4 Ways to Improve Self-Storage Facility Efficiency, Sustainability and Profitability

Aspiring investors have now learned what existing self-storage owners already knew: These properties are part of a unique, commercial real estate asset class positioned for growth. Right now, demand is largely driven by Millennials looking for storage solutions, a rising need to store e-commerce inventory and continued downsizing among retirees. With so much potential, it’s a good time to invest or expand.

That said, nearly 98.2 million additional square feet of self-storage is expected to come on the U.S. market by year-end, according to Matthews Real Estate Investment Services. In light of all this new competition, existing owners would be wise to bolster the value and appeal of their assets. One way is to improve its energy efficiency. Not only does it increase sustainability and return on investment, it augments the customer experience and your bottom line. Let’s look at four strategies you can implement immediately.

Upgrade to LED Lighting

A well-lit environment is essential for self-storage tenants and staff. Upgrading your inefficient, legacy lighting to LED technology can decrease energy consumption by up to 75%. This reduction allows you to realize immediate savings on utility bills. In addition, the longer lifespan of LEDs means staff no longer have to focus on replacing parts, and any labor associated with servicing lights is all but eliminated.

Beyond cost savings, LEDs can enhance facility safety and security, providing peace of mind. Done correctly, lighting can promote a comfortable environment, reduce accidents and deter criminal activity. Here are a few other benefits:

Lights should be strategically positioned around your self-storage property in accordance with guidelines from the Illuminating Engineering Society, a nonprofit that’s helped lighting professionals and contributed to the industry-standards process since 1906. In addition to setting appropriate light levels, you can supplement your system with motion detectors.

Optimize Your HVAC

Maintaining optimal temperature and humidity at your self-storage facility can be key to protecting tenants’ belongings, particularly in some areas of the country. The age, quality and condition of your HVAC units is crucial. Inefficient equipment can lead to excessive energy consumption, higher utility costs and damage to stored goods, which can lead to financial loss and tarnish your business reputation.

To optimize the functionality of your HVAC system, consider upgrades that allow it to run as efficiently as possible, such as WiFi-enabled sensors, controllers and thermostats. These enable you to automate settings and give you real-time visibility into equipment functionality. They also facilitate predictive maintenance to prolong equipment life. By improving your HVAC system, you can accomplish your energy-management goals while promoting your environmental-conservation efforts to customers.

Install an Energy-Management System

Multi-site self-storage owners may want to install a building-automation or energy-management system, which allows you to oversee equipment across several properties using a centralized interface and advanced controls. Imagine monitoring an entire portfolio simultaneously!

These solutions are scalable, and once enabled, they’ll maintain an optimal environment at your facilities while reducing resource consumption and costs.

You and your team can manage the system using any internet-connected device, with a dashboard customized to your organization's needs. The software accumulates data in one simple graphical interface, which allows for analysis, automation, scheduling and maintenance alerts. Staff can actively monitor environmental conditions and receive warnings for potential issues. For example, you could diagnose an electrical or mechanical fault without even being on site, then respond immediately to schedule maintenance or repair.

With this line of sight, self-storage operators have access to real-time analytics on historical and daily trends, anomalies, and any sudden changes. The ability to react more quickly and effectively to problems minimizes the potential for facility conditions to deteriorate, negatively impacting customers or driving up costs.

Take Advantage of Utility Rebates and Incentives

If any of the above sounds attractive, this last section will help you leverage the solutions you implement to even greater financial effect. Consider, for example, that utility companies now offer substantial rebates and incentives to self-storage and other businesses to upgrade their outdated lighting and energy systems. In addition, recent legislation has accelerated efficiency projects, providing more than $200 billion in energy-related tax subsidies. Thanks to these offsets, efficiency solutions have become highly affordable, as they can cover a significant amount (or all) of the implementation costs.

There are more than 3,000 utility companies across North America, and programs vary from region to region. Most offer prescriptive rebates with specific guidelines for lighting upgrades, with predetermined amounts associated with each installation. Working with a provider who understands how these incentives work is critical. Qualified lighting vendors should be able to estimate the total applicable rebates for your project, verify product eligibility and help you complete the appropriate documentation.

Another item to consider is the 179D Commercial Buildings Energy Tax Deduction, which enables self-storage and other property owners to claim a deduction for qualifying energy-efficiency improvements, including certain lighting and HVAC systems. The Inflation Reduction Act of 2022 dramatically increased this deduction, allowing owners to claim up to $5 per square foot.

Before filing a 179D claim, your eligibility must be evaluated by a qualified firm that specializes in engineering tax services. The submitted documentation must include energy modeling, a field inspection, certification and reporting.

Improve and Save

Self-storage developers and owners can increase the financial potential of their facilities with minimal effort by partnering with the right vendors. By implementing energy-efficiency systems and products, you’ll meet customers’ needs while enhancing property value. Improving the sustainability of your asset will also lead to increased profitability and a reduction in ongoing operating costs.

With 20-plus years of experience in the lighting industry, Greg Terry is director of strategic national accounts with US LED, a full-service provider of LED lighting for self-storage properties. The company offers services nationwide such as lighting audits, project management, turnkey installation, rebate management and financing. To reach him, call 209.483.4998 or email [email protected].