If only we had a fool-proof crystal ball, we could accurately predict what’s ahead for the self-storage industry in 2015. In the absence of that crystal ball, The Storage Facilitator asked several industry players what to watch for this year. Here are four self-storage trends that are on their radar screens.
1. Online leasing
Robert Chiti, president and CEO of self-storage technology provider OpenTech Alliance, said he expects more leases to be signed electronically in 2015.
“As new development starts to ramp up, consumers are going to have even more choices, and they will choose the business that has implemented currently available technology that makes their life easier,” Chiti said.
He added: “We are seeing a steady increase in the amount of consumers that rent units directly from a self-storage website, and we expect that to continue.”
OpenTech offers technology that allows leases to be executed online or via a kiosk. Self-storage management software company SiteLink recently launched an electronic lease feature called eSign. SiteLink says facilities that provide online signing of leases can boost the number of rentals by 40 percent.
Self-storage development will continue in 2015, but it will be controlled and targeted.
Although Tron Jordheim, chief marketing officer at storage operator StorageMart, expects a “good deal” of development this year, he said operators “will be very careful about what and where they are developing.”
Marc Boorstein, principal of MJ Partners Real Estate Services, said “certificate of occupancy” will remain a self-storage development tool in 2015. In such deals, an operator contracts with a developer to build a facility and then buy it once it’s finished.
“Private equity and public companies are committing substantial funds to tie up certificate-of-occupancy deals,” Boorstein said. “They are not a big part of the industry, but one that is evolving as the spread in cap rates has narrowed between them and stabilized assets.”
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Boorstein said several certificate-of-occupancy deals that he has arranged are turning dirt now, and that he’s been meeting with developers around the country to put together similar projects.
Self-storage owner and consultant Marc Goodin said 2015 could be a big year of expansion for existing facilities as well.
“Many facilities built during the ‘slow economy’ three to four years ago will make a significant profit this year for the first time,” Goodin said. “And some of these same facilities will build phase two.”
3. Customer service
Customer service will grow in importance for self-storage operators, according to StorageMart’s Jordheim.
“We see more and more people talk about training and quality control for sales and customer service,” Jordheim said.
Improvement in that area includes building a corporate culture that rewards great customer service, he said.
“As rental rates rise, you have to try harder to get people to come rent from you. When rent was cheap, renting a storage unit wasn’t a big decision,” Jordheim said.
For advice on how to improve customer service at your facility, visit blog.selfstorage.com/self-storage-operations/how-to-improve-customer-service-3235.
Now that consumers are spending more money on self-storage, they’ve become more selective. Furthermore, the rise of social media and online reviews means one bad experience for a customer can create a ripple effect in terms of attracting and retaining tenants.
“In today’s connected social world, everybody who I am connected with will know if I have a good experience at a place, and everyone will know if I have a bad experience,” Jordheim said.
Many storage operators will see the 10-year CMBS loans they took out in 2005 come due this year, meaning 2015 will be big for refinancing activity.
The good news for qualified borrowers is that they’ll have more financing options than they did in 2005, according to Shawn Hill, principal of self-storage lending advisory firm The BSC Group.
“Every type of lender is lending to self-storage, including CMBS, banks, life insurance companies and the Small Business Administration,” Hill said.
For tips on refinancing your facility, visit blog.selfstorage.com/self-storage-financial/advice-on-refinancing-a-self-storage-facility-4277.
Hill expects interest rates to remain attractive, at least for the better part of 2015.
“Maybe toward the end of the year they will start creeping up,” he said.