Unit rentals are the bread and butter of your self-storage business, but that doesn’t mean you can’t add a little jam on top. Since self-storage came on the scene many decades ago, operators have experimented with ways to expand their product and service offering. While some add-ons haven’t panned out, others have proven to be ideal companions to the base business. Here are some profit centers that have proven their staying power for bringing in new customers, satisfying existing tenants and generating additional revenue.
The Retail Store
Locks, boxes, tape and other packing and moving items are considered the golden standard when it comes to self-storage ancillaries. People need these items when moving or storing, so why shouldn’t they purchase them from you? Operators are fulfilling much-needed supply for a huge demand.
But just putting products on display won’t make them sell. It takes packaging and salesmanship. Consider creating moving kits that bundle boxes in several sizes, packing material, tape and a permanent marker. If you sell dish-packing kits, put one on display so customers can see how it works. You’ll also want to practice suggestive selling techniques.
“To have successful retail sales, the biggest thing that helps me is to convince the people they need these retail items,” says Penny Casassa, manager at Bordentown Self Storage in Bordentown, N.J. “As storage operators, we are the professionals. We need to explain to them that they may have paid a lot of money for their mattress, and wouldn't they want to protect the investment with a quality mattress bag?”
Offering retail products makes your facility a “one-stop shop” for customers. To entice them, keep your walls and displays full of product so you always have fresh stock, advises Nancy Martin-Wagner, marketing vice president of Chateau Products Inc., which supplies retail inventory for self-storage operators. “Also, ask your customers what they’re moving to allow you to suggest items they’ll need.”
If you’re not sure where products should go, try building a plan-o-gram for your retail area. This diagram, or image map, provides details on how to artfully place your items in your store. “This gives every product a consistent place that suggests other products the customer may need in conjunction, and also makes sure every empty space is filled back up with products after each sale,” Martin says.
The cost to stock your store will vary depending on the products and your vendor. A general rule of thumb is about $20 of product cost per square foot of retail space, Martin says. “So if you have a 72-square-foot wall of display, you’ll need approximately $1,440 in product at your cost on the wall.”
Some must-haves include locks, boxes in several sizes, packing material—such as clean newsprint, peanuts or bubble wrap—tape and tape guns, marking pens, and utility knives. Other items to consider include label kits, gloves, furniture and mattress covers, glass and dish cell kits, stretch-wrap rolls, and tie-down rope or bungee cords.
Most important, let people know you carry these items. “Make sure the items you offer are clearly posted on your website, and always mention it to your customers on the phone, in e-mail, on social media and in your printed materials—from the busy street and when customers are in your office,” Martin says.
Although a large space is ideal for a well-stocked retail store, even small areas can be successful. “A small space could work by hanging a display of one of each item and then having the stock in a storage unit,” Martin says. “You could ring up the customer’s purchase, and then have the customer pull his vehicle up to the unit to load the items.”
The truck-rental offering comes in many flavors. First, there’s a full-scale operation in which you contract with a national chain such as U-Haul or Penske to provide truck rental for one-way and local moves. In this scenario, you receive a commission for every rental. Another program that’s becoming increasingly popular in the storage industry is one in which you buy or lease a truck for local customers to use. This arrangement allows you to generate revenue, market your facility and provide great customer service.
It’s this type of program that has given Platinum Storage Group a competitive edge in its busy markets. The company, which operates 30 facilities in seven states, offers new customers free use of a moving truck at 18 of its properties. It also lends the trucks to local schools, charities and other organizations.
“Everyone loves a bargain, and that includes self-storage customers,” says Roger Burgin, Platinum’s vice president of field operations. “Rather than reducing rates, the ‘free’ moving-truck program allows us to offer a competitive concession without impacting our site’s potential revenue by over discounting,”
Platinum has created a few systems to generate additional revenue from its trucks. For example, each tenant is allowed 25 free miles of use, then charged 99 cents for each additional mile. The company also charges $19.99 per hour beyond the allotted time. A refueling charge of $5.99 per gallon is applied when tenants fail to gas up the vehicle, and a $100 cleaning fee is charged if the truck is returned dirty or full of trash.
Operators should also consider renting out hand trucks and furniture blankets, says CJ Steen, marketing director for On The Move Inc., which provides a turnkey rental-truck program for the self-storage industry. Another option is to offer a moving service. “Many people don’t have the means to move themselves and have a difficult time finding movers they trust. Hiring a few college students or part-time movers to help your customers move can add value to your service offerings, Steen says.
Burgin highly recommends that any operator offering truck rental invest in a creative and well-designed vehicle wrap. “Vehicle wraps directly influence customer’s perception of you and your business as a whole,” he says. “A well-designed vehicle wrap puts your services and contact info front and center, effectively making your truck a rolling billboard for your property.”
According to Steen, trucks get up to 600 visual impressions per mile driven. You can also work with local businesses to park your truck in their parking lots, which will garner even more exposure.
Much like truck rental, records storage can be simple or complex, depending on facility location and the services you choose to offer. In addition to storage, a full-scale records-management operation includes box retrieval and re-filing, pickup and delivery services, document-destruction services, indexing, and re-boxing.
If this seems like too much, you can opt for a “slimmed down” version wherein you outsource all services with a residual profit, says Cary McGovern, owner of Fileman, which provides records-storage feasibility, implementation, sales guidance and training. “It offers a great ancillary service using the existing space, systems and personnel while increasing the per-square-foot yield,” he says.
Self-storage operators can even retrofit their existing contiguous units by removing internal walls and adding shelves, McGovern says. However, he cautions to not make huge unit-mix alterations until you’ve a signed contract with a records-storage customer.
Although a cell tower on your property doesn’t offer much for your storage customers, when executed correctly, it can bring in some great revenue. “A self-storage operator should look at a cell-tower lease as a potential no-cost vehicle of procuring additional ancillary revenue from the use of land that otherwise would not be utilized,” explains Hugh Odom, president of Vertical Consultants, a telecommunications-consulting firm. “If structured correctly, a cell-tower lease can be a steady, long-term stream of revenue and an appreciable asset that grows in value based on the revenue being generated by the cell-tower company.”
A1 Mini U-Store-It in Ottawa, Ontario, Canada, benefited from cell-tower revenue until earlier this year when the 10-year contract expired and the telecommunications company found better infrastructure elsewhere. “We received approximately $10,000 per year for the base unit, $155 per month for hydro usage, and rent on a storage unit for their equipment,” says Mat Seguin, A 1’s director of operations. Overall, he says it was a positive experience. “It’s an excellent way to increase revenue that requires no upfront costs and little to no maintenance.”
Operators courting cell-tower companies should do their homework first, Odom advises. “The biggest mistake most self-storage operators continue to make when it comes to a cell-tower lease is they rely on so-called ‘market rents’ to determine how much they should receive for the use of their property.” However, market rents don’t exist when it comes to a cell-tower lease because each site has its own unique value, Odom says. This is information few telecommunications companies will impart.
Instead of just focusing on the revenue a cell-tower will generate in the short term, operators should focus on getting a fair value for the use of their land over the entire lease. “A cell tower lease isn’t a real estate transaction, it’s a telecom transaction, and understanding that important difference and how to use it your advantage could mean significantly more rent for you. Also, make sure you don’t enter into an agreement that could negatively impact the value of your overall property,” Odom advises.
When properly put into play, a tenant-insurance program generates more revenue than truck rentals, boxes, locks and packing supplies, says Stephanie Tharpe, vice president of operations and marketing specialist for A+ Management Group, which operates seven self-storage facilities in Tennessee. “The revenue that can be generated from tenant insurance is all found money,” she says.
Though it’s in their best interest to have it, few renters will ask about tenant insurance, which means staff has to be proactive about getting tenants on board. Usually, all that’s needed is training, Tharpe says. "Our managers have been properly trained and track their success. They average enrolling eight out of 10 new tenants into the insurance by assuming the insurance sale properly.”
There are three ways operators can present tenant-insurance programs to their customers, says Matt Schaller, executive vice president of Tenant Property Protection, which offers a tenant property-protection program:
- You can offer optional coverage the customer is free to accept or decline at the point of lease.
- You can use a lease-compliant or mandatory plan, which stipulates that every customer must provide proof of insurance on their stored goods to fulfill the requirements of the lease.
- You can offer a bundled program in which you build protection into the lease on every unit as part of your service offering. With this method, the protection is often listed as a tenant amenity, Schaller says.
The addition of a tenant-insurance program to your business doesn’t have to be costly or time-consuming. According to Schaller, the cost to institute a plan is minimal. On the issue of time, Tharpe says: “When you have these results across the board, the time you take to enroll the tenant becomes irrelevant. It takes us under one minute to enroll our tenants into the insurance.”
As a special niche service, wine storage is being incorporated into more ground-up developments and being added to established self-storage facilities. Not only is there increasing demand for this service, it elevates a facility’s character and can be a great source of revenue.
“We knew we didn’t want to build just any self-storage facility,” says Al Gardes, director of operations for Elmwood Self Storage & Wine Cellar in Harahan, La. “Our cellar is the only public wine-storage facility in the city servicing commercial and residential clients. It was created because New Orleans is such a famous city for food, wine and good times that having a wine cellar made sense.”
The Elmwood cellar, which was expanded three years ago, offers 70 custom-built mahogany cabinets in three sizes. The walls display a hand-painted mural of Italy. The wine-storage area has a redundant mechanical system with a back-up generator for continuous control of proper humidity and temperature. Additional amenities include a conference room, delivery acceptance and 24-hour access via a biometric system and code.
“A lot of customers who come in, even if it’s to buy a box or rent a truck, want to see the cellar,” Gardes says. “The customers who don't know we have a cellar will see the mural through the glass doors and ask about it.”
Even facilities with limited space can add this profit center, which generates a higher rental rate per square foot than traditional self-storage. Wine storage was added to an A1 Mini U-Store-It facility two years after it was built. “We used a 500-square-foot area in the basement of a 100-year-old bakery. The tenants really love the retro-industrial look of the place,” Seguin says. The area has 51 units that can accommodate a few dozen bottles or up to several cases.
Wine storage requires strict temperature and humidity controls, which is one reason many private collectors seek a self-storage facility that offers these provisions. In addition, a the area should have a properly insulated and designed perimeter that will prevent air movement and condensation, a temperature- and moisture-level logging system, and a multi-tiered, high-level security system to protect tenants’ collections.
But before you add wine storage, understand your market. “Our customers include affluent private collectors, charities, embassies, restaurants and civil servants. We’re in the city’s core in one of Canada’s wealthiest cities—the nation’s capital. The leaseup is also extremely slow; it took the better part of three years to fill,” Seguin says.
Marketing the service also takes more effort, as few people are actively looking for it. You’ll want to promote the service to current tenants and actively pursue new ones. Consider inviting a local wine club for a tasting, advertising in a community wine newsletter, or visiting nearby restaurants to see if they need storage space to house their collections.
“Aside from HVAC costs, our yield per square foot is impressive,” Seguin says. “It’s also an interesting attraction for self-storage prospects on facility tours, even if they don’t collect wine.”
While not every profit center will be right for your facility, there are many options. To determine which service or product will be successful for your business, consider your customer demographics, upfront costs, possible revenue, available space and how it will affect your staff. After all, operating a successful profit center will take time, marketing, dedication and superb customer service.