Over the last few years, the real estate investment trusts (REITs)—CubeSmart, Extra Space Storage Inc., Public Storage Inc. and Sovran Self-Storage Inc.—have gone on an impressive acquisition streak. With a perfect storm of low interest rates, a solid inventory of properties available for purchase, and the inability of the financial sector to provide acceptable construction loans for self-storage, the market has been ripe for consolidation.
According to an infographic recently released by Sparefoot, an online self-storage marketplace and provider of Web-marketing tools, the top five self-storage companies now control 4,850 facilities. If you compete in a populated metropolitan statistical area (MSA) such as Dallas, Houston, Los Angeles, Orlando or Salt Lake City, it may seem as though all 4,850 of those are in your individual market. I know self-storage owners who have upward from eight REIT-owned facilities located within a three-mile radius of their facility.
Although the numbers may seem overwhelming, are they really? As independent operators, do you look at the REITs differently because you know how large their operations have become? Do your customers really know the difference, or care that one facility is part of a national chain and the other is a locally owned with a single location on Main Street?
Even with 4,850 facilities, the REITs only control about 1 percent of the entire self-storage market. As former Speaker of the House Tip O’Neill once said, “All politics is local.” On the same note, all self-storage is local as well. Here are three ways to compete, not only against REITs, but all of the competitors in your market.
Just because you don’t have a $200,000 marketing budget, doesn’t mean you can’t create successful marketing campaigns. Money for shiny toys can be nice, but creativity and tracking can be better. There are plenty of different ways to market your facility including:
- A referrals program. A solid referral program will help the customers who are already in love with your services to spread that love to their friends.
- A website. It’s time to get on the Internet. If my father can learn to use the Web, all of your customers can as well. You can have a solid and effective website without spending your entire marketing budget. The costs will vary, but if you plan to spend $2,000 to $3,000 on the design of your website and $200 to $500 per month on the optimization, you should be fine.
- Social media. Use social media to your advantage. It costs nothing to create a Facebook, Twitter and Google+ account.
- Print. Consider newspapers, Yellow Pages and local papers only if you’re completely committed to tracking these items. These types of advertising are hit and miss in different markets.
- Direct mail. According to Borrell Associates Inc., a research and consulting firm that tracks local advertising, spending on political direct mail in 2012 will top $288 million, an increase of 11.6 percent from 2008. If politicians are spending more on direct mail, you should be looking at it as well. The art of politics is getting and keeping a person’s attention long enough to get a message to register. Create some direct-mail marketing that’s fun and catchy and see what happens.