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Unless you're buying an existing facility with no plans for updates or expansions, then getting into the industry means some amount of construction. This is especially true for completely new builds. Thankfully, our expert panelists have the experienced take you're looking for when it comes to self storage construction. Listen in and learn about hurdles you'll face, timelines, and how important it is to choose the right team.
Focus: Owners & Operators
Aired: July 28, 2022
If you don't have time to watch the whole Session, here are some of our favorite parts:
We asked our experts: What are the biggest blindspots operators have when starting a construction project?
Yea, totally agree. It's a time and cost equation. So go in eyes wide open. Understand nothing is perfect. Construction has its hurdles... Construction is not a quick process. From feasibility to door opening, it is not a fast process. And a lot of those hurdles are put in by local municipalities." - Nigel Kreft
Overall cost, time on the project, delays, planning to get it right. Those are all—generally, if you're new in the industry, those are some blinds spots you'll see." - Jeremy Rollwitz
Construction can be pricey and time-consuming. You might think that you've budgeted time and money properly, but you should always expect unforeseen delays and costs. Put together a great team of people with experience in the self storage industry because they'll be able to give you better estimates and keep you as close to your target budget and timeline as possible.
And please, get a feasibility study!
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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