Whether you’re a seasoned self-storage owner with decades of development experience or someone looking to build and operate your first facility, this article applies to you. It’s about setting up a new facility up for success by planning for marketing from the very beginning, before the doors are even open.
The self-storage industry is comprised of many knowledgeable, sometimes brilliant developers and investors who can recite entire books of financial terms and strategies with their eyes closed. They have an eye for excellent properties and can find the best financing, negotiate a sweet deal, and carefully manage the construction process. But once they receive their certificate of occupancy, their momentum comes to a screeching halt.
Because self-storage is such a fantastic real estate investment, many operators treat the business as if all the work happens up front, assuming the rest will fall into place. But we’re in a completely new market today, facing stiff competition, consumers with savvy, and an economy that has everybody holding onto their wallets. After you spend all that energy financing and building a facility, customers are not going to just beat down your door, no matter how nice it is.
To improve your occupancy, customer value and efficiency, you need a smart, strategic marketing plan from the very start. That means adding marketing into the initial financing and budget.
Two Case Studies
As an investment, marketing is every bit as important as the land on which you build. When you sell your facility, potential buyers are going to look at net operating income (NOI) to determine what they’re willing to pay. A second-rate facility on a sub-par piece of land but with good NOI will fetch a higher price than a state-of-the-art facility on the best corner in town with low NOI.
My friend, your income isn’t coming from fancy roll-up doors or meticulous landscaping. Customers are your sole source of revenue. They pay for rent, supplies, insurance and whatever else you decide to sell. So, acquiring customers is something that deserves a good chunk of your focus and cash.
The biggest mistake I see people make when they finance their self-storage investment is failing to allot enough money for marketing. This one function will generate your income and determine the value of your asset. To illustrate my point, I’ll share two real case studies. To protect their identity, we’ll refer to them as Operator A (OA) and Operator B (OB).
OA is a fantastic person and somebody I’d trust to develop my own facility. He builds great properties on excellent sites―maybe not “Facility of the Year” properties, but nice for their respective markets. He started in the storage business 15 years ago when marketing meant a nice marquee sign and a decent Yellow Pages ad, so he has little to nothing to spend on marketing after a facility is complete.