Managers must be committed to the organization and its people. The organization must be value-
driven in its mission and vision. Managers must be present and demonstrate this philosophy each
day.
 Stick to the Knitting
Companies must focus on their areas of understanding and core competencies. With
specialization, it is better to be a master at one field than to try to be great at everything. If the
focus is service delivery then the real estate managers should focus on service delivery.
 Simple Form, Lean Staff
Companies should organize with a lean and minimalistic structure. Fewer layers in the organizati
onal hierarchy are optimal. This creates unity of command, breaks down barriers to vertical com
munication, and reduces role ambiguity. Here the tenant will know whom to go to when matters
arise and need to be addressed.
 Simultaneous Loose-Tight Properties
Employees must be dedicated to the organization and its mission. The company must foster this
dedication and respect and acceptance of others who maintain this level of dedication.
Building a relationship with clients always yields rewards for all parties. Consumers who feel
that a company is responsive to their needs likely will continue to use that company's products
and services. A company's reputation for responsiveness and generous post-sales involvement
can often stimulate new sales. Similarly, maintaining communication with consumers lets a
company identify potential problems before they happen.
Wants and needs theory
One might criticize the importance of Maslow’s Hierarchy of Needs theory because why would a
landlord be concerned with your renter’s state of mind? Isn’t that their business? Perhaps.
However, keeping your renters happy will affect your bottom line. Maslow’s Theory is
illustrated in the shape of a pyramid with the most basic human needs or survival needs at the
bottom and more complex needs at the top.

Simply psychology, 

This theory can be illustrated below;

 At the bottom we have physiological needs. This includes basic human necessities such a
s water, electricity, clean air, and a clean place to work. In other words, each landlord
should strive to meet the tenant’s basic office needs.
 Safety is the next level which includes things that make humans feel safe such as secure s
urroundings, physical safety, and good health. Safety and security can be in the form of
security measures such as night patrol and restricted access to some offices that will
require key passes, safe and quiet surroundings for work this ensures the security of
documents and office equipment, as well as tenants working and in return, will offer the
security of income to investors.
 Social comes next which covers human needs such as a sense of belonging, ideally
tenants will take pride in their surroundings. This can be achieved by providing amenities
 such as parking space, serviced offices, Wi-Fi, high-speed elevators, backup generators
and regular maintenance such as clean sidewalks, landscaping and regular refurbishment.
 Esteem affects a human’s self-confidence, ability to achieve goals and respect for and fro
m others. As Maslow’s Hierarchy of Needs theory goes, the first level needs to be
accomplished before the second level can be accomplished and so on (McLeod, S.
(2007). If all the factors are in place below this level, it naturally follows that your tenant
will feel a good sense of self-esteem when they live in your complex. However, when
there are stairways filled with cigarette ashes and no one cleans them, that lowers
everyone’s self-esteem.  These esteem builders will be the result of the efforts of the
landlord to effectively provide each level leading to the result of “esteem” for all tenants.
 At the top of the pyramid is self-actualization. This includes the ability to feel great about
your surroundings and yourself as an individual. Additionally, it includes all levels
leading to this point. This includes the personal feelings of each tenant as they clock to
work daily, and does the office premise suit their needs? The value they get from renting
your premise.
This theory advises the landlord to ask the tenants specific questions to determine the services
they want and can afford.(Otto, 1998) This was done by conducting customer satisfaction
surveys to understand the sentiments of tenants. This is because tenant surveys have proven to be
a valuable tool for tenant retention programs (Birkeland & Beltini, 1995). The landlords should
identify the key services valued by the tenants from the survey and use the results to set goals for
improvement opportunities. Clearly demonstrate how maslows hierarchy of needs connects with
your topic.
Theory of Planned Behavior

The theory of planned behavior (TPB) can be used to analyze the factors affecting tenant loyalty.
A person performs a particular behavior because of the influence of behavioral intention. The
behavioral intentions of tenants should consider the relationships between tenants’ attitudes,
satisfaction, and loyalty (Ajez,1991). He highlighted that tenant satisfaction is the satisfaction of
an individual or company towards the condition of their rented space.
The cognitive image shaped by tenants through the process of perception shapes the basis of
their personal attitude and feelings toward each component and the totality of these attitudes and
feelings forms the basis of tenants’ satisfaction with their rented space, when a customer has a
good impression of a certain product, they will become more satisfied with it. (Jiboye, 2008)
Against the backdrop of different behaviors or situations, attitudes, subjective norms, and
perceived behavioral control have varying degrees of influence on intentions. (Assael,
1995) asserted that a customer makes a purchase only when the customer, situation, and product
affect one another. Therefore, it is correct to say that the influence of tenant attitude on tenant
loyalty is moderated by situational influences. Customers who feel satisfied with a product or
service are more likely to become loyal customers and may actively share relevant information
about the product or service with others. This effect is essential for ensuring the sustainability
and success of an actor in the real estate industry against temporal changes and rising
competition.
On a journal of Architecture and Planning by Chen S an analysis of customer relations
management and tenant satisfaction based on tenants’ occupation found that tenants have higher
satisfaction when they perceive a better quality of service, especially when they have a good
attitude in handling issues. The more satisfied tenants are, the more willing they are to renew
their tenancy. Loyalty is a customer’s positive attitude whereby they identify with a company
and subsequently make repeat purchases, recommend the company to others, and thereby affect
others’ purchase behaviors. (Dimitriades, 2006) When robust affective experience or satisfaction
becomes the basis of a customer’s strong relative attitudes toward an offer, they may gravitate
toward spreading positive word-of-mouth in addition to repeat sponsoring. A close
interdependence between customer satisfaction and customer loyalty. Satisfaction positively
affects customer loyalty; tenants who receive services of excellent quality will feel more
satisfied, and this high level of satisfaction will positively affect their loyalty. Satisfaction has an
active and salient influence on customer loyalty. (Fuentes, Moliner, & Gil-Saura, 2014)
Customer satisfaction also positively affects repurchase behaviors, which is an expression of
customer loyalty. A study conducted on the loyalty of the tenants shown practically and
technically speaking, tenant satisfaction has a mediating effect on tenant satisfaction. (Lee, Ting,
Yeh, & Yu, 2021) As such, tenant satisfaction has a significant positive effect on tenant loyalty.
Conceptual Framework
The conceptual framework in this study provides a conceptual view of the relationship between
the independent and dependent variables of the study. The literature review identifies the
dependent variable as tenant retention in commercial office spaces.
A few independent variables were identified, First, property management services through the
quality of the maintenance and condition of the building, the amenities provided in the
surrounding areas of the building and the sustainable elements of the building itself. Second,
lease management services by providing green leases, rent resolutions and renewal packages
despite past unpleasant experiences. Lastly, customer relationship management by having a
rapport that goes beyond just business transactions.

Figure of variables according to the author Muhleback, R. F. on his book National Real Estate
Investor,

It is the opposite. Match properly

Dependent Variables Independent Variable

Customer
Relationship
Management

Property Tenant
Management Retention

Lease
Management
Conclusion

As tenants improve their attitude toward their tenancy, they also enhance their self-value and the
benefits incurred. Landlords can increase tenants’ satisfaction and loyalty by increasing the
quality of their services and incorporating the principles of sustainability into these services.
Tenants who are satisfied with their tenancy are more likely to renew their tenancy and
recommend their landlord to other potential tenants
 Section 3: RESEARCH METHODOLOGY
Introduction.
This chapter describes the methods and procedures adopted to achieve the research objectives. In
this research the following topics are discussed; the background of the area of study, research
design, methods of data collection, the sampling procedure, the sample size, research
instruments, measurement of variables, validity and reliability, data processing, analysis &
presentation
Study Area

Upper hill is highly dense with commercial office buildings all over. It boasts of having the best
Grade A office buildings and the tallest commercial office building in Kenya that is the Britam
Tower at 200m (Mwangi, 2022) Similarly, Upper Hill was mostly affected because most of the
developments in the area are commercial offices which faced a huge loss at trying to retain their
commercial tenants who opted to work from home in order to try and observe social distancing.

Map of Upper Hill District.

Research design

The study adopted a correlational research design to establish the relationship between tenant
satisfaction and property management services and their effect on tenant retention.
A thematic analysis will be performed on different commercial offices looking to identify,
analyze, and interpret repeated patterns that influence tenant retention. This data shall be
collected from different open-ended interviews with property managers as well as tenants and
various case studies.
Target population

Borg and Grall (2009) describe a target population as a comprehensive set of studies of all the
members of either hypothetical or real set of individuals, objects, or events which are used by
a researcher to generalize the result. The target population is commercial office buildings within
the Upper Hill District, each building has at least a property manager whether outsourced or in-
house and tenants who will be my interviewees. Specify in quantitative terms the population of
property managers and number of tenants in your study.
Sampling design and sample size

This research followed a purposive sampling design. By having specific aims and objectives, you
can go ahead to choose units or variables that can provide meaningful responses and filter out
responses that do not fit the study. This can help select the managers and tenants of the selected
buildings to participate in the study. A census survey was conducted so that the researcher
targeted 10 property managers and 10% of their tenants. How many tenants. demonstarte clearly
how you arrived at this based on the population say which population in quantitative figures in
of each
Data collection

The researcher used questionnaires to gather primary data from the respondents. The
questionnaire was divided into three parts. Part I was designed to capture the level of importance
placed on property management. Part II was designed to capture tenants’ expectations of service
quality offered by property management companies and their effect on tenant satisfaction. Part
III was structured to show the renewal probability of tenants in their current premises. The
structure of the questionnaire was mainly open-ended questions then followed by a 5-point
liker’s scale. The respondents were asked to choose the level which represents their level of
agreement with the statement provided.
Reliability and validity
To produce useful results, the researcher ensured that the questionnaire was reliable and valid.
Content validity was used to examine the validity of the questionnaire. An expert opinion was
the sort to check the validity of the questionnaire. Reliability ensured that the questionnaire
instrument has internal consistency while validity ensured that the questionnaire measures what
it is intended for. The reliability of the research instrument was undertaken using the test and
pre-test methods.

Data Analysis and Presentation

Both qualitative and quantitative data analysis approach was used for data analysis. Data from

the questionnaire was coded and entered into the computer for computation of descriptive

statistics. MS Excel was used to run descriptive statistics so as to present the quantitative data in

form of frequency tables and graphs based on the major research questions.

Ethical Considerations

Approval to conduct the study was sought from Nairobi County headquarters. An introductory

letter was sought from the management of Technical University of Kenya to conduct the study.

Confidentiality of information given by respondents was observed. Only those willing to

participate were included in the study.

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Appendix I: Questionnaire

I am Stephen Waite Kamau a student at Technical University of Kenya undertaking

Undergraduate Degree in Real Estate Management. I am carrying out research on a review

of tenant retention in commercial offices during the covid 19 pandemic. A case study of (Upper

hill, Nairobi County, Kenya) Kindly I need your assistance by answering the following

questionnaire. Do not write your name.

1. Indicate your Gender

Male [ ] Female [ ]

2. What is your age bracket?

Below 20yrs [ ] 21-25 yrs. [ ] 26- 30yrs [ ] 30-35 yrs. [ ] 36- 40 yrs. [ ] 41- 50 yrs. [ ]

Above 50 yrs. [ ]

3. Level of education

Primary [ ] Secondary [ ] College [ ] University [ ]

4. How long have you been working here?

Below 5Yrs [ ] 6-10 Yrs. [ ] 11-15 Yrs. [ ] 16- 20 Yrs. [ ] Above 20 Yrs. [ ]

5. Did Covid-19 affect occupancy rates in commercial offices?

Yes [ ] No [ ]

6. If yes, to what extent did covid 19 affect tenant retention during the pandemic period.

Very great extent [ ] Great extent [ ] Moderate extent [ ] Little extent [ ] No extent [ ]

7. Did commercial office space providers adapt to Covid-19 to retain their tenants. Yes [ ]

No ]
8. Do you think a good relationship management between property managers and tenants, as

well as tenant satisfaction in commercial office building offices, can in return influence

tenant retention even during a tough pandemic such as Covid-19.

Yes [ ] No [ ]

9. Do you think that if measures are taken to retain tenants in commercial office spaces

during the covid-19 pandemic the tenants will be retained?

Yes [ ] No [ ]

10. Do you think education and skills are needed to run this organization in order to enhance

proper tenant retention?

Yes [ ] No [ ]

11. To what extent has the level of technological changes affected the tenant retention during

the pandemic in this organization?

Very great extent [ ] Great extent [ ] Moderate extent [ ] little extent [ ] No extent [ ]

12. To what extent do the following aspects of technological changes affect the tenant

retention of this organization?

Use a scale of 1-5 where 1= Very great extent and 5= not at all

13. Do you think introduction of complex information systems affects performance of this

organization in terms of tenant retention?

Yes [ ] no [ ]

14. Are the staff of this organization familiar with new technologies?

Yes [ ] No [ ]

15. Do you think the new technology is affordable for this organization?

Yes [ ] No [ ]
16. Do you think present use of ICTs in accessing business information services should be

identified in order to provide more development support for the growth of this

organization?

Yes [ ] no [ ]

17. Do you think lack of sufficient market information affects performance of this

organization?

Yes [ ] No [ ]

18. What was the initial source of capital for starting this organization?

Self-financing [ ] Borrowing [ ] Loan from bank [ ] other sources [ ]

19. Did this organization encounter any problems in relation to accessing finance or credit?

Yes [ ] No [ ]

20. To what extent does this organization face challenge in financing the business?

Very great extent [ ] Great extent [ ] Moderate extent [ ] little extent [ ] No extent [ ]

21. Do financial institutions have appropriate structure for dealing with real estate agency

firms?

Yes [ ] No [ ]

22. Do you think commercial banks have restrictive lending terms and conditions for real

estate agency firms?

Yes [ ] No [ ]
1. To what extent does this organization face the following financial challenges that affect its

growth? Use a scale of 1-5 where 1= Very great extent and 5= not at all

Statement 1 2 3 4 5
High cost of credit
High bank charges and fees

Lack of information on where to source for finance

Restrictive lending offered by commercial banks
Lack of access to long-term credit for small enterprises
Lack of access to finance
Insufficient financing,
Undeveloped capital market forces
Lack of track record required by the banks
Limited access to collateral
Financial institutions lack appropriate structure