There was a time when someone 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 managers apartment, not brewed in a nice, single-serve Keurig Machine. Competition studies were easy because there were only three competitors in a five-mile radius, instead of 13 in a three-mile radius. Security was scarce, driveways were gravel, and automatic gates were a luxury. You may be reading this, scratching your head, thinking, I dont remember it ever being like this. Well, like the time of the dinosaurs and the British Empire, this era has long since passed.
Now that were well into the 21st century and part of the Googles online world, what do we need to know about our self-storage competition? Lets focus on these specific facets: identifying your competition, management, amenities, curb appeal and pricing.
Identify Your Competitors
Do you know how many facilities you compete against in your market? How far does your facility market share reach? Start by identifying your competitors. Use Google, the Yellow Pages or an online self-storage directory site obtain a list of the facilities in your area. Second, map them out. The easiest way to do this is to purchase mapping software. Two popular programs are Microsoft Map Point and Google Earth Pro. These allow you to push pin or identify on a map where each of your competitors are located.
Once you have all the facilities in your area mapped out, use the measurement functions in the software to create a radius around your facility. If youre in Manhattan, N.Y., your market area will be blocks. If youre in a more rural area, it may be five to 10 miles. Most self-storage market areas settle between three and five miles.
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, you can identify your competition.
Get to Know the Managers
Now that you know who your competitors are, its time to make a few visits. First, the most important part of any self-storage operation is the management. If a facility has great managers, it can overcome a poor location, low budget, etc., and vice versapoor 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 give you a price and show you the exit? Did they give you gate and 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?
Consider Amenities and Curb Appeal
Next, while youre visiting with the managers, notice what kinds of amenities the facility offers. What type of access hours does it have, and does the access change based on unit type or location? Can you get 24-hour access? Does the facility have cameras, door alarms or a secured gate? Does it have an onsite manager?
Take a look at the overall site construction, design and layout. What kind of construction comprises the facilitysteal, concrete or wood? Are the walls steel, drywall, wood or chain-link? Is the facility built fortress-style, or is there fencing around the property? If theres fencing, what kind of material was used? Does the facility have climate-controlled units, drive-up access, large truck access, wine storage, or RV and boat storage? Does it have a loading area or more than one gate or access point?
Be sure to ask about facility amenities. Does it 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.
Evaluate Pricing
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 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. However, a few things about pricing are certain.
First, if youre 100 percent occupied, you need to raise your facilitys prices because youre 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 facilitys net operating income. The idea is to maximize revenue above and beyond occupancy. Trust me, electricity isnt getting any cheaper.
Second, do not market or rely strictly on price. Stanford University did a study on what motivates someone to purchase a good or service. The results are:
- 17 percent of people will purchase a good or service at the highest price point.
- 13 percent of people will purchase a good or service at the lowest price point.
- The remaining 70 percent 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. Theres 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, a full-service management company specializing in management, feasibility studies, consulting and joint ventures within the self-storage industry. Mr. Van Horn is well known for finding hidden profit centers in self-storage operations. For a complimentary Hidden Profit Discovery Session, e-mail [email protected] . For more information, call 866.970.EDGE; visit www.cuttingedgeselfstorage.com . Follow the company on Twitter at Cuttingedgemgt and on Facebook at Cutting Edge Self Storage Management.
