In just about any industry, there’s going to be the Davids versus the Goliaths. Take eCommerce for example – there’s Amazon and then there’s everybody else. The same may seem true in the self-storage industry, with small “mom and pop” operators having to compete against large privately-owned operators and publicly traded companies (REITs). However, you may be surprised to learn that as a small self storage operator, there’s still a lot of opportunity for you.
Before we delve into some eye-opening numbers, let’s get on the same page with what a REIT is. REIT stands for Real Estate Investment Trust. They are owned by a number of shareholders who purchase company stock in hopes of a steady return on investment, and often, cash flow for their personal investments. A few examples of a self storage REIT includes Public Storage, Extra Space Storage, and Life Storage. Because REITs are backed by financial institutions and investors, they typically have a lot of capital at their disposal, which means a bigger marketing budget, more locations, and a large management staff.
So how can a small self storage operator compete with that? While it may seem REITs own the market, the Self-Storage Almanac reports that they own less than 20% of the market while small operators control almost 75% of the market (the remainder is owned by large privately owned operators). So, by upping their game and working together with other “Davids,” small self-storage operators can effectively compete against the REIT “Goliaths.”
People are going to rent storage space from a place that makes them feel valued and comfortable. And today, customer experience is king. Studies show that more people care about the quality of their customer experience even over price. Check out these facts from Forbes:
To capitalize on the value of customer experience, it’s important that staff is friendly, knowledgeable, and understanding of why someone may need to rent storage space. It also helps to consider little things, like offering bottled water, coffee, WiFi, complimentary use of dollies and moving carts, etc.
As any realtor would tell you, there’s a lot to be said for curb appeal, and this applies to customers considering a storage facility. So, make sure your place is pristine – that means well-groomed landscaping, clean windows and signage, no trash on-site, etc. And that’s just regular upkeep; you might also consider regularly refreshing paint on the building, planting flowers, and anything else to make the place look inviting. A freshly-sealed blacktop parking lot also lends visibility to your place from the street and shows that the facility is well-maintained.
Need remodeling? A dated-looking facility could turn potential customers away. While it’s going to cost you in the short term, the long-term benefits may be worth it. Plus, with a better-looking facility, you can likely charge higher rents and generate more income.
REITs are successful because they know how to manage their revenue. They also know the importance of rates. A good self storage operator knows that being 100% occupied is a red flag signaling that rates are too low. After all, if there are no units to rent, someone else will get the business. So, be sure to manage rates and adjust them in regards to the market and competition. 100% full doesn’t mean you’re making as much as you could.
REITs have the budget to create big television, radio, and outdoor campaigns. As a budget-constrained independent self-storage operator, these forms of media may be off-limits. But today, these marketing tactics are proving less and less effective. So, make the internet your best friend. Online, you can focus on more financially viable ways to promote your business, such as:
The internet can make self storage marketing easy and efficient!
What is your local competition doing? What do they charge? How are they advertising to people? It’s important to understand the competition in order to compete. So, you’ll want to visit each facility within a 3-5 mile radius, check out their websites, and conduct a secret shop. Things you’ll want to look at include:
Understanding your competition helps you to focus on your unique attributes or make adjustments to better compete in the market.
Renters at any facility want to be sure their items are safe. Security features can make a big difference when they’re deciding where to store their valuables. Plus, a secure facility can help avoid legal issues in case of any incident. Some considerations include:
Safety from the elements may also be a big factor for potential customers. Does your facility provide fire protection? Is it able to handle high winds? Is it located outside of flood zones? These are all other additional, and important, considerations.
Whether you’re on-site daily or employing a manager, it’s important to stay on top of things to keep and attract new customers. Be sure you, or they, are following industry resources, attending trade shows and seminars, listening to the latest podcasts, and reading the newest blogs. Your management team should be focused on getting new tenants in the door, maximizing revenue, and beating the competition. As an owner, you must focus their activities to enhance your bottom line.
You might be thinking, ‘What’s a membership organization in self storage?’ This type of organization is a group of self-storage owners and operators who work together to increase their competitive advantage in the marketplace. By joining forces, they are able to leverage new and existing resources to lower operational costs and increase profit.
Membership organizations also provide members with access to experienced individuals in the industry for insight, and those outside the industry that can help (such as legal teams and marketing companies that understand self storage advertising). It’s ideal for networking and growing your business. Of course, there's only one cooperative in the nation – Storelocal.
At this point, you don’t need to know how to start a small self storage business – you just want to know how to compete. And while it may initially seem like you don’t have a fighting chance compared with REITs and their deep pockets, this simply isn’t true.
By employing these techniques and joining the Storelocal community, you can begin to level the playing field, and band together with other independent self-storage operators to effectively compete with REITs, get exclusive deals on vendors, lower operational costs, and align with self-storage industry thought leaders. Interested in learning more or need some self storage ideas? Join Storelocal now.