What does it take for the independents to compete with the REIT giants in the self-storage industry?
For starters, it’s good old-fashioned customer service and strong facilities, according to a cross section of small, independent operators.
Factors such as topnotch attention to customers, facility cleanliness, a touch of hospitality, free use of trucks and occasionally lending a sympathetic ear to a customer’s problems are among the keys to success.
Go the extra mile
“I can guarantee you the most important thing is customer service,” said Tahmra Copeland, resident manager for Roxborough Self Storage in Littleton, CO. “It cannot be beat. It’s a lost art in many businesses.”
Roxborough Self Storage has 355 units and three owners, and opened in April 2012. When a neighborhood REIT raises its self-storage rates, Copeland gains new customers, she says, and guarantees no rate changes for at least nine months.
Copeland shows hospitality by supplying free drinking water and snacks – helpful, as customers often forget to bring these at what can be a hectic time. “And I bring it to them on the property –- especially as hot as it’s been, those little things will make a difference,” Copeland said.
Copeland said when people are in storage, it is one of the most stressful times of their lives.
“Some [customers], because of the hot market in Colorado, their homes have sold so fast, they haven’t had the opportunity to put a contract down on another one. It could be another three months before they find it and close and can move into it,” Copeland said.
Copeland said a sympathetic ear is something that is harder to come by at a national self-storage chain.
“Be prepared,” Copeland said. “They want to tell you everything they have been through. Be patient, kind, laugh with them, console them at times.”
Keep it spotless
She also stresses the importance of cleanliness, one reason being “they’re bringing in their most valuable possessions,” she said. “They don’t want to see dirt in the hallways or trash floating around the facilities, and that the bathrooms are kept clean.”
Trust in your managers
Being smaller means it’s easier to train and track managers’ performances, said Becky Spartz, who owns a management company, Investment Management, in Minnesota. Her company works with Minikahda Mini Storage, which has facilities in South Saint Paul and Hopkins.
The larger companies utilize call centers, rather than facility managers, to handle a certain percentage of customer interaction, Spartz said.
“If we have someone who wants something short term, we have more flexibility to provide those services, as well as accepting managers. I know my managers. They don’t have strict guidelines as you have with a big company,” Spartz said.
As for the result when a REIT opens a nearby facility, Spartz said, “We don’t necessarily consider them competition. We think we have a better product, better facility, better management. Does it worry us? Yes. Whenever you have any competition, you worry. Do we lose sleep over it? No.”
Don’t spare the amenities
Customer amenities are big to Carlos Diaz, who runs Value Store IT Management Inc. in Miami Lakes, Fla. It operates 13 facilities with about 9,000 units.
Diaz makes free moving trucks, a conference room (popular with commercial tenants) and free Wi-Fi available to customers. The facilities are near one another, so it’s easier to maintain them as well as their landscaping.
Rise with the tide
Nearby REIT competition has an impact -– Diaz says if REITS increase their rents, it’s easier for him to do so as well.
“But most of our revenue management is driven by occupancy,” Diaz said, “We continue to push our rates as long as the demand is there.”
He trains his managers to study the REITS’ rapidly changing rates, and adjust theirs accordingly.
At least one small operator actually likes the large public REITs.
“We like competing with REITs,” said Kevin Cohen, business development manager-Western region for Guardian Storage, which is based in Pittsburgh, PA.
“We are typically a rate leader in all our markets, building state-of-the-art facilities that substantiate higher rates than our competitors, based on physical attributes of the property as well as the service offered.”
Guardian Storage facilities feature climate control, alarms, extensive video surveillance and many services for business tenants. Cohen says those attributes make it easier to justify Guardian Storage’s rates when it competes with REITs. “As a higher-end operator, it’s a positive for us to compete with operators like the public REITs, which are constantly pushing rates,” he said.
Cohen is based in Superior, Colo. Guardian Storage has units in Pittsburgh and Colorado.
Learn from the best
He points out that he works in a cooperative industry, and that Guardian Storage has picked up tips for improvement from REITs at industry trade shows. “Our industry is unique in that the whole industry works together to share information so that everybody can be successful,” he said.
“Many times, the strategies we employ come from the REITs themselves,” said Cohen.