Your units are filled, your rents are stable, your employees are happy and the phone’s ringing off the hook. Your self-storage facility is killing it, right?
Maybe not. Complacency, better known as not minding the store, may cost storage facilities more in lost revenue than any other single malady that may befall them.
“That’s the biggest thing we fight as operators,” said Matt Van Horn, vice president of Cutting Edge Self Storage Management. “A longtime manager will start to do everything tomorrow, and then all of a sudden, tomorrow becomes four or five or six days.”
Minding these six key focus areas will prevent your storage facility from falling asleep financially.
Occupancy is great, up to a point, according to Mike Mele of the Mele Group, senior director of the National Self Storage Group at Marcus & Millichap Real Estate Investment Services of Florida.
“Facilities that are doing extremely well understand the difference between physical occupancy and economic occupancy,” he said. “That means they’re not only full; they’re also getting top dollar out of all of their renters.”
Though it may seem counterintuitive, facilities that actually achieve full occupancy may be losing revenue as a result.
“The conventional wisdom is, once you get over 90 percent, you start to run out of units and have to turn people away. You don’t really want to do that,” said Mele. “Instead, you want to be pushing your rents so that the people who aren’t willing to pay it will move out and you can move in people with an immediate need who will pay a higher price.”
Letting your occupancy max out without raising rents can be costly, according to storage owner and consultant Marc Goodin.
“Guys who say they’re 95- or 100-percent full may be doing well, but they’re not an industry leader, and I guarantee you they’re leaving $200,000 profits on the table,” he said.
2. Rental rates
“If you go into every metropolitan area that has multiple self-storages, the guys doing the best are charging the most,” Goodin noted.
And it couldn’t be easier to join them.
“There are websites you can go to where you’ll know in 10 seconds what all of your competition is charging within a 10-mile radius. Just put your rate at the highest one on the list,” he suggested.
Don’t be afraid to push a three to five percent price increase every six to nine months across the board, advised Mele.
“If you don’t, you could be bringing in $10,000 less a month than a property with the same occupancy,” he said.
3. Onsite training
Onsite training is one profit center that’s often mistaken for overhead.
“The best facilities have a sales training plan where the managers are learning something every month onsite,” said Goodin. “They might have one training plan for sales, one for marketing and a third for facility maintenance and improvements; do them all at once, sequentially or one a year.”
Van Horn agreed: “If I can get somebody off the street and into the property, I will close a sale 90-plus percent of the time. That comes down to sales training.”
Goodin recommends paying managers for their attendance and giving them scripts or assignments, such as showing every customer who walks in a unit so it becomes a habit.
“Forming strong sales habits will make you an extra $5,000 to $25,000 a year,” he said.
These days, you’re either on the web or you’re road kill.
“If your website is outdated or comes up on page two of a Google search, you’ve lost because 95 percent of the people won’t go to page two,” said Goodin. “If you can’t afford to be on page one, you need to find a website company that can put you there.”
Van Horn agrees: “Most mom-and-pops haven’t even claimed a Facebook page or even their Google Local listing,” he said.
Extra marketing points if your storage website take online payments and bookings.
5. Facilities and maintenance
Matt Van Horn visits dozens of facilities large and small in the course of each month. He doesn’t like most of what he sees.
“I visited three Florida properties in a row that didn’t even have offices; you just called and they would meet you there,” he said. “Should we have an office? Should we offer water or coffee? These are no-brainers.”
He can spot the top performers by their maintenance zeal.
“Is it clean? Is the manager smoking? Are there animals? I love dogs but they have no place in a storage office,” he noted. “If the bathrooms are filthy, you wouldn’t want to store your grandmother’s stuff there.”
His all-purpose solution to less-than-tidy facilities? “Simple checklists work wonders,” he said.
Mike Mele has one word of advice for smaller facilities that are killing it: expand.
“Because operating expenses usually average 40-45 percent of revenue, depending on taxes and insurance, smaller facilities are definitely harder to make profitable,” he said. “If they’re doing great, they should absolutely expand, provided they have the land or are allowed to build up.”