Self-Storage Facility Operators Discuss $1 Deals: Good or Bad?
|Copyright 2014 by Virgo Publishing.|
|By: John Carlisle|
|Posted on: 09/07/2010|
The marquee reads, “$1 per day for any size unit.” Traffic starts to line up outside the advertising self-storage facility with tenants who want to take advantage of the cut rate. Suddenly, competing facilities in the area start to get nervous. How in the world can this facility make money by renting all of its units, even big units such as 10-by-25 spaces, for only $1 a day? And most importantly, how will the others compete?
Self-Storage Talk, the official online forum of Inside Self-Storage, has been hosting an ongoing discussion on the advantages and disadvantages of dollar deals, whether they be $1 a day (as in the example above) or $1 for the first month of a lease. The thread-starter, who is a competitor of a facility offering the dollar-a-day deal, was at first very concerned, but then she and her husband mystery-shopped the facility.
Apparently, several restrictions applied to the offer, including the fact that the dollar-a-day price was only for the first month; a different rate existed thereafter. But that discovery assuaged only the concerns about this particular discount. It still doesn't solve the industry-wide problem that many facilities, especially those from larger chains, can afford to offer dirt-cheap rent (at least at first) to reel in tenants with the vast majority of others left struggling to compete.
Member annek offered this bit of advice to other members who are facing sinfully low rates in their market: “Remember, not everyone is an economic buyer. Not everyone cares about a $1 special. What have you got that they don't? Even if your occupancy is lower than you want, do you have to cave (in)?” She also proposed offering matching deals on a case-by-case basis instead of offering them to everyone, which several other members agreed to.
Another member posted a valid concern: “I would be afraid of trying the $1 deal because of getting people's garbage and things that need to go to the landfill. Could be a cheap way to dump.”
So far, no one has posted in defense of the $1 deals, but the discussion is still live and active at Self-Storage Talk. You can post a response if you are a registered member. If you're not registered, you can do so quickly, easily and for free at www.selfstoragetalk.com/register.php.