Rent the Space! Why Empty Self-Storage Units Are an Expensive Proposition

By Bob Copper Comments
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I don’t have a lot of hard and fast rules about the self-storage business, but I do have a few rules of thumb that I’ve found useful when it comes to successful facility operation. One of the most effective is for managers to have a higher sense of urgency about renting space.

Years ago I worked as a district manager for one of the real estate investment trusts and was assigned a territory of underperforming facilities. The locations were beautiful, multi-story sites with large retail offices and professional signage but lower-than-expected occupancy. After about three months of working with the managers, one of them said to me, "You’re the first person who has ever told us our main job is to rent space." My response was, "Really? What else do you do here?"

It turned out the managers in this territory had been given an ever-changing list of priorities communicated by their supervisor: Keep the facility clean! Sell more boxes! Increase your insurance percentages! Lower your past-dues! Rent more trucks! While all of these are important, none have anything to do with renting space.

To reverse course, we refocused their efforts on occupancy. I told them, “You have to rent space or we don’t need you to be here.” We had to create a sense of urgency about the critical importance of renting units. Several months later, those facilities were experiencing healthy occupancy gains, and I received a bonus check for a billion or gazillion dollars, or maybe it was an Applebee’s gift card.

The point? If you want to increase occupancy, you have to rent more units. To rent more units, you have to create a sense of urgency about renting space. You have to develop a “drop everything” mentality as it relates to potential customers and realize that every lead matters. If managers get only one or two chances each day to rent a space, then how they handle those opportunities is critical.

Lost Opportunity Has a Price

You must also communicate to your managers the high cost of not renting space. I find very few have any idea about the expenses involved in creating rental leads and the revenue lost when they fail to convert those leads into rentals. Not renting space is expensive!

First, consider the costs of generating the leads. Have you ever calculated what each phone call, walk-in or Web lead costs in marketing expenses? Do you know which of your marketing efforts are the most effective? Which have the highest return on investment? If you haven’t, you should, and you need to share this information with your managers.

Self-storage staff should understand that when the phone rings, money was spent to make that happen. Marketing dollars are spent to generate walk-in traffic, and each month, money is invested in various forms to gather more Internet leads. Those things don’t happen by accident! The money spent to generate storage leads is lost forever if a potential customer  isn’t converted to a paying tenant. And, by the way, if you’re not investing in quality sales training for your managers, the cost of lost opportunity is even higher.

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