The Riddle of 'Location'

By Harley Rolfe

The buzz thesedays is playing Q & A--you give the answer, then guess the question. Ready? Here's theanswer: Location, location, location.

I know, you've heard that one, but an old adage applies here: "You have to ask theright question to get the right answer." What's the right question? "What is agood location for a self-storage facility, and will it stay 'good' for the useful life ofthe facility?" What other dimensions of location might there be?

If things are going well, it's probably because of the location. If things aren't goingwell, it may be for the same reason. Operators tout that their success is due to a uniquefeature of their facility. They certify that it will be hard to duplicate, offer rationaleabout why the site works and believe that, in all the talk of competition, location willcarry the day. Let's take a closer look.

The Whole Truth

Self-Storage is a retail operation, so the most common location idiom for that businessis a high-traffic retail-style model. Why do so many off-the-beaten-path facilities do sowell? That's a riddle. Maybe the retail model isn't totally right for self-storage.Marketers are always trying to unravel their markets, then form and prove theories orinsights on why they are behaving in certain ways. That's how you discover niches.

The usual retail-store prospect's interest centers on the goodies at the store. Thegoods are the focus of the prospect's activity--the self-storage locker is not. The tenantinterest in the unit is passive. The only thing that happens for the user is that timepasses while other things occur. Thus, the acceptability of a/the location relates to theother location, the one where the contents are destined (or perhaps where theyoriginated). That other location controls the value for any given self-storage site.

Different Strokes

OK, so where is the "good" location, then? It varies with the segment. Forthe lawyer, the "good" location is that nearest to his office; for the personmoving to a new residence, either the present or the new location; for the distributor,either the most convenient location to the interstate or the center of the distributionroutes; for a contractor, close to his job site, etc. I'm emphasizing the significance ofsegments because the answer to what each tenant values is wrapped up in what he's up to,i.e., his use, business, problem....

How can an out-of-the-way location be a good thing? Security is an ever-present elementchoosing a facility. We install surveillance cameras, imposing fences, coded gates,on-site managers--all aimed at giving signs of our concern for tenant-property safety.High-visibility locations have a security flaw. They facilitate vandals committing theirdrive-by crime. Locations on side or dead-end streets, however... Well, out of sight, outof mind. So, it is certainly possible for a by-way location to do the job.

Keep in mind that a good retail location is actually a form of media that announces thefacility to the thousands of passersby. A by-way location must be promoted, along withreminders of its virtues. That gives you a chance to use one of the most effective salesapproaches--featuring an apparent sales weakness. Sound strange? It's daring, but it workslike a charm. It dumfounds your competition (who believe that a highway is the only way)and instantly disarms what is "bad" about your facility by aggressively showingthe positives of a by-way location.

Magic?

There is one self-storage development out there that makes the significance of locationdisappear. Magic? No. Containers. Location is important because the tenant must travel tothe storage site. What if he never needs to go there? For those segments where the use ofcontainers will work (residential moves, for instance) the storage location site is oflittle consequence. The client doesn't know or care as long as it's safe and the goodsreappear at the destination on time. This extends the useful range of the facility from acouple of miles to whatever distance is practical for trucks to deliver containers. Thisis one to watch.

For the Ages

Another condition of the location picture is the effect of time. Your facility will bephysically fit for 25 to 30 years. The passage of time can assail assumptions thatpertained initially. Where the facility once served a bedroom community, now developmentchanges it to commercial or even industrial environment. Yellow Pages content must berevamped, other messages and media need re-direction--all because the changing characterof the area has recast the mix of uses that a location should serve. On-going surveys ofthe types of applications to which the facility is being applied will reveal these shiftsand trigger management to take note of evolution. It is no fun to see the income beingthreatened for a facility in good physical condition because management is oblivious toshifts in the neighborhood.

One day an operator will want to sell. Appraisers accord location a lot of weight.Abstract evaluations of facility value (traffic counts, capped income, highest and bestuse, comparable sales, etc.) may work for banks and financial people, but these methodsare backward looking. A facility buyer only looks to the future and must believe that hewill be able to sustain and improve net-operating income. He uses any unknowns to discounta facility price. The fewer the unknowns, the less basis for haggling. It will help if thecurrent owner has methods in place that show how he determines and regularly calibrateshis location to the evolving character of the market.

Take Me to Your Leader

So far, we've been talking about the location of the facility. We need to be curiousabout the location of the decision-maker, also. That's the most important person in themarketer's life. He may or may not be located in the usual service area. My experienceindicates that personal segment decisions get made locally, while those juicy commercialones happen all over the place. This is especially telling in larger communities. Mediachoices are controlled by the location of decision-makers. Thus, we need to see where theycall home.

Do an examination of your tenant addresses as they appear on the lease. Inexpensivecomputer programs can do that. You input the addresses of tenants, which then pop upgraphically as dots on an area map. Separate them by segment, then inquire of the varioustenant groups the use to which they are putting the unit. Once you know how your locationworks for each segment, you can compose a trenchant message to each kind of user. Existingfacilities have a big advantage in that myriad decision-makers--past and present--havealready made their evaluation and are telling you (by their presence) that your locationworks.

Location is the one thing the operator can never change. But he can adjust the way hepresents his site to the emerging activity around him. He needs also to be conscious ofthe chance that those decision-makers he needs to reach are not located in his servicearea.

Missed some previous issues? Check the Web site at www.hardnosed.com, which has been modified to includea search engine. It permits you to locate an expanded discussion of certain terms orconcepts as they appeared in the original nine-part series.

Harley Rolfe is a semi-retired marketing specialist whose career includedexecutive-level marketing positions with General Electric and AT&T. He also ownedlodging and office facilities for more than 20 years. Mr. Rolfe holds a bachelor's degreein economics from Wabash College and a master's degree in business administration from theUniversity of Indiana. He can be reached at his home in Nampa, Idaho, at (208) 463-9039.Further information can also be found in Mr. Harley's book Hard-Nosed Marketing forSelf-Storage.