There was a time whensomeone could build a self-storage facility and watch it grow without much effort. Rent up would be swift, income would rise, expenses would level out, and in 24 months you could refinance your construction loan and make a nice return. There were no websites, no advanced marketing techniques, and Facebook was still a dorm room project at Harvard. Self-storage facility offices were the size of your first apartment, had no furniture, and if there was coffee it was brought down from the facility manager’s apartment, not brewed in a nice, single serve, Keurig Machine. Competition Studies were easy, because there were only 3 competitors in a 5-Mile radius, instead of 13 in a 3-Mile radius. Security was a scarce, driveways were gravel, and automatic gates were a luxury. You may be reading this, scratching your head,and thinking “I don’t remember it ever being like this”. Well like the time of the dinosaur’s and the British Empire, this era has long since passed. So, now that we are in the 21st century and part of Google’s new online world what do we need to know about our competition? Let’s focus on a few things, identifying your competition, management, amenities and curb appeal, and pricing.
So who are your competitors? How many facilities do you compete against? How far out does your facility reach? Start by identifying your competitors. Use Google, the yellow pages, or an online self-storage site and attain a list of the facilities in your area. Second, map them out. The easiest way to do this is to purchase mapping software. Two programs that have been successful for me in the past are Microsoft Map Point and Google Earth Pro. These programs allow you to “push pin” or identify on a map where each of your competitors are located. Once you have all of the facilities in your area mapped out, use the measurement functions in the software to create a radius around your facility. If you are in Manhattan, NY your market area will be blocks, if you’re in a more rural area it may be 5-10 miles. Most self-storage market areas settle in between 3 miles and 5 miles. Now you can accomplish this on a standard map if it makes you feel more comfortable, but I suggest the mapping software so you can manipulate the data in the future. Once you have this information, now you can identify your competition.
Now that you know who your competitors are, it’s time to make a few visits. First, the most important part of any self-storage operation is the management. If a self-storage facility has great management it can overcome a poor location, low budget, etc. and vice versa, poor management can destroy the best facility in a market. Walk into the facility and inquire about renting a unit. How did the managers treat you? Are they pleasant? Do they have a sense of humor? Were they in the office or did they come out of their onsite apartment? Try to be as objective as possible. Did they offer to show you a unit or did they give you a price and show you the exit? Did they give you gate hours, office hours, pricing, specials, a walk through, etc. Did they explain what makes their facility the best? Would you feel comfortable storing your most prized possessions there?
Next, while you are visiting with the managers, what kind of amenities does the facility offer? What type of access hours does the facility offer and does the access change based on unit type or location? Can you get 24 hour access? What kind of security does the facility have? Does the facility have cameras, door alarms, or a secured gate? Does the facility have an on-site manager? What kind of construction comprises the facility? Is the facility steel, concrete, or wood? Are the walls steel, drywall, wood, or chain link? Is the facility built to be fortress style or is there fencing around the property? If there is fencing, what kind of material was used? Does the facility have climate control, drive up access, large truck access, wine storage, or RV and Boat Storage. Does the facility have a loading area? Does the facility have more than one gate or access point? Does the facility offer moving carts, packing supplies, a coffee area, or bottled water? Curb appeal is equally important in the management of any self-storage facility. Is the facility clean? Do you see roaches or mice running across the hallways? Do the doors and hasps work correctly, or does the facility manager have to fight with each unit door? Are the units clean? These are just a few of the amenities that people want.
Pricing can be one of the most dynamic aspects of managing a self-storage facility. In any market in America your facility can be the highest priced facility in the marketing, or the lowest. You can raise rents on your existing tenants or not. You can offer the best move in special; include an administration fee, or adjust your late fees. A few things about pricing are certain. First, if you are 100% occupied you need to raise your facility’s prices because you are losing money. Yes, you may lose some occupancy in the short term, but the remaining units will rent up at a higher street rate and the increase on the remaining tenants will go right to your facility’s NOI. The idea is to maximize revenue above and beyond occupancy. Trust me, electricity isn’t getting any cheaper.Second, do not market or rely strictly on price. Stanford University did a study on what motivatessomeone to purchase a good or service. The results were the following, 17% of people will purchase a good or service at the highest price point, 13% of people will purchase a good or service at the lowest price point, and the remaining 70% of people will purchase a good or service for a reason other than price. Learn to sell your store on VALUE, not price. Last, check prices in your market at least monthly. There is nothing wrong with being the highest priced facility in your market, but be aware of what your competitors are doing. Remember, good management and competitive advantages are two things that will help you control your market. The self-storage facilities that provide the best value for their customers are the ones that will win in any market, regardless of price.
Matthew Van Horn is Vice President of Cutting Edge Self Storage Management and is well known for finding hidden profit centers in self storage operations. For a complimentary “Hidden Profit Discovery Session” please send an email to email@example.com . Cutting Edge Self Storage Management is a full service management company specializing in Management, Feasibility Studies, Consulting, and Joint Ventures within the self-storage industry. For more information, contact our main office at 866.970.EDGE or visit our website at www.cuttingedgeselfstorage.com . Follow us on Twitter at Cuttingedgemgt and on Facebook at Cutting Edge Self Storage Management.