Self Storage Revenue Management
Self storage customers move quickly. Are you taking the necessary steps to meet their immediate need and effectively manage your property? You may have a hard and fast goal of reaching – and keeping – 100 percent occupancy. If this is your focus, and you’ve reached stabilization of at least 85 percent, you’re missing a realistic opportunity to increase your revenue.
Self storage revenue management is more than just increasing rates. It takes a comprehensive view of local competition, pricing, and communication strategy. When coupled with a proven marketing platform, there is effective dial adjustment on every unit type and increased NOI. This can be your new overall strategy to better manage potential and actual revenue.
Ready to learn more? First, take a close look at your local competition. Depending on how competitive self storage is in your area, you should review all properties nearby. To effectively sell your units, you need to know where you rank and what makes it distinctive. Do a Google Maps search for self storage and then identify a three-to-five mile radius around your facility. You can start by visiting each property’s website, but you may also need to visit in person. Take a survey of each location to record the following information, as well as anything else that is relevant to your business or area.
Property Information: Total square footage, number of units, unit types, security, access hours, office hours
Unit rates: Online rates vs street rates
Special units or parking spaces: Wine storage, RV parking, boat parking
Moving: Truck rental or moving supplies for purchase
On- or off-site management: What’s the most efficient way to reach staff?
Facility construction materials: Concrete, metal, or wood
Specialty units: Climate-controlled units?
Presence: Does the facility have a website or other online presence?
Dialed In Pricing Adjustments
Knowing your competition well allows you to confidently evaluate your pricing strategy. If you’re not comfortable with the idea of raising rates, or worry that you will lose business, remember that it is actually the norm. The most successful self storage companies in the country apply revenue management to their bottom line.
There are two common rent increase approaches. The first is to increase rent up to seven percent as often as every nine months. The second is to increase up to six percent, first at the six-month mark, and then again every 12 months. There are several other factors that play into raising rents. Are you planning site improvements, such as advanced access gate, climate-controlled units, or CCTV? Each of these, and many more improvements, can be the proof or reason for a timely rent increase. Many properties also change prices during their busy season – summer and/or winter.
Online vs. Street Pricing
Another thing to consider is whether you want to offer different prices online versus street. Customers shopping online have time to research and consider many facilities. They often are more focused on price than customers who walk-in or even call. If a customer visits your office asking to lease a unit immediately, there is far less pressure to meet a competitive price point. This customer needs the unit now, and is driven by location, property amenities, or simply time.
A note about backlash: many self storage operators – and business owners in general – hesitate to increase rents due to fear of customer backlash. Strong opposition to regular increases are actually quite uncommon. You may have a few customer complaints or frustrated phone calls, but few long-term customers will move as a result. Make sure that your staff are up-to-date on price increases, as well as any reason or schedule behind them.
Redefine Stabilization and Occupancy Goals
Give yourself the freedom to accept a new occupancy goal: work toward 100 percent, but never actually get there. Once you reach stabilization at 85 percent, you can confidently adjust your occupancy and rate dials. Allow dials to balance out while increasing revenue. An important step in revenue management is to not just evaluate your overall occupancy, but individual unit types, as well. If your 10×20 unit occupancy is on the rise, you need to raise your rates. Then, if unit vacancy increases, lower your rates.
Putting it All Together: Revenue Management and Digital Advertising
At G5, we know that the sum is greater than its parts. That’s why we partner with self storage owners and operators to work beyond increased brand awareness and occupancy. We utilize industry-specific expertise to build a digital advertising campaign towards your stabilization and revenue management goals.
Schedule a demo to learn more about G5’s innovative products and how we can assist you in your self storage revenue management strategy.