Section 7 • Utilizing Technology: Analytics
How is it possible to increase your income this much without increasing you occupancy? By retrieving money that is being “left on the table.” The easiest way to do this is to reduce discounts that are
no longer needed. This can increase your income from $500 to $20,000 or more per month. Selecting the correct concession plans can increase your income by $1000 to $2000 a month, and better collection efforts may increase your income by thousands each month. You can also significantly increase you monthly in- come by eliminating employee giveaways and theft. On the other hand, when you have a large number of vacancies in one size, your discounts and concessions will need to be larger—perhaps 12 percent economic spread or more to stimulate leasing.
When the occupancy increases either in a particular size (or
overall) to 90 percent plus, your spread should be 5 percent or less and you should be considering raising your standard rates soon, thus reopening your economic spread. By opening and closing the spread on any given size or on your overall occupancy, you can eliminate money that is being left on the table. So what other things can we learn by data analytics? Exam- ples include: What and how do I set my standard rates for each type and size of units? Based upon the number of units I have of a particular size, what would be the optimum concession plan or discount I should offer to get the unit leased but not give away too much? Will that discount or concession vary during the time of the year?
When the global recession
Chart 7.1 – Area Occupancy and Economic Occupancy (Trailing 12 Months)
100% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% 45%
$65,000 ECONOMIC SPREAD Area Occ.
Eco. Occ. Income
$45,000 A M J J A S 0 N
This chart shows the area occupancy versus the effective occupancy for the past 12 months. The effective occupancy is calculated by dividing the Effective Gross Rental Income (EGRI) by the Potential Gross Rental Income (PGRI)
D J F M Source: © 2014 District Manager
hit in 2008, owners responded by cutting rates through dis- counting or using concessions as their first line of defense against competition. Mike Burnam with StorageMart summarized it best by calling it a “race to the bot- tom.” Chart 7.2 shows the dis- counting that occurred for the entire life of a new property. Notice what happened to dis- counts after January 2010 when computer software was intro- duced at this location to help reduce discounting. For several years, the indus-
try dug itself a deep hole by taking this approach; luckily, we have now started climbing back out. By analyzing the vacancies and discounts currently still in existence, we can quickly spot
Chart 7.2 – Rent Discounts (Entire History)
$14K $12K $10K $8K $6K $4K $2K $0K
MTD Dollars
those tenants who should no longer be getting rent discounts. Why continue to give a discount to a tenant—literally, for years—on a unit size or which you do not have a single vacancy or only a handful left to rent? Hundreds of millions of dollars in
2006 Source: © 2014 District Manager 82 Self-Storage Almanac 2015 2007 2008 2009 2010
income is still being given away in our industry by rent discounts that are not necessary. Some rate-management soft- ware is specifically designed to find ten- ants who are buried among the rest and could have their discounts reduced or eliminated entirely in the next 30 days. This is money being “left on the table,” and almost every facility has some of this income just waiting to be captured. The more sophisticated programs can instantly provide a list of tenants who
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132
