Best Practices To Stay On Track
Self-storage owners dream of the moment they conquer their lease-up timeframe. The proper schematics for a lease-up timeframe used to be so reliable 20 years ago. Today the market is inundated with competition and ripe with change, making it incredibly difficult to pinpoint a proper lease-up schedule. It’s so difficult that a number of industry experts are unwilling to approach the subject in a roundabout manner. In fact, it’s so integral to a successful business strategy that a few industry leaders neglected to share information about a successful lease-up strategy for this article.
Whether you are the proud owner of a revamped self-storage facility or you are looking for coastal expansion, your investors are going to want to feel comfortable in your lease-up strategy. Applying a broad spectrum schedule to a nationwide chain will undoubtedly lead to several failed ventures, and it’s a huge caution for someone looking to expand outward into new territories. Understanding the proper lease-up schedule requires a deeper knowledge of a number of factors. Experts such as Ken Nitzberg would say that in order to properly follow a lease-up schedule, it requires at the very least a knowledge of the market, the competition, the marketing budget, and the company’s online presence.
Everything blends together in such a way that it is important to know how the industry works before setting a concrete lease-up timeframe. Robert Francis of The Heron Group agrees. “Your specific market conditions are what control the expected rate of fill for the site,” he says.
Identifying Customers
It takes a lot of patience and determination to identify the customer base. Self-storage isn’t a division of territories, customers are not blocked in sections like pizza delivery zones, and your customers are certainly not limiting themselves to a radius based on their home address. “What defines a market is generally closer to drive times and convenience to prospective customers,” says Francis. Customers may be considering a storage facility that is on their way home from work or outside of the area they live because of preference. In other words, consider broadening your definition of what you consider your local market to outside of residential neighborhoods within a radial distance from the property.
Francis continues, “Self-storage is a micro-market business, and we are not a destination point. If we were developing apartments we could entice customers by having lower rates.” This may be one of the biggest challenges. The way to stay on track for a lease-up schedule begins by connecting with the local market.
Rivals For Revenue
Competition is arguably the biggest obstacle in earning the appropriate amount of revenue during the schedule. A saturated marketplace dilutes the available customer pool. Inexperienced or desperate self-storage properties drop their prices and have an immediate impact on a quarter’s performance. Seasoned properties are likely to earn more through their steadier income and are likelier to hold a larger marketing and advertising budget. Or they have a stronger foothold in the community. Understand how to identify your property first.
“There were plenty of sites developed that were in fringe or ‘green’ markets,” says Francis. “These sites tend to fill much more slowly (if at all) and are also subject to the last in first out phenomena when the markets weaken or new products open.” Since competition is such a predominant factor, learn what sort of properties are in the market, and keep steady on the path of filling out occupancy through solid revenue management. A lease-up schedule is more often derailed by falling behind the competitor in this aspect. Francis says, “The best rule of thumb that I use in projecting fill rates is one developed by Dean Jernigan years ago. ‘In most markets, stabilization will require three marketing seasons.’” The more effective marketing campaigns and sales grinding—and especially proper revenue management—will speed along the lease-up. Francis is adamant that this rule of thumb needs to be weighed against the market variables along with a few key questions:
- Is your market expanding or stagnant? Specifically, determine if the population is expected to increase or stay static.
- What is your market’s definition of “full”? Determine if your competitors are truly at full occupancy and compare this to the available unit types on their website.
- Are you able to accept delivery of the site in a realistic manner? Avoid if possible an overzealous timeline.
Best Practices
The best approach to maintaining a reliable lease-up timeframe is to educate yourself on how your market operates and how your property fits into the needs of the consumer. This keeps the lease-up strategy on its intended course, but an enthusiastic self-storage operator looking to expedite their market’s typical lease-up timeframe will inevitably want to exhaust their marketing resources and maximize their online presence.
Finally, Francis strongly recommends a qualified site manager to help maintain good business. “The one thing that is true from market to market is that quality managers can significantly improve the site’s performance,” he says. “While it is true that many companies use services to answer the phone at some point in the process, most customers enter the office. How they are treated and the impression the manager makes on them sets the stage for their entire occupancy. Find the personality type for your site. You are in fill up and an aggressive sales oriented manager is what you need. Taking a proactive stance on advance sales and reservations, putting a friendly face in front of prospects, and never losing the attitude than ‘nobody walks’ will set you apart from the rest of the pack.”
Nitzberg feels that understanding the marketing budget is an integral piece of the lease-up puzzle. He feels so strongly that there are instances when a marketing budget can overpower some of the smaller market variables: still tied into a self-storage operator’s knowledge of their community and competition. There are self-storage companies with much deeper pockets who take advantage of their resources and market themselves everywhere. This all drives business to a property, away from the competitor, and helps control an intended lease-up timeframe. Think of some of the faster growing self-storage brands in your market, and you’ll be quick to realize the ways in which they market to the community. This kind of production can ease an investor greatly whether or not the lease-up timeframe is rapid or not.
Since most self-storage operators are working with a smaller marketing budget, there are several alternatives to throwing money at the problem. Francis recommends little things like placing up a “Coming Soon” sign on the lot as soon as possible, updating the sign as it gets closer to the opening day. He also recommends becoming involved in the local or small business communities such as the local chamber of commerce or similar “business social groups”. Several experts again refrain from operating at a discount in order to drive in business as this can backfire in the long term if you reach full occupancy with unprofitable low rates.
Nitzberg says that proper marketing will help control business flow and help maintain a strong, competitive presence, but it’s just as much about managing an online presence. Imagine for a moment a web page with your self-storage facilities address, telephone number, and email. It has a picture of the front and a tiny blurb about your company’s history or a brief bio. If this describes your web page, then your website is in desperate need of an overhaul. A proper website is so integral to controlling the moving parts that keep a lease-up strategy in place.
“The industry is sometimes far behind the times when it comes to SEO and understanding the importance of online presence,” says Nitzberg. Search Engine Optimization is a general term used to rank a website’s place in a search result. Take for example a web search for “(your city)+self storage+best”. Search this right now. If your website isn’t anywhere near the top few pages of Google or Bing, then it is time to consider utilizing the services of someone who rewrites web content. Consumers can be impatient especially when it comes to finding storage units. Help them find you by updating your website.
“Don’t be afraid to change and modify your plan,” says Francis. Many experts agree that a lease-up strategy should remain fluid if you plan on being successful in a timely manner. No loss of business should be attributed to a self-storage operator’s inability to adapt. Remain aggressive in sales, know the local customer base, stay vigilant in marketing campaigns, and strengthen the property’s online presence. These are today’s best ways at executing a successful and efficient lease-up strategy.
Khris Golder is a freelance writer based in Phoenix, Arizona.