Category Archives: #BeatCompetition

Self-Storage Boom Driven By ‘Four Ds’

Issue 70- Self-Storage Demand Driven By Four Ds

Introduction...Self-Storage is booming.  Seventy-five per cent of all self-storage in the world is in the United States.  There are over 50,000 storage facilities in the U.S. and the rest of the world has 15,000.

Demand…Demand for self-storage is driven by four major life events the industry calls “the four Ds”

  1. divorce
  2. death
  3. downsizing
  4. dislocation (e.g. job loss)

“The big driver is change,” said Brad Schwer of Morningstar Equity Research.  “In one way or another, people are looking for stability.”  That may be why they hang onto stuff that may not have a future value to them.

The U.S. has an estimated 2.6 billion square feet of storage, according to the Self-Storage Association.  That’s about 8.1 square feet per person, which is growing.

Experts are not sure how much longer this growth curve will last.  However, storage is very local.  Typically, our trade area is a 3-mile diameter.  So, one area that could be over built, may not impact another area where demand exceeds supply.

Click here to watch the rest of the video.

I recently visited a property in a town west of Fort Worth. This C Class property was charging higher rents than an A Class property one mile away.

I asked the owner how she could charge higher rents than a nicer A Class property.  She said, “I don’t worry about what my competition charges.  I just give the best personal service in town, so price is secondary.”

Why tenants stay...Most people rent storage much longer than they expect and over value the sentimental item inside.  Rarely do they shop for better pricing once their belongings have been stored.

The physiology of storage is opposite that of other commercial real estate.  Generally, we want longer term leases for commercial property of 3 to 5 years.  With storage, our leases are generally, month to month.  If they had a term lease, they would be inclined to move out at the end of the term.  With a month to month lease, they can move out at the end of the next month.  Then the next month.  Then the next month.  Five years later, they still haven’t moved.

In conclusion…Self-storage is a good business to be in.  The reason its a good business is that you can raise rents on existing customers by 5 to 10 per cent every eight to ten months and they will stay.  Most customers are on auto payment so the small incremental increases typically don’t spark a move out.

Free Stuff Makes Self-Storage More Profitable

Self-Storage Insider Issue No. 63

Introduction…Who doesn’t love free resources that will make your self-storage operation purr like a kitten and kick out gobs of cash? —that is, a no-brainer!

Here is a list of free marketing resources of which self-storage can take advantage:

  • Free Facebook marketing posting company advertisement to groups where people may need storage.  Examples include… Garage sales listings, antique sales listing, flea market listings, and dealers of household items
  • Email marketing to current and prospective tenants with Mail Chimp which is free
  • Ask for referrals from existing customer…one property had a drawing each month with a prize for those who made referrals
  • Sponsor a charity event one property held garage sales with those who participating making a charitable donation and promoted through local chamber of commerce and actually picked up additional tenants
  • Optimize website for local search improvement with long-tail keywords
  • insert promotions in monthly billing statements at little cost
  • Monthly print newsletter this one is not free, but can worth the investment
  • Add phone number and website on property sign or side of building

In conclusion...The best marketing strategy uses multiple strategies.  My experience after reviewing dozens of self-storage properties is most use one maybe two marketing approaches. One large property that had 500 vacancies was using only one strategy.  I love my competition.  It is soon easy to out produce them.