By Ben Vestal
If you’ve read the latest news coming out of the self-storage industry, it’s apparent that the fundamentals of the self-storage business are sound. With all four of the major self-storage real estate investment trusts posting positive growth numbers over the same quarter this past year, it’s clear the industry is poised to move forward.
Based on my conversations with self-storage owners, there are three main topics on their minds as we close out 2011:
- Operations: What is driving revenue and how
- Investor activity: Who is buying and how they are valuing properties
- Capital markets: The kinds of loans available
These three topics are influencing the opportunities in today’s market whether you’re a buyer or seller. Let’s take a look at each.
Recent industry chatter has been focused on revenue management, search-engine optimization, call-center conversion rates and rebranding, just to name a few popular topics. As the self-storage industry has matured over the last decade, we’ve seen an accelerated sophistication with regard to facility operation. This has led to increased revenue growth in recent years, even when the market has struggled. The more sophisticated owners are able to squeeze out 1 percent to 3 percent more in revenue than small, less experienced operators.
We have come to the realization that the Yellow Pages is not slowly going away; it is, for all practical purposes, gone and not coming back. The Internet is now the focus of all major storage operators, with every move-in and click on the Internet tracked to ensure the investment of each advertizing dollar is maximized.
Call-center conversion rates are also rising faster than anyone ever expected, and it does appear that if you train someone to do a specific job and he does it over and over again, he’ll become better at closing the sale, even if he’s sitting in Phoenix and the property is in Boston.
Third-party management is here to stay, and we will see several of the small to mid-sized operators joining forces with the larger, more sophisticated operators in the coming years. This will allow the smaller investors to gain access to tools needed to grow their revenue and, ultimately, their bottom line as this once niche market develops in to a tighter and more competitive mainstream market.