The song “Tomorrow” from the musical Annie is a fitting theme song for the situation many self-storage owners are in right now. Several factors are contributing to the negative national economy: rising unemployment, the mortgage crisis and abundance of foreclosures, home-value meltdowns, and inflated oil/gasoline prices. Hopefully, your micro-market is still chugging along and operating results have remained solid. Unfortunately, that’s not the case for many facilities with occupancies off 20 percent or more from historical levels.
During my 20-plus years in this industry, I have been guilty of being an optimist as well as an idealist regarding the future of self-storage. Despite all the doom and gloom, I still strongly believe self-storage is one of the finest entrepreneurial opportunities available in the United States and world. The new normal may no longer be 95 percent occupancies with 5 percent to 10 percent annual rent increases, but our investment returns will improve and our industry will remain strong.
Yes, we may have to adjust expectations and budgets, but in the end, we still enjoy one of the best investment returns in all of real estate. If you view your site as a retail business, you’re probably still benefiting from the best gross revenue-to-payroll ratio of any business, except maybe loan sharking.
My encouragement to “hang on ’til tomorrow” comes as a challenge to owners and managers alike. The mantra for marketing is no longer “ready, aim, fire!” Instead, it must be, “ready, aim, fire, review the results, re-aim and fire again.” Honestly ask yourself:
- Why don’t all my employees have business cards?
- Why have I been running the same Yellow Pages ad for the last four years?
- Why has the brochure (if you have one at all) been reduced to a black-and-white copy of the color brochure printed for our grand opening?
Things will improve. Telephone volume will build. Occupancies will increase. Rates will rise. Tomorrow will come. However, make sure when it does, you have done everything necessary to be ready to rumble.