SURVIVAL GUIDE
Survival Guide For Operations
Maximizing Revenue And Efficiency In The Self-Storage Industry By Alexander Harris
W
ith a new year ahead, it’s an opportune mo- ment for self- storage businesses to reca- librate strategies and fortify operations in the wake of the shifting market landscape. The current economic climate, rife with high infla- tion and interest rates, has steered the self-storage industry into choppy waters. Rates have seen a down- turn from pandemic highs, while occupancy levels have staggered due to a sluggish housing market, making growth a daunting challenge for operators. After a year of decline, record pricing gains made during the pandemic have virtually disappeared. Reservation data from the Storable Marketplace showed the average monthly self-storage rate was $86.71 in November 2023, a more than 17 percent decrease from the same month a year ago. That is also the lowest monthly average storage rate since June of 2020, when the national monthly rate was $86.02. Amidst these winds of uncertainty, self-storage opera- tors have two primary pillars with which to defend their business and pursue NOI growth: increasing efficiency and maximizing revenue per tenant.
Elevating Revenue Per Tenant Strategy In the current climate of declining rates, the imperative for self-storage operators is not just retaining tenants but maximizing the value derived from each tenancy. Moderate price increases over time can help achieve this goal, so long as the operator is careful not to push increases so aggressively that it increases the rate of churn. • Strategic Revenue Management: As street rates wither from their pandemic highs, the implementation of robust revenue management practices becomes indispensable. This strategy allows for steady adjustments to rental rates, not only to meet market demands but also to opti- mize income. By intelligently and dynamically managing rates, operators can strike a balance between competi- tive pricing and maximizing returns from existing tenants.
Spring 2024 39
• Insurance Optimization: Beyond being a safeguard, tenant insurance holds untapped potential as an addi- tional source of line item revenue. By offering compre- hensive and tailored insurance packages, self-storage businesses can enhance tenant satisfaction and protect their business from reputational damage. It’s pivotal to reassess and fortify existing insurance programs to ensure you are meeting your goals. Leveraging auto- mated solutions can remarkably boost enrollment rates without placing additional burdens on staff.
• Expanding Revenue Streams: Consider the untapped potential within your existing units; converting spaces into specialized offerings, like climate-controlled wine storage or business centers, can diversify revenue streams significantly. These ventures not only cater to niche markets but also present opportunities to extract premium rates, thereby amplifying overall revenue.
• Value- Added Services: Augment tenant offerings with value-added services. This could encompass establishing partnerships with moving companies, providing packing supplies, or even offering concierge services, thereby enhancing tenant experience while generating supple- mentary revenue.
By using these diverse approaches to “average up” the total revenue generated from each tenant, self-storage businesses can smartly offset the impact of reduced demand and frosty pricing.
Maximizing Efficiency
Efficiency is doing things in a smart way that saves time, money, or energy while still getting results. It’s about finding the best and quickest method to accomplish some- thing without wasting resources.
During good times, businesses often forget about being
efficient. They’re too focused on growing and expanding, not paying attention to how they could do things better. When things are going well and there’s plenty of resources, there’s a feeling that efficiency isn’t important.
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
