Whether you’re a seasoned veteran or just starting out in the self-storage business, one of the first things you will (or should) learn is how to identify and understand your target market using demographics as a tool. As with any real estate business, location is very important for a self-storage facility. It’s critical to understand your market, particularly if competitors are closing in.
Demographics are the statistical data of a population within a defined geographic area. This usually includes population, age of the population, race, housing types, income levels, education levels and more. Knowing these details about your market should help you to make decisions about how to attract and serve customers. The correct use of this data is vital to your success.
Demographics for New Projects
For example, let’s say you just found a tract of land that looks good for self-storage. You’ve driven around the area and become familiar with all the competitors. You’ve watched the traffic flow by the site, and it seems high. You feel the price is right, and you think local government officials will approve your development plan.
So you find a demographics service and buy its reports for the area. (Sometimes you can even get the information for free.) Much to your surprise, you find the region has a very low-density population and a very low income level per person and household. However, you also discover the majority of local residents rents their homes, and most of those live in multi-family units such as apartments or mobile-home parks.
By doing some shopping, you find out the competitors are all full in their smaller unit sizes, and they’re all comparable in price. Second, you learn there’s sometimes a waiting list for certain unit sizes. What would this tell you initially?
It would tell me that in spite of the low density, a lot of this population appears to need storage, since the housing units are small, and they’re probably already using storage on a regular basis. With competitors having periodic waiting lists, I know there are times of the year when there’s higher demand. The fact that unit prices are all on par tells me price is important to this market, but there may be an opportunity to get slightly higher rents. The data also tells me I probably shouldn’t build a “Cadillac” storage center, but a mid-priced Chevrolet might work.
This information is, of course, just the beginning of what you would need to make a decision about whether to build, but it demonstrates how knowing market demographics can be extremely useful.
Demographics for Existing Projects
Now let’s say you’re already operating a self-storage facility, and you’ve lately noticed some drops in occupancy. You want to market your location, but you’re not sure whom to target. Again using demographics reports, you find out:
- The average age of the local population is 35 years old.
- The average income level per household is $56,000.
- The majority of your population is Hispanic (75 percent).
- The average education level per person is two to four years of higher education.
- The majority of your market is single-family homes in the $125,000 to $150,000 range.
This presents a couple of interesting possibilities. For example, should you create any of your marketing materials in Spanish? What about putting some ads together that show how freeing up room in the garage or carport makes for a less cluttered home and allows the homeowner to enjoy his space? You can even demonstrate how the average household should have some disposable income, since each home is well within the average income level for the area.
Using this data, you could also assume your market population is somewhat sophisticated and, thus, more prone to have a mobile device or computer. Now your method of advertising delivery can be varied and perhaps less costly.
Other Uses
These are just a couple of ways demographic information can be helpful. You can also use it to determine unit pricing. If you find your area has a higher than average per-capita income level, it would be safe to assume your pricing could be a little higher. Conversely, if you’re having a hard time renting at your asking rates, you might want to look at the income levels in your market and make the appropriate adjustments.
There’s a lot more information to be gleaned from demographic reports than the examples I provide above. If you haven’t run a demographic report for your market (generally speaking, within one to five miles of your location), obtain one and study the information to help you better target your customers. There are several companies that specialize in this type of reporting, and it would be well worth your time to find out how they can help you in your particular area of need.
Once you’ve identified your market using demographic data, it can be a useful tool in managing your marketing campaigns, determining which advertising sources to use, adjusting your rental rates, predicting the unit types most likely to rent, etc. By knowing your market income levels, housing types, educational levels and more, you can be a more productive and efficient operator. The use of demographic data is key to having a successful self storage facility, whether it’s new to the market or well-established.
Mel Holsinger is president of Professional Self Storage Management LLC, which oversees the operation of more than 40 facilities in Arizona, Colorado and Texas. Mr. Holsinger has been in the self-storage industry for more than 25 years. To reach him, call 520.319.2164; e-mail [email protected]; visit www.proselfstorage.com.
