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The self storage market is hot! But how do you know where you and your facility, or potential facility fit into the market? In this GabFocus session, our experts provide insight on buying, selling, and even adding value to your facility as it is.
Focus: Owners & Investors
Aired: April 8, 2022
If you don't have time to watch the whole Session, here are some of our favorite parts:
We asked our experts: What’s the first thing you look at when evaluating a facility?
"What is important when evaluating a facility is looking at the potential income. The potential being where their revenue is at the moment per the market rate, and then as well as that supply in the market and how likely more supply was coming. What that facility can do, could do, will do, that potential is really important." - Jane Sauls
"The first thing we look at in a deal is the market and where the deal is located. Do I feel comfortable with that market, and I look at the demographics and supply." - Kris Bennett
"Ask yourself, do I want to be in that market and what can I do with this facility?" - Matt Van Horn
Despite the crazy market trends we are seeing in the self storage industry, there is still hope for you to get in (or out)! When buying, our experts all agreed that knowing the market you are entering and also what style of management you want to employ are two key pieces of information to gather. If it is time for you to sell, get your facility in front of as many buyers as possible by calling a broker. They are incredible resources and will know what buyers are looking for in your area. But, it may be time just to stay put, and if so, there are numerous ways you can add value to your facility sooner rather than later!
Gabfocus Sessions are virtual workshops for self storage owners, managers, and operators. Brought to you by the team behind Gabfest: StoragePug and Affordable Storage Guys Management.
Each session features hand-picked industry pros who will dive deep into relevant topics surrounding our industry, share best practices, and explore trends in the market. It's our hope that these sessions help you navigate your self storage business better during these uncertain times.
Want to learn more about self storage? Join us on select Thursdays for Gabfocus.
Our panelists will be happy to answer any questions you have. We hope you enjoyed this Gabfest Session. Talk soon!
“Once your operation is in place, you can become more dynamic with your pricing, but that requires data. You need some method of being able to record the data that you need to know whether your price is in the right place - whether you need to move it up or start giving some concessions.” - Warren Lieberman
“I never want to downplay to what someone else is doing. I'm better than they are, then I'm going to be worth a higher price. That's what value is. If you go out to a restaurant and get really good service, would you go back? Yes! What if it was pricier? You'd still go back because you got better service and a better product.” - Jim Mooney
"It's good to be informed on your competition. I don't want to ignore them, but I don't want to respond too strongly to them either." - Warren Lieberman
"We did a survey of 10,000 facilities on their pricing. We found out that two-thirds of those operators didn't change the price of a single unit of the course of a month." - Warren Lieberman
“Rate increases and value pricing are the number one ways to grow your revenue.” - Jim Mooney
"Tenants in more convenient units tend to be less price sensitive." - Warren Lieberman
"The size of the unit is only one aspect of what people are willing to pay for." - Warren Lieberman
Lease up marketing strategies:
Your average customer value
Find the average stay length of all tenants. Next take your economic occupancy and divide by how many units you have. That will tell you what the average customer pays.
Multiply the average length of stay by what the average customer pays, and that's the average value of a customer.
For example, if a customer stays for 12 months and pays $100 per month, then their value is $1,200.
Your average lead value
Figure out your closing rate (or conversion rate) i.e. how many leads do you turn into tenants? Multiply that by your average customer lifetime value to figure out what your leads are worth.
Pro Tip: see which lead sources are converting the best. It may be that certain sources have a higher conversion rate, so those leads are worth more to you than a source that barely converts.
Typical Lease-up timeline
According to our panelists, it's typical to see a 3-4% increase each month, putting your facility at 36% after the first year, and 72% after the second.
Alternately, you can look at your lease up goals through the lens of your units, aiming for 20 units rented per month.
For Nick and StorageMax, they pro forma their economic occupancy at 85% with their sweet spot at 92%.
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