Storage Demand Study | PugTalk

Storage Demand Study

The storage industry is always in flux.

Rates change, markets change, and customer expectations change. So where are we now? In this session, we were joined by Lynn Sykes, Sr. VP of Operations at Storage Asset Management, as she reviewed and broke down storage demand and customer trends.

Featured Speakers: Tommy Nguyen & Lynn Sykes

Aired: October 18, 2023
Duration: 1:23:45

Overview

If you don't have time to watch the whole session, here are some of our favorite parts:

At 6:10, Lynn introduces the demand study and gives background about its origin.
8:00, Lynn discusses the overall trends of storage demand over the years.
Starting at 12:10, Lynn highlights the current industry outlook including street rates, occupancy, length of stay, and construction.
At 14:50, Lynn covers the importance of going back to the basics, including how you handle leads.
21:00, an example is shared about how some REITs are handling rate increases for existing customers.
Around 24:00, Lynn discusses the construction pipeline trends.
At 27:10, Lynn highlights a small portion of the study that digs into customer length of stay.
32:40, Lynn starts digging into the importance of street visibility and signage.
Starting at 34:45, Lynn covers the importance of your online presence and optimizing for mobile devices.
Around 39:25, Lynn talks about why the first impression often matters the most.
45:40, Lynn discusses the percentage of residential vs. business storage customers.
At 46:15, Lynn talks about how the percentage of non-cash and non-check payments are continuing to grow.
Starting around 50:10, Lynn digs into the amenities that customers actually want and what they will pay extra for.
56:50, Lynn highlights the percentage of renters who actually have extra space for storage at home.
At 57:35, Lynn notes the household income of renters by generation.
58:20, Lynn discusses why trends for Gen Z are actually a reason for optimism when it comes to storage demand.
Starting at 1:01:40, Lynn highlights the most valued features and amenities of Gen Z.
At 1:06:00, Lynn covers where you can get the demand study for yourself.
1:08:20, Lynn discusses the strategy of buying occupancy and how effective it is.
Around 1:16:00, Lynn talks about other ways to increase occupancy like grassroots marketing and referral programs.

Questions Answered in this Session

Where can I get the demand study?
What is the current outlook for demand in the industry?
How can I handle rate increases with existing customers?
What can I learn from the length of stay of my customers?
How important is street visibility and signage?
Does my website need to be optimized for mobile?
What is the percentage of residential vs. business storage customers?
What are amenities that customers will pay extra for?
What are the most important amenities of Gen Z?
How effective is the strategy of buying occupancy?
How else can I increase my occupancy?

Carol Mixon-Krendl

SkilCheck

Website: https://www.skilcheck.com/
Email: carol@skilcheck.com

Hailey Teal

Jenkins Organization

Website: https://www.jenkinsorg.com/
Email: hailey@jenkinsorg.com

Resources from this session

Awesome Quotes

“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

Highlights

Foundational marketing strategies to have in place - whether leasing up or stabilized:

Website
Set up listings (Yelp, Google My Business, Apple Maps)
Social Media
Establish Local Partnerships

Lease up marketing strategies:

Lead Generating Strategies (like digital ads)
Aggregators (Sparefoot, Storagefront, etc.)
Awareness Campaigns (like billboards, flyers, and sponsorships)

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%.