One of the most pressing items in the day-to-day task list of a self-storage owner, operator or investor is increasing facility revenue or, more important, net operating income (NOI). The industry has recovered well from the economic downturn, and the financial situation for most facilities has improved dramatically. During the recession, we were forced to cut costs to operate. If you haven’t started already, it’s time to begin focusing on the revenue side of that equation.
What is revenue management? We often think of it as just increasing rates, but it’s more than that. Simply put, it’s an overall strategy to most effectively manage potential and actual revenue and maximize return. Competition review, pricing and staff participation are all part of this intricate art.
Knowing what your competitors are offering is a basis for revenue management. It’s hard to manage or project revenue when you’re blind to the status of your market. You can be the highest-priced facility in any area, but there’s a limit, so knowing what other facilities are charging is important. To sell your product, you need to know what makes it distinctive. This is your unique selling proposition, or USP. You also need to know who your competitors are and what they’re charging.
So who are your competitors? The standard market radius used to be about five miles. However, with new self-storage development, it’s now about three miles. This will vary between urban and rural areas, but for the most part, three miles will give you an adequate representation.
To determine who your real competitors are, use a map. You can use Google Maps, Google Earth, Microsoft Map Point or just a regular paper map. Once you’ve placed all your competitors on the map, mark a three-mile radius around your property and see which of them fall inside. Those are the properties on which you want to regularly focus. Now, grab a notebook, tablet or smartphone, a camera and GPS; it’s time for a field trip to visit these businesses. These are the questions you want to ask at each one:
- What is the facility’s total square footage and how many units does it have?
- What’s the approximate occupancy?
- What sizes and rates are currently listed? Are these street rates or Internet-only rates?
- What kind of security is available?
- Is management on site or off?
- What are the facility’s access and office hours?
- Is truck rental available? Does the facility have its own truck customers can use when moving?
- What's the facility’s construction type: concrete, metal or wood?
- Does it offer climate-controlled units?
- Do it require an administration fee or deposit?
- Is rent due on the first of the month or the anniversary date?
- Does the facility have a website or other Internet presence?
- What specials are being offered and where?