The Federation of European Self Storage Associations (FEDESSA) and investment-management firm JLL (Jones Lang LaSalle) have released research findings from a 2020 survey of the European self-storage market. The organizations polled more than 900 facility operators. The results indicate the industry has remained resilient through the coronavirus pandemic, drawing strong interest from investors. Existing operators in Europe also showed gains in rental rates and occupancy, according to a press release.

This year, there are 4,831 facilities comprising 10.5 million square meters of storage in operation in Europe, an increase of 481 properties from 2019. In the last 12 months, there were more than €250 million in self-storage transactions, which is in line with last year. The top 10 European operators represent 18.2 percent of all facilities in the region and 36.1 percent of available rentable space, according to the source.

The average self-storage rental rate in Europe is €250 per square meter per year, with average physical occupancy at 79 percent. Average occupancy increased from 79.2 percent in February to 79.9 percent in June despite the global pandemic. During the same period, rental rates fell 1 percent.

The United Kingdom continues to lead all European markets in self-storage square footage per capita, followed by Iceland, The Netherlands, Sweden and Denmark. Several mature markets, including Belgium, France and Germany, are below the European per-capita average, indicating industry potential in those countries, JLL analysts said.

“The statistics [for] self-storage during 2020 are impressive. With resilient rents and strong occupancy levels across Europe, the sector continues to deliver strong cash flows despite the pandemic,” said Ollie Saunders, lead director of self-storage Europe for JLL. “The flexibility of self-storage has meant that it can adapt to changing macro-economic circumstances, as it did in the global financial crisis. The appetite from investors has also remained strong, with transactions marketed and closed since March; but a challenge for the sector is how to get the scale investors want. The answer will be a mix of innovation, patience and best-in-class operators.”

The survey identified technology and sustainability as key drivers for the European self-storage market. More than one-third (36 percent) of facilities offer 24-hour access, and 76 percent of operators intend to spend more on technology to improve their business, the release stated.

“This has been a turbulent time for the property sector, but it’s a testament to self-storage that it’s remained resilient throughout the uncertainty,” said FEDESSA CEO Rennie Schafer. “In all real estate sectors, we are seeing increased integration of technology and a greater emphasis to an omni-channel customer experience, which the self-storage market is also adapting to. With more than three-quarters of those surveyed admitting that they intended to spend more on technology, we should expect to see the market adapt and to continue growing into the next year.”

Founded in 2004, FEDESSA consists of 14 self-storage associations across Europe and represents about 1,400 facilities.

JLL is an investment-management firm specializing in real estate services for property investors and occupiers. The company has about 300 corporate offices in more than 80 countries and a global workforce of more than 92,000 employees.

Source:
JLL, FEDESSA European Self Storage Annual Survey 2020

Controlling expenses should be a top priority for any self-storage operation. In truth, an emphasis on saving should be part of the company culture. But before you can look for ways to cut costs, you must know the items on which your business spends money and understand the difference between the two types of facility expenditures.

Typically, businesses have fixed (controllable) and variable (uncontrollable) expenses. By identifying them all, you can create budget against which to measure financial performance. You do this by regularly reviewing a monthly profit-and-loss statement, known as a P&L. With a budget, you have a benchmark for expenses and know the numbers to which site staff should be held accountable. Knowing the company’s financial goals will help managers understand the importance of controlling costs and achieving optimal profit.

Cost Types

A self-storage facility has many expenses. Again, some are fixed, while others fluctuate. Staff payroll is an example of a fixed cost. It’s generally the same month-over-month, unless there’s a dramatic change to work regimen or a lot of overtime. This is why it’s important to adhere to schedule and eliminate unproductive hours. 

Janitorial supplies and snow-plowing are examples of variable costs. These can change over time based on a number of factors. To anticipate these expenses, look at the amounts paid for these line items in previous years and make an educated guess as to how they might vary in the year ahead. While you can’t predict the future, it’s important to get your budget as close as possible, so you don’t overspend.

Here are some other common self-storage expenses:

• Loan payments
• Utilities
• Property taxes
• Third-party management services
• Advertising/marketing
• Landscaping
• Business insurance
• Software
• Credit card processing
• Building repair and maintenance
• Office supplies
• Retail product
• Pest control

While there are surely more than those listed above, these are good examples of the costs many self-storage facilities incur. You should be regularly reviewing all expenses.

Compare Vendors

When it comes to managing your variable costs, it’s important to consider the vendors you employ and regularly assess their pricing and services. Even if you’re totally satisfied with the work the company provides, shop around for the best rates and make sure the provider is aware you’re doing this. Chances are, it’ll want to keep your business and may even offer a lower price to do so.

Furthermore, has anything changed within your business? Has it grown into multiple facilities, thus offering you scope of scale, a better negotiating position and stronger buying power? These are considerations to be made when deciding which vender best suits your needs from an operational and financial standpoint.

Look to Reduce

Typically, cost reduction can be managed by comparing actual dollars spent vs. budgeted numbers. Even if you’re under budget on an item, you may still be able to trim. For example, let’s assume you’re well-established within your market, with a high-ranking online presence for self-storage searches in your city. You buy Google ads to stay at the top. Chances are you can decrease that spend and still retain your high ranking, then use the extra money in other ways or let it drop to the bottom line.

In particular, look at your utilities. Once you’ve confirmed you’re receiving the best possible rates, look at how you’re heating and cooling your buildings. Set standards for temperature highs and lows and ensure staff follow them. This will develop consistency and further enhance a culture of fiscal responsibility.

A preventive-maintenance program is also vital when it comes to reducing expenses. Some items, such as sprinklers and elevators, require specific, time-sensitive inspections by state or local ordinance. Other items like your HVAC system may not have these requirements, but you should still pay attention to them. By performing biannual cleaning and maintenance, the useful life of equipment can be extended, and it’ll perform more efficiently at a lower cost.

Even with a proactive maintenance program, though, things can go wrong, so it’s wise to keep a fund for emergencies or when you need to replace something. Purchasing new vs. temporary patching is usually the best course of action. Keep an eye on things like your access gate, electric or sliding glass doors, and emergency lighting and exit signage.

Create an Action Plan

You need an operational budget, as it’s critical to managing and reducing expenses. But just looking at the numbers on a P&L statement isn’t enough. That’s just the beginning. Once you know an expense needs to be controlled or even cut, you must develop and implement a plan to accomplish the goal, with a timeline to ensure the process is followed and can be adjusted if necessary.

Consistency is key. Establish policies and procedures that make each employee responsible for using and saving company money. Staff need to understand when, how and with whom they are allowed to spend.

Consider the Impact of COVID-19

After all the planning, reviewing and careful management, an unexpected event could still cause unforeseen expenses. As we work through the coronavirus crisis, most self-storage operators are dealing with costs they never considered when heading into 2020. I’m talking about things like:

• Face masks and gloves
• Hand sanitizer
• Disinfectant wipes
• Additional cleaning materials
• Plexiglass dividers or sneeze guards for the management office
• Social-distancing decals for the office floor
• New signage regarding facility protocols
• Technology to allow for contact-free rentals

All of these items are necessary to keep employees and customers safe, though we never saw the need for them when we created our operational budgets at the end of last year. Some might be one-time purchases, while others will be ongoing as we endure the pandemic. It’s the continuing costs that you should be monitoring and seeking to control.

Shop different vendors to see who has the best price and if there are discounts offered for buying in bulk. Are there shipping costs? Can they be lowered? Of course, all this is predicated on whether the items you need are available and you have a choice of where to buy. Savings may also be realized after you’ve purchased the materials by using them in an efficient, effective manner.

Expense reduction doesn’t necessarily mean cost elimination, unless this is the optimal solution and wouldn’t negatively affect the bottom line. Rather, it’s is used to manage outlays that can be controlled to effectively maintain the business in a profitable manner.

Jeff Fickes joined Storage Asset Management (SAM) as a store manager seven years ago. He was later promoted to district manager and currently serves as regional director for the company’s managed properties in the Northeast. Based in York, Pa., SAM is a property-management and consulting firm that oversees 220-plus facilities in 31 states. For more information, e-mail [email protected]; visit www.storageassetmanagement.com.

Commercial Property Executive (CPE), a media brand specializing in commercial real estate news and analysis, has published a list of the five top-performing markets for self-storage development in the United States. The ranking is based on projects underway or planned space as a percentage of total inventory as of August. It was compiled using data from Yardi Matrix, the self-storage data-services platform offered by management-software provider Yardi Systems Inc., according to CPE.

Although many markets are enjoying an improvement in rents, development activity is beginning to show the effects of the coronavirus pandemic and economic fallout. About 147.2 million square feet of storage space was under construction or in the planning stages, representing 8.8 percent of total stock. The new-supply pipeline grew by 20 basis points over the previous month, however, development activity remained flat or contracted in more than half of the top 31 markets tracked by Yardi Matrix, CPE reported. In addition, 33 projects were abandoned in August.

The top market on the list is New York City (NYC), with 64 projects under construction and 100 in the planning stages, totaling more than 12.3 million square feet. The new supply represented 18.5 percent of existing inventory, up 50 basis points month-over-month. The NYC storage market is also facing recent changes made to the city’s Industrial & Commercial Abatement Program, which provides tax relief for ground-up and conversion projects, according to GlobeSt. Many storage projects will no longer be eligible for tax abatement, which could make a development unprofitable, CPE stated.

Las Vegas ranked second on the list, however, development activity has been mostly idle during the pandemic, with three facilities comprising 293,680 square feet completed this year. About 2.8 million square feet is under construction or in the planning stages, accounting for 16.2 percent of the city’s 17.2 million-square-foot inventory. It has 21 projects in planning and 14 under construction, all slated to be complete this year or in early 2021.

Rounding out the top five are Sacramento, Calif.; Portland, Ore.; and San Jose, Calif. Sacramento’s self-storage market is grappling with oversupply, with the per-person inventory at 7.9 net square feet, slightly above the national average of 6.6 net square feet. As of August, 2.8 million square feet was under construction or in the planning stages, accounting for 15.8 percent of total stock.

The self-storage development pipeline in Portland contracted slightly. The nine projects under construction and 18 in the planning stages, encompassing 2.2 million square feet, accounted for 15.2 percent. The city’s self-storage inventory per person is 6.9 net square feet.

San Jose’s high barrier to entry has helped keep it from becoming oversupplied. The city has 9.4 million square feet of storage space, making the supply per person 4.7 net square feet. As of August, San Jose reported 1.4 million square feet of storage planned or under construction, accounting for 15 percent of existing inventory.

CPE is an integrated resource for executives and companies that own, manage, invest in or develop commercial real estate. With an emphasis on executive profiles and industry and economic data, it offers reports covering finance, legal and regulatory issues, property management, sustainability, technology, and other areas.

Sources:
Commercial Property Executive, Top 5 Markets for Self Storage Development
GlobeSt.com, NY Storage Developers Freeze Projects Following New Tax Policy

The recent ISS Virtual Event drew hundreds of industry professionals into its exhibit hall, networking lounge and education theater. If you missed the online conference and tradeshow, or want to revisit the seminars you attended, you’re in luck! All 12 sessions presented during the event are available in on-demand and DVD formats—including some discounted bundles!

The Complete Seminar DVDs package covers a range of material across the building, investing, operations and technology sectors of the self-storage business. Topics include building costs, recession strategies, staff compensation, online rentals, virtual management and much more. Together, the sessions offer about nine hours of education designed to help facility developers, investors and operators thrive during these times of uncertainty.

Three smaller packages are also available, organized by topic tracks. The Building and Investing, Operations and Leadership, and CX and Innovation packages each contain four sessions. Individual videos are also available for purchase in DVD and on-demand formats.

Visit the ISS Store for full product details, and get the insight you need to ensure your business succeeds during the coronavirus pandemic and beyond!

Store Space Self Storage, which operates more than 30 facilities in 15 states, will donate $5 for every new customer move-in in October to the Breast Cancer Research Foundation (BCRF) as part of Breast Cancer Awareness month. New tenants will also receive a pink ribbon and bracelet to commemorate their involvement, according to a press release.

“This is a cause near to my heart, as my mother was diagnosed with breast cancer several years ago. She was one of the lucky ones and was able to beat it,” said Rob Consalvo, president and chief operating officer. “Having the opportunity to use our platform and company culture of ‘Storage that Cares’ enables us to help generate awareness throughout our customer base, while also providing an opportunity for our owners and employees to raise funds to help eradicate this form of cancer once and for all.”

This will be the second consecutive year Store Space has raised money for BCRF. Last year, the company donated $1,215 generated by 243 move-ins, the release stated.

Founded by Evelyn H. Lauder in 1993, BCRF is the largest private funder of breast cancer research worldwide, according to its website. BCRF-funded initiatives focus on prevention, diagnosis, treatment, survivorship and metastasis. Last year, the organization awarded $66 million in grants to approximately 275 scientists at medical and academic institutions in 14 countries.

Launched in 2018 and based in Winter Garden, Fla., Store Space operates an owned and managed portfolio comprising more than 25.3 million net rentable square feet of self-storage.

Sources:
PR Newswire, Store Space October Fundraiser to Benefit Breast Cancer Research Foundation
BCRF, Website

The self-storage industry in Europe continues to show strong growth, and the COVID-19 crisis doesn’t appear to have significantly impacted it to date. At the time of this writing in late summer, many facility operators are recording better results than at the same time last year, and development and acquisition projects are continuing. There’s also increasing interest from institutional investors.

Let’s take a deeper look at what’s happening throughout the European self-storage market.

Markets

Self-storage is now present in almost every European country. The number of stores in Europe has basically doubled in the past five years, and the amount of storage space has increased by more than 50 percent. There are approximately 4,600 facilities across the continent, representing more than 118 million square feet of space. This equates to around 0.22 square feet of space per person, though it’s much higher in more developed markets such as the United Kingdom, which has 0.73 square feet per person.

The northern countries like France, Germany, Netherlands, Sweden and the U.K. have the most developed markets. The U.K. makes up 37 percent of the European market, France 12 percent, Netherlands 7 percent and Germany 6 percent. Spain has seen significant growth in the last few years, especially outside the major cities of Barcelona and Madrid. It now makes up 12 percent of the market.

Europe is very much a series of micro markets. Efficiency can be affected by different languages, legal systems, planning laws and sometimes currencies between countries. Each region also has a slightly different customer mix and requires unique marketing campaigns.

Operators

Shurgard Self Storage Europe SARL, the European affiliate of U.S.-based real estate investment trust Public Storage Inc., is the largest operator in Europe, with more than 200 stores in seven countries. The only other operator with a significant presence across the continent is Safestore Holdings PLC, which owns or manages stores in Belgium, France, Netherlands, Spain and the U.K. All other storage companies operate within a single country or region.

Most self-storage businesses in Europe are privately owned, though there are more choosing to list on the stock exchange. The most recent of these being Sweden-based 24Storage and Shurgard. There are now six self-storage companies listed on European stock exchanges and one U.K. operator owned by Stor-Age REIT, based in South Africa. All are performing well despite the challenges of COVID-19 and the general depression of the market.

Investors

The level of interest in self-storage from institutional investors in Europe has certainly increased in the past few years. Some of the more significant partnerships include The Carlyle Group joint venture with Safestore, which has expanded into new markets. Investment firm Legal & General has also entered the U.K. market, acquiring and developing properties to be managed by the SureStore group.

Other institutional investors are looking to enter, however, suitable acquisitions remain scarce. The industry has largely consolidated, stripping out many of the middle-tier operators. Investors may prefer to buy a portfolio with 10-plus A-grade stores, as it allows them to gain instant presence in a market; however, there are previous few. Instead, many investors are forced to develop their own stores, or purchase single stores or small chains, which takes more time and often doesn’t suit their investment model.

Meanwhile small, independent operators continue to build new sites or expand existing holdings in their own local markets, particularly outside the major cities. There’s also an increasing number of container-based storage companies joining the market. This is seen as an easy, low-capital entry point, though changes to taxation and planning laws in some countries are making it more difficult to convert vacant land to a container-storage yard.

Development

Lack of suitable and affordable land remains the biggest barrier for development in the European market. The publicly listed companies have relatively low levels of debt and access to capital when the right properties become available. Independent operators are also finding it easier to get bank financing, particularly when they have an established facility and brand.

This lack of land has contributed to relatively stable industry growth, with few issues of oversupply. In fact, despite all markets having significant growth over the past three years, they have almost all increased their rental rates, return per square foot and occupancy rates. This indicates demand for the product is growing faster than supply, even though awareness and understanding of self-storage remains low in developing markets.

Facility Performance

Across Europe, the average occupancy rate is 80 percent and the return per square foot is €24.50. However, in the larger cities like London, the return can be well above €40 per square foot.

Occupancy rates vary between countries. Italy is down at 75 percent while France and the Netherlands are approaching 85 percent. Despite the political uncertainties of Brexit and various changes in government in some countries, the industry has remained a positive performer in the alternative asset sector. The recent COVID-19 crisis has reinforced this, with the industry continuing to perform well while most other asset classes struggle.

COVID-19

Each country has dealt with the COVID-19 crisis differently. Some, like Belgium, enforced strict lockdowns early and even went into a second lockdown as cases increased. Others, such as Sweden, took a more relaxed approach, banning only larger gatherings and advising people to socially distance where possible. In all but a few places in Germany and Italy, self-storage continued to operate, though there was less activity in the stores and, in some cases, customers could access their units only by appointment.

Self-storage provides support to some essential services but also to online traders and other small businesses, so it was deemed essential. It was also considered low-risk, with limited contact between customers and staff and no gatherings. Many stores moved to online contracts and move-ins so customers could rent without interacting with facility staff. Common areas like keypads and loading areas were regularly cleaned and disinfected, and staffing rosters were changed to keep minimum staff on site. Some stores were able to operate remotely.

Move-ins and -outs dropped to around 40 percent of normal trading during the height of lockdowns. Income, however, was largely maintained. Occupancy only dropped around 2 percent, and revenue was down only 2 percent. In some cases, revenue was maintained at normal levels.

As soon as lockdowns started to end, inquiries soared to record levels. Move-ins picked up almost immediately while move-outs took more time to return to normal. This meant that, in most cases, stores were at a better occupancy after the lockdown than at the start of the year. Most held off on rent increases during lockdown but reintroduced them during the summer.

Revenue is also back up to pre-March levels. There was a small increase in bad debts or write-offs, but it was marginal. While summer is usually a good season for self-storage, many stores reported better 12-month results than in previous years. So, the overall impact of the crisis was negligible, and some operators would argue their business benefited slightly from the pandemic.

Opportunities

Of course, the long-term economic impact of COVID-19 is yet to be felt. Some commentators are predicting the deepest recession in centuries. Some businesses are folding and making staff redundant as government subsidies are removed and the impact of social distancing and working from home affects various sectors like retail, events, live performances, leisure and travel. They’ve been hard hit and will continue to struggle for some time.

Still, there are a lot of trends in play that benefit self-storage: Online retail is increasing, and businesses are storing more stock. The pandemic has caused some relationship strain in couples, which can lead to divorce. Some people are preparing to permanently work from home and need space for a home office.

On the investing side, businesses like student housing, car parking, hotels, dry cleaners, nightclubs and airports are all showing heavy losses with long recoveries. As a result, self-storage investors and developers are hoping to capitalize on a changing commercial real estate landscape, which may open more property.

All in all, there remain many growth opportunities for self-storage in Europe, in 2020 and beyond!

Rennie Schafer is CEO of the Federation of European Self Storage Associations and the Self Storage Association of the United Kingdom. For more information, visit www.fedessa.org.

Store Here Management LLC, the division of RHW Capital Management Group LLC that operates the Store Here Self Storage brand, is raising funds online this month for Huntsman Cancer Institute (HCI), a cancer-research center and treatment hospital at the University of Utah in Salt Lake City. Donations will be allocated to the new Kathryn F. Kirk Center for Comprehensive Cancer Care and Women’s Cancers, according to StoreHere.com, where contributions are being collected.

“Along with donating to cancer research, we will be highlighting HCI and its patients by sharing archived stories told by patients, [sharing] information on women's cancer, and highlighting statistics and ways to help women affected by cancer,” said Ryan Rogers, managing partner of Store Here.

The Huntsman Family pledged $100 million in 1995 to build HCI, which is owned by the state of Utah and is the state’s official cancer center. The institute has 206 research teams and operates clinics that focus on patients with a family history of breast, colon, melanoma, pancreas and prostate cancers. It also has three community clinics and five affiliate hospitals in neighboring states.

HCI also manages the Utah Population Database, the largest genetic database in the world, according to the HCI website. It includes information on more than 11 million people, linked to genealogies as well as health, birth, death and marriage records, according to its website.

“We are extremely grateful for Store Here's continued commitment to our cause and to the cause of our founder, Jon M. Huntsman Sr., who said ‘The best investment we can make in ourselves, our family, loved ones and those closest to us is to invest in cancer research,’” said D. Jerry Nelson, director of major gifts for the Huntsman Cancer Foundation, which raises funds to support HCI’s mission. “Cancer is personal. It's personal when you or someone you love receives a cancer diagnosis. Cancer moves fast; we need to move faster!”

Founded in 2012 by self-storage veterans with more than 70 years of combined experience, RHW owns or manages 28 self-storage facilities in 15 states. It’s operating portfolio comprises more than 2 million net rentable square feet. Store Here operates facilities across 11 states.

Sources:
Benzinga, Store Here Self Storage Donates to Huntsman Cancer Institute
Huntsman Cancer Institute, Website

StoreEase, a self-storage operator and provider of a virtual third-party management platform for the self-storage industry, has hired Cindy Ashby as chief operating officer and Karla Childress as controller.

With more than 25 years of self-storage industry experience, Ashby has held executive leadership positions throughout her career. Most recently, she was a sales representative for the R3 (Restore, Rebuild, Replace) Division at Janus International, a global manufacturer and supplier of self-storage building solutions and technology. She’s also a former vice president of operations for self-storage operator Prime Storage Group. Ashby founded her own consulting firm, Dynamic Self Storage Solutions, in 2017.

“I have envisioned this revolutionary technology as the future for self-storage for over 10 years. Thanks to Josh Boyd's StoreEase, the future is now, and I get to be a part of it! It just does not get much more exciting than that,” Ashby said. “I am passionate about combining self-storage operations with technology, and feel fortunate to join this organization with a strong entrepreneurial spirit.”

“I have known Ms. Ashby for some time, and the combination of her operational excellence experience with her passion for improving the customer-service experience is remarkable,” said Boyd, StoreEase CEO and President. “That combination reflects the StoreEase Virtual Management mission, and we couldn’t be happier to have her on board.”

Childress has more than 16 years of experience in corporate finances and accounting. She’s served in a variety of accounting and analyst positions in the mining, manufacturing and healthcare industries. Most recently, she was employed with Vulcan Materials Co., a producer of construction aggregates.

“StoreEase is a remarkable, forward-thinking company within its industry, and I am very excited to be part of the wonderful team of people [who] foster such an innovative atmosphere while sharing the company’s vision of quality, growth and success,” Childress said.

“With the addition of Ms. Ashby as COO and Ms. Childress's prowess as controller, we continue to strengthen our foundation as we move toward making facility automation with virtual management the new standard of self-storage operations,” Boyd said.

Headquartered in Birmingham, Ala., StoreEase acquires, develops and oversees self-storage facilities in Alabama and Ohio. It’s also building new projects in the Southeast. The company’s virtual management platform offers tools to automate self-storage facility operation including 2 Minute Move-In, DemoSuites, Smart Environment, Virtual Assistant, Virtual Counter and Virtual Terminals.

Self Storage Plus has implemented a new online-rental option across all 42 of its facilities. “Plus Leasing,” accessible through the company website, is being targeted at customers who want convenience as well as safe alternatives to in-person business transactions during the coronavirus pandemic, according to a press release.

“We are extremely excited to roll out our new Plus Leasing option and are very pleased with how simple our process is,” said Mike Anthony, executive vice president. “Being able to serve the needs of our customers is our No. 1 goal, and online rentals is a huge part of that convenience.”

To use the online-rental tool, self-storage customers must first select their desired facility location and unit type. The process includes options to purchase tenant insurance and sign up for autopay. Users can complete the transaction in less than two minutes, the release stated.

Self Storage Plus operates facilities throughout Maryland, Northern Virginia, West Virginia and Washington, D.C.

Source:
Hood River News, Self Storage Plus Premieres Online Rentals at all 42 Locations

Self-storage unit pricing has become more complex in recent years as facility operators aim to up their revenue-management game. Dedicated software systems and other innovations have emerged to help owners and managers answer the questions, “How much can I reasonably charge new customers in light of the current market?” and “How much can I realistically raise rates on existing tenants?”

Enter the coronavirus pandemic, and those questions have become vastly more difficult to answer. People still need self-storage, but with many out of work and struggling to make ends meet, what they can afford has changed. And let’s not forget legislation that may now restrict how much operators can get for rent. What’s the new-world plan for unit pricing?

We asked a handful of your fellow storage companies to share their concerns and strategies around revenue maximization in the COVID-19 environment. Here’s what they had to say. As you’ll see, there’s no one-size-fits all approach.

Note: These responses were gathered in early August. Some circumstances may have changed since.

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How has the coronavirus pandemic affected the way you manage rate adjustments for both new and existing self-storage customers?

We halted existing-tenant rate adjustments and have not yet started them up. We did make certain our rates were in order, increased a few of them for new customers coming in, and are changing up our specials periodically.
―Diane M. Gibson, President, Cox's Armored Mini Storage Management Inc.

The coronavirus pandemic did affect the way our revenue-management models were implemented across our portfolio. Rates were lowered and concessions were increased for new customers, and relief was provided to existing customers through the deferral or reduction of rate increases during the early stages of the pandemic. This has now changed, and our model is in full effect across most of our markets.
―Korey Hanson, President, Argus Professional Storage Management

The COVID-19 pandemic led to us hit pause on any existing-customer rate increases from April to July. Our street rates for new customers were not affected much at all. We actually had a really strong March and April, as many others in our industry also reported.
―Ben Hendricks, Chief Operating Officer, Five Star Storage

We’ve offered many existing customers who’ve come to us with a hardship situation a COVID-retention discount ranging from 10 percent off a month’s rent up to the equivalent of two months free rent. Our move-in specials did not change much, as they were already competitive. Move-in activity slowed about 30 percent in March and April but picked up a lot in May and June. Move-out activity also slowed in March/April but picked up to normal levels starting in May.
―Natolie Ochi, CEO and President, SKS Management LLC

It has been a delicate balance to ensure there is protection for revenue and customers. Our concern changed from maximizing revenue to ensuring stable occupancy that we could protect revenue with the unknown that we were facing at the onset of the pandemic.
―Tocarro Williams, Director of Operations, Donald Jones Consulting & Service LLC

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Have you implemented any rate increases on new or existing customers since the U.S. pandemic hit in mid-March? If so, how did you approach it? How did customers react?

We haven’t implemented any rate increases on existing customers. We also have not had any issues renting new units to new customers since March.
―Diane M. Gibson, President, Cox's Armored Mini Storage Management Inc.

During the months of April and May, we either halted or reduced significantly our rate increases on existing customers across our portfolio. In June, we restarted in some markets, and by July, it was back to business as normal. We are actually taking a more aggressive approach in certain markets as we near the end of leasing season. With the early part of our leasing season interrupted by the pandemic, we feel the need to do this to catch up and get back on track.
―Korey Hanson, President, Argus Professional Storage Management

We began with rate increases taking effect Aug. 1 on the majority of those customers who would have previously had an increase throughout April to July. The reaction from our customers hasn’t seemed much different at all in comparison to “pre-COVID-19.” We’ve had about the same percentage of customers that voice their dislike for the increases and similar small percentage who actually move out.
―Ben Hendricks, Chief Operating Officer, Five Star Storage

We stopped rate increases for about four months, mid-March through July, and started back up recently with nominal increases, starting with those who were up for increases prior to the pandemic. If someone comes to us with a hardship situation, we work with them to defer the rent increase on a case-by-case basis. In some California counties, there’s a 10 percent rent increase cap, which we made sure to stay under regardless of county.

We’ve had some complaints (less than 5 percent), some referring to the current pandemic, but we get some complaints every time we do increases. We’ve instructed our teams to be extra compassionate if the tenant needs a deferment; but generally, our team members know the habitual complainers who would’ve complained even prior to the current situation.
―Natolie Ochi, CEO and President, SKS Management LLC

We decided not to increase rental rates for any customers from March through the middle of May. We also waived fees in March and April for customers who were affected by job loss due to the pandemic. We put in a moratorium for any auctions for 60 days as a goodwill gesture to our customers to allow them to pay their balances.

In June, we increased street rates at some properties based on their occupancy; each property was handled individually. Due to our ideology on the frequency of raising rates, we haven’t experienced many complaints. We respected that some of our localities were affected because their entire industries evaporated, i.e., oil and manufacturing communities. In those communities, we haven’t raised occupied street rates yet.
―Tocarro Williams, Director of Operations, Donald Jones Consulting & Service LLC

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What’s your pricing policy now and moving forward, as the health crisis continues? Will you attempt to revert to a “business as usual” approach?

Yes. We may start to test the waters in September to see how existing customer rate increases will fly.
―Diane M. Gibson, President, Cox's Armored Mini Storage Management Inc.

We owe it to our clients to be as aggressive as we can with pricing to improve the bottom line, however, we are taking into account any COVID-19-related issues that our tenants report to us, such as loss of income, and our clients are supportive of this. We’ve been working with tenants to defer or reduce rate increases if they have been negatively affected by COVID-19.
―Korey Hanson, President, Argus Professional Storage Management

At this point, we’re essentially operating our pricing and revenue management as “business as usual,” but we are very aware of the unique and unprecedented times our world is in right now. We’re ready to make any necessary adjustments at a moment’s notice.
―Ben Hendricks, Chief Operating Officer, Five Star Storage

We’re maintaining competitive pricing with the surrounding market. Some markets are experiencing full occupancy and standard prices on new rentals have actually been raised.
―Natolie Ochi, CEO and President, SKS Management LLC

We are 99 percent back to business as far as our business/financial model. We strive to have a harmonious relationship with the owners, customers and managers in all aspects but especially in rate management as it's the primary factor that involves all three of the groups. Maximizing revenue is the goal yet respecting the community to whom we provide services. We’ll continue to raise rates as occupancy increases and re-evaluate street pricing if occupancy decreases greatly.
―Tocarro Williams, Director of Operations, Donald Jones Consulting & Service LLC

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Are you using an automated revenue-management system, or are you handling rate adjustments manually?

We use an automated revenue-management system. However, we include a human touch, as this is very important, especially in today’s environment. Our site managers and district managers have influence and approval power over rate increases on a case-by-case basis. They know their customers better than anyone, and we typically don’t want to lose a customer over a rate increase.
―Korey Hanson, President, Argus Professional Storage Management

We use an automated system that provides us with recommendations for our standard rates and existing customers’ rate adjustments, but we still manually select, modify and approve.
―Ben Hendricks, Chief Operating Officer, Five Star Storage

We use both an automated system and also review the list manually.
―Natolie Ochi, CEO and President, SKS Management LLC

We handle rates manually at every location as we know our customer base better than an automated system. This allows us to interface with our managers on their knowledge of each customer’s situation to preserve long-term accounts. We look at payment history, the date of their last increase, discounts on their accounts and occupancy of the size code of the unit they rent as we consider rent increases.
―Tocarro Williams, Director of Operations, Donald Jones Consulting & Service LLC

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Do you find that you’re having to offer more discounts or specials to entice new renters in this time, or is business strong based on asking price?

We have been changing up our specials, but the end result is always the same … just different perception on how people look at it. We haven’t had to give away any more than usual, and most will pay asking price.
―Diane M. Gibson, President, Cox's Armored Mini Storage Management Inc.

During the earlier stages of the pandemic, we reduced prices and increased our concessions in order to keep rental velocity higher, as many of the REITS in our market did as well. However, in the months of July and August, rates have increased significantly, and business has been strong.
―Korey Hanson, President, Argus Professional Storage Management

Most [of our] locations are experiencing very high levels of occupancy. Demand is strong this summer, although accounts receivable is also high due to the delay in auctions during the first three-four months of the pandemic and extra leniency and rent deferments.

Income isn’t meeting last year’s levels at most locations. Lease-up facilities experienced high levels of move-ins in June and July, but lost momentum in leasing up in the first three months of the pandemic, which put a strain on meeting budget targets. We read a report by the Pew Foundation that 22 percent of Americans have moved (including college kids moving back home) or know someone who has moved since March. Self-storage starts as a temporary solution that often ends up being a long-term one for many of these people who have moved!
―Natolie Ochi, CEO and President, SKS Management LLC

We’ve assisted in opening a new development and the facility is offering specials to assist with their lease-up. We have three facilities where the economy is struggling, so we’ve reduced rents on specific units, while in other jurisdictions we offer a specific discount on certain issues upon move in. Since June, pricing in our markets has stabilized and we’re able to forgo specials or reduce rents at this time.
―Tocarro Williams, Director of Operations, Donald Jones Consulting & Service LLC