By Jared Farmer
The attraction of self-storage as a real estate investment is at an all-time high. With increased complexities and competition in the industry, it can be a challenge to know how to maneuver in your markets and make good business and financial decisions. It can even feel overwhelming at times.
I want to help you tune out the fear propaganda you hear from “experts” and marketers, and show you how to make smart decisions that will lead to a profitable future. Specifically, I’m going to discuss physical adjustments you can make to your property to compete as new product enters your market.
First Impressions
In my line of work, I get to see the future of self-storage—and it’s fantastic! I see impressive facilities with beautiful architecture and offices that rival any shopping-mall showroom. Walking into a storage business used to be the equivalent of going into an oil-change station. Now it’s like walking in to buy an Apple computer! Storage facilities are increasingly attractive and spacious.
The importance of presentation for your property can’t be overstated. Your website, curb appeal, front office and staff are the first impressions people have of you. As we know, these impressions are made quickly and stay ingrained for a long time.
Are your properties consistent in their look and feel? If you don’t have a standard image for your sites or, at minimum, your front offices, you need to start there. Your standards (or lack thereof) will come to establish your brand, so think about what you want it to be. The appearance of your facility is the introduction to the world of your business identity.
Know Your Market, Know Your Customer
Because each market is unique, I recommend arming yourself with the information you need to make smart decisions about how best to adapt. Mapping out the competitors within a 3-mile radius of your site and visiting each is a great way to learn what you’re up against. Be aware of new development as well.
Pay attention to the look, feel and function of competing facilities. Whatever your thoughts about your own property, this exercise will give you precious perspective on the realities of your local market. It’ll also help you determine what changes you may need to make to stay competitive, achieve higher occupancies and raise rates.
What are the key features of self-storage in your area? There’s no need to have every one under the sun, but there’s also a danger in being the last storage business in the region to make upgrades. You don’t want to watch your customers leave or have little new business walking through your door because your facility looks dated.
Knowing your customers will help you make the right decisions for updating an older property. We hear the following statistics over and over: Women represent 70 percent of decision-makers when it comes to choosing a storage facility, according to a video by Mark Helm, a self-storage consultant and author of “Creating Wealth Through Self-Storage.” In addition, 80 percent of potential renters do some form of online research before calling or visiting a facility. Janus International Group LLC, a manufacturer of self-storage roll-up doors and building components, stated in a recent advertisement that 75 percent of people who visit will decide to rent.
I’m not giving you new information here. It’s not a secret. What I’m saying is you need to execute on this information because your competitors are. If you don’t, you’ll be left behind. Now, let’s talk about how to devise a renovation plan within your given circumstances and budget.
Your Specific Situation
Sometimes it’s hard to know if the timing is right to make a change and, if so, exactly what alterations should be made. Consider these possible scenarios:
- Near capacity: Your facility is 90 percent or more occupied, and so is everyone else in your area. The market is speaking, so listen. It’s telling you the people want more! This is the time to invest in expansion, but do your homework. What’s the most popular unit type and size? Uncover this information about your own facility as well as others in your market.
- New competition moving in: You’ve got competitors opening near you and heard of two more in the development stage. They’re class-A sites with climate-controlled units, a drive-through, elevators and a shiny new office. What are the key features of these new properties? What needs updating at your site to keep up?
- Site needs refreshing: You look at your property one day and realize it’s outdated. Sometimes it’s just time for a refresh, to be as proactive as possible for what will eventually be coming to your backyard. What’s the best bang for your buck? Beyond function, what will help you stand out and look better?
Your Upgrade Options
Every self-storage owner wants to know the return on investment for any capital improvements or facility maintenance. Here’s the answer that’s too simple for most to accept: Customers want a clean, dry, organized and secure facility.
Investing to get or keep older facilities up to new industry standards will provide the look, feel and function customers want before choosing to do business with you. If you provide those things to a higher standard than is the industry norm, people will be compelled to do business with you and recommend you to their friends. This brings higher occupancies, which allows you to raise rates and possibly even expand. So, yes, beyond looking impressive and protecting your assets, there’s significant value to your bottom line.
Think about your facility’s needs and budget as you consider the following upgrade options:
Simple, small updates that make a significant difference. If you can only do small updates because of your budget, I recommend looking at your signage, landscaping and LED lights. These are some of the most immediate curb-appeal items people notice. Fresh signage shows prospects you take pride in your operation. Great landscaping says you’re an active owner who hasn’t abandoned the business to serve your financial interests. LED lights give the appearance of safety and security; plus, they lower your utility expense, increasing your net operating income.
Best bang for your buck. I like to call it the two Ps: painting and paving. If you’re looking to make your facility look new—no matter the age—then the two Ps are your best friend. Just some simple sealcoating and striping does wonders. Add a fresh coat of paint on your doors and the transformation is stunning. Your facility looks completely altered!
If doing this work for your entire site isn’t possible, even a simple update to the front office and parking area is powerful. The bonus is your sealcoat and paint also protect everything they cover, so there’s a practical and cost-savings aspect as well. Replacing old doors with new ones and completely redoing your asphalt is great, but those are much larger projects with larger price tags.
Office remodel/light construction. If you have class-A self-storage facility near you, then it’s smart to at least have a class-A front office. Again, we’re talking first impressions here. This is a critical aspect to winning business and giving your prospects the level of comfort and security they want to feel before they business with you.
Structural updates/expansions. There are two times when this is necessary: the facility is in really bad shape, or business is really good. Either way, these are opportunities for revenue growth, as you can turn an old, underperforming property around or add value to an already high-performing business.
If expanding, first determine the right unit mix. You may even consider adding a new unit type altogether. The market will tell you when the timing is right and the product it wants. Again, pay attention and do your homework.
It’s What We Do That Counts
Again, this may not be new information for you. The question is, how are you executing your capital-expenditure (capex) plan? Too often I hear from self-storage operators that they’re far behind where they’d like to be in their capex and facility maintenance. If you’re having trouble making it happen, find vendors that can help you achieve your business needs.
The stunning growth and development we’ve seen over the last few years is nothing to be afraid of or stress out about. These are amazing times in self-storage, and it’s great to see the industry improve, set higher standards and better serve its communities. The only reason to fear is if you aren’t prepared. So be smart, be proactive, make a plan and, most important, execute. This will be the difference between doing well or really thriving.
Jared Farmer is the owner and president of Farmer Development, a general-contracting company, and Farmer Facilities, a capex/facilities maintenance company built exclusively for self-storage. For more information, call 810.844.1544; visit www.farmerfacilities.com.
