5 Ways to Add Value to Your Self Storage Property
Self storage is attracting institutional commercial real estate investors. According to Real Capital Analytics, “Institutional players accounted for 31% of the volume in the 12 months through Q2 2019, up from an 11% share in the prior 12 months.”
With billions of dollars flooding the self storage industry, competition is stiff. Choosing a location in a desirable market doesn’t always guarantee success for this asset type anymore. Luckily, there are ways for investors to add value to a self storage property that can differentiate the asset in a highly concentrated market.
Personally Assess the Property for Improvements
Nothing will provide you with more insight into how you can add value to a property than physically experiencing it. There may be simple improvements you could make that would make a big difference that you or your onsite team could be overlooking. Look for units that aren’t turning a profit, and find out why.
Walk through your facility and see what repairs need to be made. What can be changed to make the facility perform more efficiently? Some issues inside the property may include lack of climate control, units that are too small, having to climb stairs to a storage unit, or low security.
On the property's exterior, ensure that your drainage system and stormwater plan is optimal. Perhaps you need driveways, more drive-up units, or other ways of maximizing your land usage.
Improve Your Storage Facility’s Security
One of the key decision-makers for customers considering a self storage facility is safety. Renters want to know that their belongings are secure and that they won’t need to worry about them. Some basic services include gated access, improved lighting and on-site management during business hours. Property owners might also install alarm systems and video surveillance for renters who seek a higher level of security at a higher cost per unit.
Today, a key differentiator for self-storage owners is technology. “Savvy self-storage operators are taking advantage of security technology to gain a competitive edge and command a premium price in the marketplace” (insideselfstorage.com). For owners who are considering upgrading their property, becoming more customer centric and focusing on user experience is key. Enabling customers through web and mobile to manage all their storage requirements online and access onsite ultimately increases profits for owners.
Make Your Self Storage Facility Green
Millennials are willing to spend more on environmentally friendly products, housing, and services offered by conscientious businesses. Significantly improving your self-storage property’s sustainability efforts means that you may be able to increase rents. Make it easy for renters to dispose of items in an environmentally safe way by providing properly designated containers. Offer storage pick-up and delivery services along with online agreements and contracts to be more environmentally friendly.
Engaging in these practices may also open you up to a new network of sustainability alliances, memberships, certifications, and green businesses, that expand your marketing opportunities. Depending on the city and state you do business in, there are also tax and green business incentives. Also, implementing more sustainable practices is typically more cost-effective for business operations in the long run.
Tap into Your Customer’s Needs
The best way to add value to your property is to solve problems for your customers. Do some research on local demographics to understand the type of people you really serve. Sometimes your assumptions about your market don’t always align with actual data. When you understand your audience, their concerns, wants, and needs, you can adapt accordingly to positively impact your bottom line.
Create a Brand
We’ve come a long way from traditional marketing such as a street sign or a newspaper ad being a sufficient marketing strategy. Today’s customer wants more than a product or service. They want an experience. When a customer is looking for a self-storage facility, they first go online. Provide them with a strong web presence that allows them to go on virtual tours, demonstrates how the facility can meet their needs, and makes the process of renting and moving in as easy as possible.
It is also important to many customers that the physical property meets their expectations. The condition and appearance of the building, signage, and the customer service can influence a customer’s trust. Your brand needs to be consistent across the physical and digital customer experience. Establish an identity people will easily remember and trust.
What have you done to add value to your self-storage property? Join the conversation on Twitter and let us know!
PLUM Lending is a full service commercial real estate lender that provides creative structured finance solutions for all property types. We specialize in the capitalization of middle-market commercial real estate properties nationwide with a focus on secondary markets. We provide borrowers with capital through our various direct lending programs as well as access to construction financing, mezzanine capital, and preferred and join-venture equity investments.
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