When was the last time you took an in-depth look at your local market and your facility’s competitive position? Would you be prepared to compete against a new facility? In these uncertain economic times, a facility checkup is a crucial exercise to ensure a healthy future for your business.
Be on the lookout for certain symptoms indicating an ailing market. Begin by keeping detailed records of all phone and Internet inquiries from renters, and track how many of them turn into paying customers.
Over several months, you’ll be able to see if the pace is holding steady or if calls and conversions are declining. A downward trend in the percentage of inquiries turning into renters could indicate a serious condition in the market.
Also, review your rental-rate history and note trends following your last rate increase. If you lost customers as a result, determine how long it took to lease up again. Renters becoming more price-sensitive are another indication your market is tightening.
Finally, don’t forget to track your physical and economic occupancies. If you’ve increased rental concessions and incentives to maintain your occupancy then your market could be in for a decline.
Several underlying factors contribute to a declining market, the first of which is today’s unstable economy. The credit crunch and decline in the housing markets have left many families with less discretionary income. The result is fewer first-time renters and also a potential loss of current customers who can no longer afford to rent a storage space. Seasonal changes in occupancy can also be a factor, so be sure to keep good records over the years to note the normal flow of business or any anomalies that might reveal an unusual spike or drop in business.
Also, don’t overlook the possibility that an oversupply of self-storage is affecting your market. Overbuilding is a serious problem in many cities throughout the United States and often has damaging effects on the rest of businesses in the area. Consider how a new facility in an established market area can impact the overall occupancy of the market.