Reducing the Turnover Tax in Commercial Real Estate

Turnover is an expensive aspect to every business, especially property management. A quick search provides staggering numbers on the true cost to an organization. One example, “Gallup estimates that replacing leaders and managers costs around 200% of their salary, replacing employees in technical roles costs 80% of their salary, and replacing frontline workers costs 40% of their salary, excluding unmeasured losses in morale and knowledge.” While the true cost of turnover varies by sector and person, most would agree that it is both costly and can drastically increase organizational friction.

At our parent company, HG, we have traditionally used third party property management for our commercial real estate portfolio. This has required us to change providers on occasion, and over the years we have experienced multiple individual property managers leaving their employers and subsequently our portfolio as well. Turnover is a normal part of business, but as you can appreciate losing a property manager from your team can create a large vacuum in institutional knowledge.

We experienced this repeatedly several years ago with a former management company. The property manager on our portfolio left their employer, and each time it occurred it created a very challenging situation for our asset manager to navigate for several reasons. The knowledge of the prior property manager was not easily discoverable. It lived in their own notes, email inbox, and brain. Conversations with tenants and service providers were not typically documented. Various projects were tracked in a word doc that wasn’t always updated. In short, there was no reliable shared pool of knowledge that various stakeholders in property management, asset management, and ownership could leverage.

This painful situation, just described, is one of multiple reasons we set out to build Cardinal. In an age of unprecedented connectivity and endless software tools, it was totally ridiculous that we found ourselves in that position, repeatedly. We also couldn’t understand why there wasn’t a software solution to help the actual property management companies manage turnover better as well.

Fast forward to late 2025. Our property manager gave notice the week before Christmas. Fortunately, Cardinal software was implemented earlier in the year. Through Cardinal’s Inbox, Issues and Knowledge Management features everyone on our team, and the new property manager, were able to have full situational awareness on all the open issues currently being worked on, planned, and recently completed. Our asset manager had full visibility and certainty that nothing was slipping through the cracks. We were able to onboard the new property manager with way fewer meetings and at a much faster pace. Our asset manager noted that the change occurred seamlessly over days, not weeks or even months. It was amazing to see how alignment could so drastically change the outcome!

Turnover was really stressful in the past. As an owner this stress was amplified, we didn’t know what we were missing. That is now a thing of the past. Of course there was a definite transition period between the old property manager resigning and the new one coming on. Indeed, various members of our team had to step up and take on some tasks in the transition. In contrast with prior transitions, our most recent turnover response was proactive, organized, and smooth. There was never a moment where our team didn’t know where to find an answer to a question. Everything was clearly organized and transparently shared in Cardinal.