What Keeps Tenants: The Operational Case for Retention

The relationship between how a commercial office building is operated and whether its tenants choose to stay is no longer a matter of intuition. It is now one of the most thoroughly documented causal relationships in commercial real estate research. Evidence drawn from peer-reviewed academic studies, institutional owner data, certification body research, and large-scale landlord surveys consistently demonstrates that operational quality — encompassing building systems performance, indoor environmental quality, energy efficiency, sustainability practices, and responsive property management — is the most controllable driver of tenant retention available to building owners and managers.

This statement synthesizes findings from leading research institutions including MIT, Harvard University, the U.S. Green Building Council (USGBC), BOMA International, the Institute of Real Estate Management (IREM), Nuveen Real Estate, and independent industry surveys to present a comprehensive picture of the evidence.

‍

The Financial Stakes of Getting It Wrong

Before examining the specific drivers of retention, it is important to establish the cost of failure. Industry analysis places the average cost of commercial tenant turnover at $31,927 per departing tenant, and research consistently finds that replacing a tenant costs approximately three times more than retaining one. These figures include direct costs such as leasing commissions, tenant improvement allowances, and rent-free periods, as well as indirect costs including lost net operating income during vacancy, management time, and reputational damage to the asset.

With national office vacancy rates having climbed significantly since 2022 and hundreds of millions of square feet of leases expiring through the mid-2020s, the financial calculus is unambiguous: every dollar invested in operational quality that keeps a tenant in place returns multiples compared to the cost of re-tenanting the same space.

‍

Academic Research: Quantifying the Operational-Retention Link

MIT and Maastricht University — 2024

The most comprehensive academic study to date on this topic was published as MIT Center for Real Estate Research Paper No. 24/01, authored by economists at MIT and Maastricht University. The study compiled a unique longitudinal dataset of 104,586 tenant survey responses covering 39,534 tenants across 2,906 office buildings in major U.S. metropolitan areas, spanning the years 2009 to 2022. Its findings are precise and statistically robust.

The study found that a single one-point increase in overall tenant satisfaction — measured on a five-point scale — is associated with an 8.6 percent higher willingness to renew the lease and an 11.5 percent higher likelihood of recommending the building to prospective tenants. At the portfolio level, a 10 percent improvement in building-level satisfaction is associated with a 0.9 percent higher growth in effective gross rent and a 0.3 percent reduction in the vacancy rate.

Critically, the research identified sustainability attributes and the quality of property management as the two primary mechanisms through which tenant satisfaction is improved and, ultimately, through which retention decisions are made. Physical features of the building — location, age, and design — showed a lower correlation to satisfaction than service quality and management performance. The practical implication is significant: owners who invest in how their buildings are run can achieve measurably better retention outcomes than those who rely solely on physical upgrades.

‍

Harvard University: The Indoor Environment as a Retention Driver

Research from the Harvard T.H. Chan School of Public Health's Healthy Buildings Program provides some of the most compelling evidence that building operations directly affect the daily experience of the people inside — and therefore the renewal decisions of the companies that employ them.

The Harvard CogFx Study — a multi-year research program spanning three studies conducted across hundreds of office workers in multiple countries — examined the relationship between building operational conditions and cognitive performance. The first study, conducted in a controlled laboratory setting, found that workers in green-certified building environments recorded 61 percent higher cognitive scores than those in conventional buildings, and 100 percent higher scores in enhanced green environments. The second study, conducted across 10 buildings in five U.S. cities, found that workers in green-certified spaces recorded 26 percent higher cognitive scores than their counterparts in conventional offices. The third and most expansive study, covering 600 office workers across 42 buildings in 30 cities and six countries, corroborated these findings on a global scale.

The economic implication of this research is stark. As the Harvard Healthy Buildings Program concluded: the productivity gains from enhanced ventilation alone are more than 150 times greater than the associated energy cost. Given that salaries and benefits typically account for approximately 90 percent of an organization's total occupancy costs — far exceeding rent — a building that demonstrably improves the cognitive performance and health of its occupants is not merely a comfortable workspace. It is a competitive advantage that tenants are increasingly unwilling to surrender at lease expiration.

Harvard researchers also documented that improved indoor air quality reduces absenteeism and work hours lost to asthma, respiratory illness, depression, and stress. A study published in the American Journal of Public Health found that employees who relocated from conventional offices to LEED-certified buildings reported measurable reductions in absenteeism and stress-related lost work time, with those recovering from respiratory conditions gaining up to 1.75 additional productive work hours per year, and those with depression and stress-related conditions gaining up to 2.02 additional hours.

‍

U.S. Green Building Council: The Performance Case for LEED Certification

The U.S. Green Building Council (USGBC), the nonprofit organization that administers the LEED green building certification system, has compiled and published extensive data on the performance of operationally certified buildings relative to their conventional peers. As of 2024, there are over 195,000 LEED-certified buildings in 186 countries, with commercial office buildings representing the largest single category in the United States.

USGBC's own research and the body of independent studies it has commissioned or supported document the following outcomes for LEED-certified office buildings:

‍

• Workers in LEED-certified buildings report 16 percent higher productivity, 36 percent higher satisfaction, and 30 percent fewer sick building symptoms compared to workers in conventional office buildings.

• LEED-certified buildings carry 4 percent lower vacancy rates than their non-certified peers, reflecting the demonstrated preference of office tenants for operationally certified environments.

• LEED-certified buildings command rental premiums of 5 to 8 percent over comparable non-certified buildings, a premium that has been documented consistently across studies spanning more than a decade.

• A study of 7,100 LEED-certified construction projects found that more than 90 percent were improving energy performance by at least 10 percent over baseline, confirming that certification delivers real operational results.

• LEED projects score an average ENERGY STAR score of 89 out of 100, placing them in the top tier of energy performance among all commercial buildings.

• USGBC's research confirms that improving indoor air quality in LEED buildings can reduce absenteeism and work hours affected by asthma, respiratory allergies, depression, and stress, with self-reported improvements in productivity.

• According to the USGBC, 61 percent of corporate leaders believe sustainability leads to improved financial performance, creating a direct alignment between operationally efficient buildings and the strategic priorities of the tenants occupying them.

‍

The USGBC has also highlighted the accelerating divergence in market performance between certified and non-certified assets. Since 2020, occupancy rates for LEED-certified office buildings have increased from 90 percent to 92 percent, while occupancy at non-LEED buildings fell from 90 percent to 88 percent over the same period — a four-percentage-point swing that reflects the structural premium tenants place on operational quality and sustainability credentials.

For sale transactions, the premium is even more pronounced. Studies documented by the USGBC have found that LEED-certified Class A and Class B office buildings command sale price premiums of 25 to 77 percent over comparable non-certified properties, confirming that the tenant retention and income stability that operational excellence delivers is recognized and capitalized by the investment market.

‍

BOMA International: Operational Standards as a Retention Framework

BOMA International, which represents the owners and managers of nearly 10.5 billion square feet of U.S. commercial real estate, has developed the most comprehensive operational standards framework in the industry through its BOMA 360 Performance Program. The program evaluates buildings across six major operational domains and awards the BOMA 360 designation to those that meet rigorous standards in each area. Its founding premise is that operational efficiency, tenant retention, emergency planning, and community impact are not independent performance metrics but interconnected outcomes of well-run buildings.

Independent research commissioned in connection with the BOMA 360 program produced the following findings:

‍

• Research by Kingsley Associates found that BOMA 360-designated buildings earn higher tenant satisfaction scores in nearly all measured categories compared to non-designated buildings in comparable markets.

• A CoStar study confirmed that BOMA 360 buildings have higher tenant retention rates and command higher rental rates than similar buildings that have not achieved the designation.

• BOMA 360 recipients consistently report that the designation is a material factor in attracting and competing for tenants, achieving operational cost savings, and establishing credibility with institutional owners.

‍

BOMA International's annual Experience Exchange Report (EER), which draws on voluntarily submitted operating data from thousands of commercial property owners and managers, reinforces this connection at scale. BOMA International leadership has stated directly: 'Solid asset management strategies are key to driving a property's profitability and increasing tenant satisfaction.' The EER data enables property teams to benchmark their operational efficiency against market peers and identify specific areas where underperformance is translating into tenant dissatisfaction and retention risk.

BOMA's The Outstanding Building of the Year (TOBY) Award, one of the commercial real estate industry's most recognized honors, explicitly evaluates buildings on the combined criteria of operational efficiency, tenant retention, emergency planning, and community impact — further cementing the institutional consensus that these outcomes are inseparable.

‍

IREM: The Management Quality Connection

The Institute of Real Estate Management (IREM), an affiliate of the National Association of Realtors representing more than 20,000 real estate management professionals, has conducted longitudinal research on office building income and expenses through its Income/Expense Analysis: Office Buildings study — a data series that dates to 1976 and covers over 2,100 privatesector office complexes in major U.S. markets.

IREM's data underscores a consistent finding: buildings that invest in professional management infrastructure — including systematic preventive maintenance, responsive tenant services, and active performance benchmarking — demonstrate stronger occupancy stability and income performance over time. As the demand for operational benchmarking has grown among institutional owners, IREM has noted that real estate managers across all property sectors rely on accurate benchmarking to assess their properties' operating efficiency and compare performance against their competitive set — a process that directly informs retention-oriented management decisions.

IREM's Income/Expense IQ platform, developed in collaboration with BOMA International, enables property managers to benchmark operating efficiency in real time across maintenance costs, energy expenses, and occupancy metrics — giving management teams the data they need to identify operational gaps before they translate into tenant dissatisfaction and lease non-renewal.

‍

Nuveen Real Estate: Institutional Evidence at Scale

Among the world's largest real estate investment managers — overseeing assets across 20 cities in the United States, Europe, and Asia-Pacific — Nuveen Real Estate has been among the most systematic in documenting the relationship between operational investment and tenant outcomes at scale.

Nuveen committed to a U.S. Department of Energy Better Buildings Challenge goal to reduce energy consumption across 25 million square feet of office space by 20 percent by 2020. The firm achieved that goal on schedule. The stated basis for this commitment was Nuveen's conviction — backed by its own portfolio data — that energy-efficient, sustainable properties deliver better returns for investors and are more appealing to current and future tenants.

Nuveen has further documented that improving energy and water performance simultaneously reduces utility costs, enhances an asset's competitive position in the market, and improves both tenant attraction and retention. Across its global portfolio, 265 buildings carry high-energy performance certifications — including ENERGY STAR, NABERS, and EPC A or B ratings. In 2023, Nuveen achieved ENERGY STAR certification for 116 properties, reflecting a disciplined and systematic approach to operational performance management.

A practice that distinguishes Nuveen's approach to retention is the systematic use of tenant satisfaction surveys: 89 percent of its properties have completed such surveys, creating a continuous feedback loop between occupier experience and asset management decisions. This is not a passive data collection exercise but an active management tool that enables Nuveen to anticipate retention risk and address operational deficiencies before they influence renewal decisions.

Nuveen's own market research further points to a structural tailwind for operationally efficient buildings: a projected 70 percent supply shortfall in low-carbon office buildings through 2030, with rental premiums of 5 to 10 percent already observed in markets where operationally efficient, low-carbon supply is constrained. For building owners who invest in operational excellence today, this supply-demand imbalance represents a durable competitive advantage.

‍

Industry-Wide Evidence: Retention as the Central Priority

The 2024 VTS Global Landlord Report, based on a survey of more than 400 office landlords worldwide, confirmed that the industry has undergone a structural shift in focus from new tenant acquisition to existing tenant retention — and that building operations sit at the center of that shift.

The report found that 57 percent of landlords now rank retention and renewal of current tenants as their top priority, compared to just 41 percent prioritizing leasing vacant space. Of those focused on retention, 56 percent identified the enhancement of property management and tenant experience as their primary strategy. Property operations ranked as the third-highest area of planned capital reinvestment, behind only tenant experience technologies and outdoor communal areas. Eightytwo percent of landlords reported that renewal lengths are already increasing or holding steady, and 84 percent expect to increase their technology investments in building operations.

The 2023 edition of the same report found that 87 percent of landlords named retention and renewal of current tenants as a greater focus than acquiring new ones — a near-universal consensus driven by market conditions in which every existing lease has become financially irreplaceable.

Additionally, BOMA International's research confirms that the top metrics tracked by commercial real estate professionals to gauge building performance are work order completion rates, preventive maintenance performance, and tenant satisfaction rates — all direct outputs of operational quality. This alignment between the metrics professionals track and the outcomes that drive retention reflects a growing industry-wide understanding of the causal relationship between how buildings are run and whether tenants stay.