Site Refresh: Simple Ways to Breathe New Life Into an Aging Self-Storage Property

In recent years, an influx of private and public companies has been entering the self-storage industry to build new facilities or buy and upgrade existing properties. Once finished, these projects tend to include state-of-the-art technology and designs that set them apart from older sites. To compete, operators of older, legacy assets should consider making some simple improvements to remain competitive, satisfy customers’ evolving expectations and maximize net operating income (NOI).

Customers are an important consideration when it comes to potential renovations. Today’s tenants expect a safe, clean, seamless and consistent experience. New self-storage facilities offer this reliability through items like redundant access-control and video-security systems, lighting with motion sensors that illuminate entire hallways, and user-friendly websites supported by call centers.

But before you start planning enhancements to site security, aesthetics and other projects that might improve the look and the useful life of your self-storage facility, carefully investigate potential return on investment (ROI). Any changes you make should not only reduce friction for the customer but also help to lower expenses and increase revenue. It’s important to distinguish between “must have” and “nice to have” upgrades. Prioritizing these appropriately can make all the difference in your facility’s future success.

Must-Haves

Must-have upgrades will extend the useful life of a self-storage facility and improve its function, possibly even its appeal. These might include structural repairs that are needed for safety and liability reasons such as patching leaks, replacing the roof, and repairing failed asphalt or concrete. Though these types of projects can be costly, they shouldn’t be ignored. Deferred maintenance often gets more expensive with time and can complicate negotiations if you decide to sell the property.

In particular, pay attention to your site security, including access control. Perimeter fencing, automatic entry gates and keypads are now an industry standard. These are relatively low-cost improvements that’ll improve security and customer convenience. Surveillance cameras are another easy addition that customers appreciate. There are many cost-effective, off-the-shelf products that are easy to install and operate. If you need guidance on choosing equipment, there are many well-established industry vendors who can help you find reliable, economic systems.

Other must-have projects include those that impact site functionality and safety. For example, take a close look at your self-storage unit doors. Broken doors and hasps not only frustrate customers, they can lead to injury and unrentable inventory. If you receive feedback from tenants on these types of issues, assess and address the situation, so it doesn’t lead to negative reviews.

Finally, look beyond the physical to your virtual assets. For example, does your self-storage facility have a strong online presence? If you don’t have a website, you need one now. This has become a foundational component to customer acquisition and revenue optimization. Don’t worry if you aren’t tech-savvy. Again, there are industry vendors that specialize in creating websites, and they make the process simple and easy.

Nice-to-Haves

In this category, consider projects that would improve your competitiveness within your self-storage trade area. Is there a level of security, cleanliness and convenience offered by nearby stores that you don’t have? Similarly, is there something they don’t have that would make you stand out as best-in-class if added to your facility?

Take a critical eye to your occupancy levels and how well you’re attracting new tenants. Are you losing out on prospects due to poor curb appeal or a lack of attention to maintenance? If you and the competition are fully occupied, consider investing in a rate-management system, expanding onto available land or converting an unused building that’s already onsite.

Here are some other things to consider:

Tough Decisions

To help prioritize your work, examine the ROI for the improvements you intend to make. The cost of the project should be measured against the expected boost in revenue or long-term facility value. If there’s no significant upside, then it should probably be a low priority.

Also, think about opportunity cost. How much income will you miss (or lose) if you don’t make certain repairs or upgrades, or expand the facility?

Once you decide on what needs to be replaced, renovated or added, it’s important to minimize disruption to the property and customers. Alert tenants in advance via email and text messages to inform them about any business interruption, but also to share the good news about upcoming improvements and their benefits. Try to do all the work at one time to avoid prolonged inconvenience. If you communicate proactively, most tenants will be pleased that you’re making improvements and will happily reap the benefits of a refreshed property.

A Case Study Example

We recently acquired a self-storage property in Hinesville, Georgia, that put our renovation skills to the test. The property comprises 358 units in buildings that are 15 to 30 years old, along with a small warehouse and some underutilized land. After performing a comprehensive assessment of the site and local competition, we pinpointed several ways we could make quick improvements and grow the NOI.

The most obvious upgrade was to improve the dirt drive aisles, which were riddled with tall grass and mud puddles. Due to stormwater constraints, we couldn’t pave these areas, so we opted to fix the drainage issue and install gravel. This was an instant game-changer that our customers really appreciated.

We also chose to install gates with keypads, upgrade the fencing, add a new drive-up building on some vacant land, and create climate-controlled units in a small warehouse structure. After adding new signage, landscaping and paint, this old property looks and feels totally different!

Not only did we have the satisfaction of transforming a legacy asset, we reaped the benefit of significant NOI improvement.

Outside Opinion

As you evaluate your self-storage property for upgrades, reach out to industry professionals for suggestions. There are dozens of vendors with a wealth of experience that can help you explore your own ideas and recommend enhancements you may not have considered. They can also help you establish a budget that allows you to prioritize between the must-haves and nice-to-haves. Set a limit you’re comfortable with, and then start tackling the most critical projects first.

Most importantly, think about your customers and how you can best offer a safe, clean and seamless self-storage experience that meets their needs. That’s the best way to stay competitive, no matter how the industry evolves.

Mike Vahle is managing partner of Capital Growth StoreGuard, providing leadership, strategic direction and oversight for the company’s self-storage acquisition, development and redevelopment efforts. He has more than 16 years of commercial real estate development and executive leadership experience, including key roles with Public Storage Inc., Walmart and Ramco Developments Inc. To reach him, email [email protected].