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
The general objective of the study was to conduct a review of tenant retention in commercial offices during
the covid 19 pandemic which is also part of an investigation of factors contributing to poor performance of
real estate agency firms in Kenya (A case of Upper Hill, Nairobi County, Kenya). The study was guided by
the following specific objectives: To find out the unprecedented effects of Covid-19 on tenant retention in
commercial offices. To find out how commercial office space providers adapted to covid-19. To find out the
measures taken to retain tenants in commercial office spaces during the covid-19 pandemic. To find out
whether good relationship management between tenants and landlords can influence tenant retention even
during tough economic times The research adopted a descriptive survey design. The study was conducted in
Upper Hill,Nairobi County, Kenya. The target population for this study was staff working with Real
Estate Agency Firms in Nairobi City. The study used 30% of the target population as the sample
size. Simple random sampling was used to select the respondents to be involved in the study hance
the sample size was 63 respondents. The primary data for the study was obtained using
questionnaire. The study used content validity in the study. This was ensured by giving the
questionnaire to experts whose recommendations were used to adjust the questionnaire. 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. The study revealed that lack of
managerial training and experience affect tenant retention to a great extent. The study also
established that; management and management experience is vital for tenant retention for it
enhances the process of getting tasks accomplished with and through people by guiding and
motivating their efforts, those with more education and training are more likely to be successful in
the real estate sector, there’s a very strong positive relationship between management skills,
owner/manager and the real estate agency firms itself, Education and skills are needed to run real
estate agency firms. The study revealed that most of the real estate agency firms’ owners had
obtained their Capital from borrowing. The study further revealed that technological changes affect
tenant retention to a great extent. The research further established that Unfamiliarity with new
technologies with real estate agency firms’ owners, new technology not situated to local conditions,
new technology not locally available, unawareness of new technology, new technology not
affordable, and introduction of complex information systems all affects the tenant retention
especially during the pandemic period where social distancing was required. The study concludes
that many real estate agency firms in Kenya lost most tenants due to the covid 19 pandemic period
and also lack of managerial training and experience hence many real estate agency firms in Kenya
lost many commercial tenants due to lack of adequate business support services and the poor
information technological infrastructures, lack of sufficient market information poses a great
challenge to real estate agency firms in attracting commercial tenants, and that poor infrastructure
and the relatively high cost of IT hardware and software creates many problems in the area of
business information services for the real estate agency firms. Thus, the study concludes that access
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to marketing information services have a positive influence on the performance of real estate
agency firms in Kenya especially during tough economic periods like the covid 19 pandemic
period. This study recommends that the management of the financial institutions should consider
reviewing their policies regarding access to finance by real estate agency firms, there is need for the
government to review policies governing real estate agency firm’s sector and the entrepreneurs in
the real estate agency firms should consider advancing their technological expertise by even
training on use of modern technology in order to acquire information that is of essential to their
businesses and also investing in technology in order to benefit from the advantages that come along
with the modern technology.

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 TABLE OF CONTENT

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

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

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

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

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

TABLE OF CONTENT.......................................................................................................................7

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

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

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

Figure 4.4: Duration respondents had been working in their respective organizations………..21.2

Organization………………………………………………………………………………….22. . .2

Organization………………………………………………………………………………….25. . .2

Figure 4.10: Extent to which the organization face challenge in financing the business………29 2

Table of Appendices............................................................................................................................3

List of Abbreviations...........................................................................................................................4

Section 1: INTRODUCTION..............................................................................................................5

Overview..........................................................................................................................................5

Background Study...........................................................................................................................5

Problem Statement...........................................................................................................................7

Research Objectives.........................................................................................................................8

Specific Objectives......................................................................................................................8

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 Research Questions..........................................................................................................................8

Research Hypothesis........................................................................................................................8

Scope of the study and Study Location...........................................................................................9

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

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

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

Section 2: LITERATURE REVIEW.................................................................................................12

Introduction....................................................................................................................................12

The concept of Tenant Retention...................................................................................................12

Factors that influence Tenant Retention....................................................................................13

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

Theoretical Framework..................................................................................................................16

Relationship theory....................................................................................................................16

Wants and needs theory.............................................................................................................18

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

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

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

Section 4: DATA ANALYSIS AND INTERPRETATION..............................................................25

4.0 Introduction..............................................................................................................................25

4.1 Response Rate..........................................................................................................................25

Background information of respondents.......................................................................................25

Distribution of Respondents by Gender........................................................................................25

2 Distribution of Respondents by Age...........................................................................................25

4.2.3 Level of academic Qualification...........................................................................................26

4.2.4 Duration respondents had been working in their respective organizations..........................27

: Duration respondents had been working in their respective organizations........................28

4.3 Whether management of the organization have sufficient managerial skills to ensure
the maximization of tenant retention during the covid 19 period...........................................28

4.4 Extent to which covid 19 affected tenant retention of the organization..................................28

Figure 4.5: Extent to which covid 19 affected the tenant retention of the organization................29

4.5 Whether the managerial skills help in designing of organization structure to enhance tenant
retention.........................................................................................................................................29

4.6 Whether management skills are vital for any business growth...............................................30

4.7 Whether there is any positive relationship between Management skills, owner/manager and
the performance of this organization.............................................................................................31

4.8 Whether education and skills are needed to run the organization in order to maximize tenant
retention.........................................................................................................................................32

4.9 Extent to which the level of technological changes affects tenant retention on commercial
offices............................................................................................................................................32

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 Figure 4.8: Extent to which the level of technological changes affects tenant retention of the
organization...................................................................................................................................33

4.10 Whether introduction of complex information systems affects tenant retention of the
organization...................................................................................................................................33

4.11 Whether the tenants are familiar with new technologies.......................................................34

4.12 Whether the new technology is affordable for the organization............................................34

4.13 Whether the present use of ICTs in accessing business information services should be
identified in order to provide more development support for the growth of the organization that
lease spaces to tenants...................................................................................................................34

4.14 Whether lack of sufficient market information affects performance of the organization in
attracting new tenants....................................................................................................................35

4.15 The initial source of capital for starting the organization......................................................35

4.16 Whether the organization encounter any problems in relation to accessing finance or credit.
.......................................................................................................................................................36

4.17 Extent to which the organization face challenge in financing the business during the
pandemic period.............................................................................................................................37

Figure 4.10: Extent to which the organization face challenge in financing the business......37

4.18 Whether financial institutions have appropriate structure for dealing with real estate
agency firms.................................................................................................................................37

4.19 Whether commercial banks have restrictive lending terms and conditions for real
estate agency firms.......................................................................................................................39

4.20 Extent to which the organization face the following financial challenges that affect its
growth............................................................................................................................................39

SECTION 5: SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATION........41

5.1 Summary..................................................................................................................................41

5.2 Conclusions..............................................................................................................................42

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 5.3 Recommendations....................................................................................................................43

5.4 Areas of further study..............................................................................................................44

References..........................................................................................................................................45

Appendix I: Questionnaire.............................................................................................................48

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 Table of Figures
LIST OF TABLES

Table 3.1: Sample size determination………………………………………………………...16

Table 4.1: Whether management of the organization have sufficient managerial skills to

run the organization………………………………………………………………………….29

Table 4.2: Whether there is any positive relationship between Management skills,

owner/manager and the performance of this organization…………………………………….32

Table 4.3: Whether education and skills are needed to run the organization………………….33

Table 4.4: Whether introduction of complex information systems affects tenants’ retention

organization………………………………………………………………………………34

Table 4.5: Whether the staff of the organization are familiar with new technologies……….35

Table 4.6: Whether the new technology is affordable for the organization…………………...35

Table 4.7: Whether the present use of ICTs in accessing business information services

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

organization…………………………………………………………………………………..36

Table 4.8: Whether lack of sufficient market information affects performance of the

organization…………………………………………………………………………………..36

Table 4.9: Whether the organization encounter any problems in relation to accessing

finance or credit………………………………………………………………………………36

Table 4.10: Whether financial institutions have appropriate structure for dealing with

real estate agency firms……………………………………………………………………….37

Table 4.11: Whether commercial banks have restrictive lending terms and conditions

for real estate agency firms…………………………………………………………………..39

Table 4.12: Extent to which the organization face the following financial challenges that

affect its growth………………………………………………………………………………40

 LIST OF FIGURES

Figure 2.1: Conceptual framework…………………………………………………………...14

Figure 4.1: Distribution of Respondents by Gender………………………………………….26

Figure 4.2: Distribution of Respondents by Age……………………………………………...27

Figure 4.3: Level of academic Qualification………………………………………………….28

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

Figure 4.5: Extent to which covid-19 affects the tenant retention in an

organization………………………………………………………………………………….29
Figure 4.6: Whether the managerial skills help in designing of organization structure……….31

Figure 4.7: Whether management skills are vital for ensuring maximization of tenant

retention…………………………………………………………………………………………32

Figure 4.8: Extent to which the level of technological changes affects the growth of the
organization………………………………………………………………………………….34
Figure 4.9: The initial source of capital for starting the organization…………………………35
Figure 4.10: Extent to which the organization face challenge in financing the business………38
 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.

 To find out whether 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.
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.

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
11
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.

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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.

13
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 Ksh51,250,00 Ksh.81,250,000
0
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.19,530,00 Ksh.31,250,000
0

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

14
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
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 that
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 out
managerial functions. Further, the manager must be able to reconcile opposing ideas simultaneousl
y. 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, inactivity,
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 o
n the individual wants and needs of its customers. This requires being proactive and anticipating the
ir wants and needs.
 Autonomy and Entrepreneurship

15
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 qualit
y 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-dri
ven 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 organization
al hierarchy are optimal. This creates unity of command, breaks down barriers to vertical communi
cation, 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 ded
ication 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.

16
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 as
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 surr
oundings, 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 from
others. As Maslow’s Hierarchy of Needs theory goes, the first level needs to be
17
 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.
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
18
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.

19
Figure of variables according to the author Muhleback, R. F. on his book National Real Estate
Investor,

Dependent Variables Independent Variable

Customer
Relationship
Management
Ma

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

20
 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) which makes it ideal for my research.

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.

21
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 several 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.
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 based on the population 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 likers scale. The
respondents were asked to choose the level which represents their level of agreement with the
statement provided.
administered.
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.

22
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.

23
 Section 4: DATA ANALYSIS AND INTERPRETATION

4.0 Introduction

This chapter presents analysis and findings of the study as set out in the research methodology. The

study findings are presented on Nairobi City, Nairobi County. The data was gathered exclusively

from the questionnaire as the research instruments. The questionnaires were designed in line with

the objectives of the study.

4.1 Response Rate

The study targeted 210 respondents who were selected to form the sample size. This generated a
sample of 63 respondents of this study in collecting data. From the study 50 respondents filled-in
and returned the questionnaires making a response rate 79.4%. According to Mugenda and
Mugenda (1999) a response rate of 50% is adequate for analysis and reporting; a rate of 60% is
good and a response rate of 70% and over is excellent; therefore, this response rate is adequate for
analysis and reporting
Background information of respondents

Distribution of Respondents by Gender

The study tried to examine the age of respondents who were involved in the study. Results are

explained in figure 4.1 below;

Gender

40%

60%

Male Female

24
: Distribution of Respondents by Gender

The findings revealed that 26 (52%) of respondents were male while 24 (48%) were females. This

implies that there are more male than females. It is evident that out of the number of staff tenant

respondents there were more males than females as shown by the percentages in the above table.

2 Distribution of Respondents by Age

The study tried to examine the age of respondents who were involved in the study. Results are

explained in figure 4.2 below;

Age

50.00%

45.00%

40.00%

35.00%

30.00%

25.00% 46%

20.00%

15.00% 26%
20%
10.00%
8%
5.00%
0%
0.00%
Below 25 Years 26-35 Years 36-45 Years 46-55 Years Above 55 Years

Figure 4.2: Distribution of Respondents by Age

Figure above shows the age range of the respondents 13(26%) of the respondents were below 25

years, 23(46%) were between 26 and 35, 10(20%) were between 36 to 45 years old, 4(8%) were

between the age of 46 to 55 years and none (0%) was aged above 55 years of the total respondents.

25
It can be deduced that in the areas within which the research took place, a considerable number of

respondents were aged between 26-35 years which is considered as the youth.

4.2.3 Level of academic Qualification

The researcher sought to find out level of education of respondents. Level of education of

respondents was as presented in the figure below;

Academic Qualifications

60%

50%

40%

30% 52%
40%
20%

10% 8%
0%

0%
Certificate Diploma Bachelor’s degree Masters

Figure 4.3: Level of academic Qualification

From the findings, the researcher found that majority of respondents 26(52%) had Diploma

certificates with followed by Bachelor’s level with 20(40%) of respondents. Only 4(8%) of

respondents had attained Masters Level of education and these were from top management. None

of the respondents had Certificate level or above Masters level of education.

4.2.4 Duration respondents had been working in their respective organizations

The researcher sought to find out duration which respondents had been working in their respective

organizations. Findings are presented in the figure below;

26
 Duration respondents had been working in their re-
spective organizations

35%

30%

25%

20%
31%
15% 26%
19%
10%
13%
11%
5%

0%
Below 5Yrs 6-10 Yrs 11-15 Yrs 16- 20 Yrs Above 20 Yrs

: Duration respondents had been working in their respective organizations

4.3 Whether management of the organization have sufficient managerial skills to ensure the

maximization of tenant retention during the covid 19 period.

Respondents were asked whether they think the management of their organizations had sufficient

managerial skills to run the organization. Findings are as presented in the table below;

Table 4.1: Whether management of the organization have sufficient managerial skills to
ensure maximization of tenant retention during the covid 19 period.
Response Frequency Percentage

Y Yes 22 44

No No 28 56

Total 50 100

4.4 Extent to which covid 19 affected tenant retention of the organization

27
Respondents were asked to indicate to what extent lack of managerial skills affected the tenant their

organization. Findings are presented in the table below;

Extent to which covid-19 affected tenant retention of the

organization

6%
No extent

14%
Little extent

18% Figure
Moderate extent
4.5:
24% Extent
Great extent

to
38%
Very great extent
which

0% 5% 10% 15% 20% 25% 30% 35% 40% covid

19 affected the tenant retention of the organization

4.5 Whether the managerial skills help in designing of organization structure to enhance tenant

retention.

Respondents were asked to indicate whether they managerial skills helps in designing of

organization structure. Findings are as indicated in the table below;

28
 Managerial skills and designing of organization
structure to maximise tenant retention.
18%

82%

Yes No

Figure 4.6: Whether the managerial skills help in designing of organization structure to

maximize tenant retention.

4.6 Whether management skills are vital for any business growth

Respondents were asked to indicate whether they thought management skills is vital for any

business growth for it enhances the process of getting tasks accomplished with and through people

by guiding and motivating their efforts. Their responses are presented in the table below;

29
 Management skills and business growth

100%
90%
80%
70%
60%
100%
50%
40%
30%
20% 0%
10%
0%
Yes No

Figure 4.7: Whether management skills are vital for any business growth

4.7 Whether there is any positive relationship between Management skills, owner/manager and the

performance of this organization

Respondents were asked to indicate whether they thought there is any positive relationship between

Management skills, owner/manager and the performance of this organization. Findings are

presented in the table below;

Table 4.2: Whether there is any positive relationship between Management skills,

owner/manager and the tenant retention in this organization

Response Frequency Percentage

Yes 48 96

No 2 4

Total 50 100

30
4.8 Whether education and skills are needed to run the organization in order to maximize tenant

retention.

Respondents were asked whether they thought education and skills maximize tenant retention in

their organization. Findings are presented in the table below;

Table 4.3: Whether education and skills are needed to maximize tenant retention.

Response Frequency Percentage

Yes 53 88.3

No 7 11.7

Total 50 100

4.9 Extent to which the level of technological changes affects tenant retention on commercial

offices.

The researcher sought to find out to what extent has the level of technological changes affects

tenant retention on commercial offices. Findings are presented in the table below;

Extent to which the level of technological changes affects

tenant retention of the organization

50%

45%

40%

35%

30%
48%
25%

20%

15%
22%
10% 14%
10%
5% 6%
31
0%
Very great extent Great extent Moderate extent Little extent No extent
Figure 4.8: Extent to which the level of technological changes affects tenant retention of the

organization

4.10 Whether introduction of complex information systems affects tenant retention of the

organization

Respondents were asked whether they thought introduction of complex information systems affects

tenants’ retention of an organization. Findings are presented in the table below;

Table 4.4: Whether introduction of complex information systems affects tenant retention of
an organization.
R Response Frequency Percentage

Yes 28 56

No No 22 44

T Total 50 100

4.11 Whether the tenants are familiar with new technologies

The researcher sought to find out whether the staff of the organizations were familiar with new

technologies. Findings are presented in the table below;

Table 4.5: Whether the tenants are familiar with new technologies
Response Frequency Percentage

Yes 22 44

No 28 56

Total 50 100

4.12 Whether the new technology is affordable for the organization

32
Respondents were asked to indicate whether the new technology was affordable for the

organization. Findings are presented in the table below;

Table 4.6: Whether the new technology is affordable for the organization.

Response Frequency Percentage

Yes 11 22

N No 39 78

T Total 50 100

4.13 Whether the present use of ICTs in accessing business information services should be

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

lease spaces to tenants

Respondents were asked to indicate whether they thought present use of ICTs in accessing business

information services should be identified in order to provide more development support for the

growth of the organizations in order to maximize tenants’ retention. Findings are presented in the

table below;

Table 4.7: Whether the present use of ICTs in accessing business information services should
be identified in order to provide more development support for the retention of tenants and
ensure growth of the organization
Response Frequency Percentage

Yes 43 86

No No 7 14

Total 50 100

33
4.14 Whether lack of sufficient market information affects performance of the organization in

attracting new tenants.

Respondents were asked whether they thought lack of sufficient market information affects

performance of the organization. Findings are presented in the table below;

Table 4.8: Whether lack of sufficient market information affects performance of the
organization in attracting new tenants.
Response Frequency Percentage

Yes 41 82

No 9 18

Total 50 100

4.15 The initial source of capital for starting the organization

The researcher sought to find out from the respondents the initial source of capital the organization

used for starting when starting. Findings are presented in the table below;

34
 Initial source of capital for starting the organization

30%
Other sources

34%
Loan from bank

22%
Borrowing

14%
Self-financing

0% 5% 10% 15% 20% 25% 30% 35%

Figure 4.9: The initial source of capital for starting the organization
4.16 Whether the organization encounter any problems in relation to accessing finance or credit.

Respondents were asked whether their respective organizations encountered any problems in

relation to accessing finance or credit. Findings are presented in the table below;

Table 4.9: Whether the organization encounter any problems in relation to accessing finance
or credit.
Response Frequency Percentage

Yes 32 64

No 18 36

Total 50 100

35
 4.17 Extent to which the organization face challenge in financing the business during the pandemic

period.

Respondents were asked to indicate extent to which their respective organizations face challenge in

financing the business. Findings are presented in the table below;

Extent to which the organization face challenge in financ-

ing the business During the pandemic period.

40%
Figure
35%
4.10:
30%

25% Extent to
38%
20%
which
15% 24%
10%
18% the
14%
5% 6%

0%
Very great extent Great extent Moderate extent Little extent No extent
organization face challenge in financing the business

4.18 Whether financial institutions have appropriate structure for dealing with real estate agency

firms

Respondents were asked to indicate whether financial institutions have appropriate structure for

dealing with real estate agency firms. Findings are presented in the table below;

conditions for real estate agency firms. Findings are presented in the table below;

36
Table 4.11: Whether commercial banks have restrictive lending terms and conditions for real
estate agency firms
Response Frequency Percentage

Yes 47 94

No No 3 6

Total 50 100

Table 4.10: Whether financial institutions have appropriate structure for dealing with real

estate agency firms

Response Frequency Percentage

Yes 16 32

No 34 68

Total 50 100

4.19 Whether commercial banks have restrictive lending terms and conditions for real estate

agency firms

Respondents were asked whether they thought commercial banks have restrictive lending terms

and

4.20 Extent to which the organization face the following financial challenges that affect its growth

Respondents were asked to indicate extent to which their respective organizations face the

following financial challenges that affect their growth. Findings are presented in the table below;

37
Table 4.12: Extent to which the organization face the following financial challenges that affect
its growth
Statement Very Great Moderate Little No Total
great extent extent extent extent
extent
High cost of credit

Frequency 23 13 7 4 3 50

Percentage 46 26 14 8 6 100

High bank charges and fees

Frequency 22 14 8 4 2 50

Percentage 44 28 16 8 4 100

Restrictive lending offered by

commercial banks
Frequency 19 15 7 6 3 50

Percentage 38 30 14 12 6 100

Lack of access to finance

Frequency 20 11 10 7 2 50
Percentage 40 22 20 14 4 100
Undeveloped capital market forces
Frequency 16 12 12 7 3 50
Percentage 32 24 24 14 6 100
Limited access to collateral
Frequency 16 16 12 4 2 50
Percentage 32 32 24 8 4 100
Financial institutions lack appropriate
structure
Frequency 9 7 11 14 9 50

Percentage 18 14 22 28 18 100

38
 SECTION 5: SUMMARY OF FINDINGS, CONCLUSIONS AND
RECOMMENDATION
5.1 Summary

The study revealed that the main reasons for loss of commercial tenants during the COVID-19

pandemic was likely due to businesses shutting down permanently, downsizing, or relocating to

cheaper office space. This affected the growth of real estate agency firms to a great extent. The

study also established that; management and management experience is vital for any business

growth for it enhances the process of getting tasks accomplished with and through people by

guiding and motivating their efforts, those with more education and training are more likely to be

successful in the real estate sector, there’s a very strong positive relationship between management

skills, owner/manager and the real estate agency firms itself, Education and skills are needed to run

real estate agency firms especially during tough times in the corona periods.

The study revealed that most of the real estate agency firms’ owners had obtained their Capital

from borrowing. Most of the real estate agency firms encountered great problems in accessing

finance, accessing credit and raising capital. The study further revealed that real estate agency

firms’ owners were faced with a great challenge in financing the business during the pandemic

period. Other factors related to financing which impeded growth of real estate agency firms

included; lack of track record required by the banks, restrictive lending offered by commercial

banks, lack of access to finance, high bank charges and fees, undeveloped capital market forces,

limited access to collateral, insufficient financing, lack of access to long-term credit for small

enterprises, lack of information on where to source for finance and high cost of credit. The research

established that most of the real estate agency firms were faced with challenges related to limited
39
access to collateral, insufficient financing, financial institutions lack appropriate structure for

dealing with real estate agency firms, the problem related to finance includes lack of information on

where to source for finance, lack of track record required by the banks and restrictive lending

offered by commercial banks.

The study revealed that technological changes affect the growth of real estate agency firms to a

great extent despite the major economic backlash that the country faced during the corona period,

the research further established that Unfamiliarity with new technologies with real estate agency

firms’ owners, new technology not situated to local conditions, new technology not locally

available, unawareness of new technology, new technology not affordable, and introduction of

complex information systems all affects the growth of real estate agency firms to a great extent.

The study revealed that due to the inability to interpret statistical data and poor connectivity, many

real estate agency firms’ cannot lead their business growth, lack of sufficient market information

poses a great challenge to small enterprises and hence affecting the growth of businesses, despite

the vast amount of trade-related information available and the possibility of accessing national and

international databases, many small enterprises continue to rely heavily on private or even physical

contacts for market related, Present use of ICTs in accessing business information services should

be identified in order to provide more development support for the growth of real estate agency

firms.

5.2 Conclusions

The study concludes that many real estate agency firms in Kenya witnessed a high rise in

evacuation of commercial tenants with most of the commercial tenants working from home hence

the tenant retention turned out to be much lower. The study revealed that management experience is
40
vital for ensuring tenant retention because it enhances the process of getting tasks accomplished.

Real estate agency firms’ owners with more education and training are more likely to be successful

in the real estate agency firms. Thus, the study concludes that managerial training and experience in

real estate agency firms’ sector have a positive effect on ensuring that real estate firms retain their

tenants. The study revealed that the government policy before has not been very favorable to the

real estate agency firms and that business environment is among the key factors that affects the

growth of real estate agency firms because obtaining licenses is time consuming, cumbersome,

costly and causes delays in starting new business hence hampering development of real estate

agency firms thus the study concludes that government policies and regulations negatively affects

the performance of real estate agency firms in Kenya.

The study concludes that many real estate agency firms in Kenya operate in an information-poor

environment due to lack of adequate business support services and the poor information

technological infrastructures, lack of sufficient market information poses a great challenge to real

estate agency firms, and that poor infrastructure and the relatively high cost of IT hardware and

software creates many problems in the area of business information services for the real estate

agency firms. Thus, the study concludes that access to marketing information services have a

positive influence on the performance of real estate agency firms in Kenya.

Regarding technology the study revealed that many real estate agency firms cannot lead their

business growth and that lack of sufficient market information poses a great challenge to real estate

agency firm affecting the growth of businesses though there is vast amount of trade-related

information available that can be of great help to the entrepreneurs thus the study concludes that

technology has a positive effect on the performance of real estate agency firms in Kenya in

ensuring maximum tenant retention.

41
5.3 Recommendations

1. This study recommends that the management of the financial institutions should consider

reviewing their policies regarding access to finance by real estate agency firms who wish to

improve their business environment in order to maximize tenant retention. This should aim

at instituting policies which brings ease in obtaining of credit from the financial institutions

by the real estate agency firms thus encouraging entrepreneurship.

2. The study recommends that there is need for the government to review policies governing

real estate agency firm’s sector. This should aim at establishing new policies that should

favor the starting up and the general running of real estate agency firms in order to ease the

heavy burden placed by unfavorable government policies on the real estate sector.

3. The study recommends that the entrepreneurs in the real estate agency firms should

consider advancing their technological expertise by even training on use of modern

technology in order to acquire information that is of essential to their businesses and also

investing in technology in order to benefit from the advantages that come along with the

modern technology.

5.4 Areas of further study

1. The researcher suggests that a replica study on investigation of factors contributing to poor

performance of real estate agency firms should be carried out in other towns in Kenya.

2. Studies should be done to establish to what extent do lack of access to finances affects reals

estate agency firms in Kenya.

42
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Appendices
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 ]

46
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 [ ]
47
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 [ ]

48
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

49