The self-storage industry has roots in the 19th century as a solution to overcrowded bank vaults. By the 1960s, it had more or less become what it is today: a cost-effective way to store personal items with secured access. At the time, units averaged 15 cents per square foot. Today, that price is around $4—still an affordable solution for most customers.
Still, facility owners often struggle to offer value beyond their storage services. Among their biggest concerns is how to create a portfolio that’s attractive to investors. In this article, I’m going to share the concept of social tokens and how they provide actionable value to industry investors, owners, stakeholders and customers, aligning the interests of all parties.
The Lay of the Land
Before we discuss social tokens as a cutting-edge monetization strategy for self-storage, it’s important to know the following terminology:
- A social token is cryptocurrency based around a brand or influencer. It’s one of the primary ways creators can offer and create additional value to and with their community.
- A community comprises people who hold a company’s social tokens, including owners and customers, who share a common purpose and mission.
- A decentralized autonomous organization (DAO) is an entity in which token holders share the management and decision-making. There’s no centralized leadership.
- Crypto assets are a digital representation of value that a person can transfer, store or trade electronically, including non-fungible tokens (NFTs).
- Tokenomics refers to the math and incentives governing crypto assets, including everything about the mechanics of an asset as well as the psychological or behavioral forces that could affect its long-term value.
- The metaverse is a virtual world that mimics the physical one. People use virtual reality and other technologies to work, shop and interact with others in this space.
At the intersection of crypto developments such as DAOs, NFTs and the metaverse, social tokens can be centered around a person or a community. If cryptocurrency is blockchain-supported digital currency, social tokens are the separate, independent economies that support digital ownership.
Tokens allow for a range of financial benefits, such as income-share agreements, customer-loyalty points and club-membership models. Freely transferable, they have a fluctuating market price based on their value in real time. For investors, purchasing tokens could mean a fractional stake in a self-storage facility or portfolio. For industry customers, it could be a way to contribute to the operation of a facility or even a way to pay future rent.
An Industry First
The new $STOR social token, a decentralized finance utility token that provides a reward
system and lending platform for the self-storage industry, will serve as a way to increase customer loyalty and retention throughout the portfolio and build a pipeline of capital to facilitate growth. It’ll also bring more self-storage sellers into the funnel, increasing deal flow, and create opportunities for customers to become contributors and stay within the community ecosystem.
The goal is for token holders to have access and contribute to the development of 60 to 80 self-storage facilities per year. $STOR won’t purchase properties itself but will instead receive equity by funding the group that does purchase the assets. In the event a group defaults, the platform can absorb the loss as an ownership option to token holders and still maintain the resources to run its facilities.
Unlike traditional venture capital and private-equity firms, social tokens offer a pathway to share in the financial upside of a self-storage portfolio through the economy that supports the community. Every contributor receives a stake. And since contributions come in the form of freely tradable tokens, participants may be able to enter and exit an investment more fluidly, which makes the venture more enticing.
In addition, if customers are incentivized to use the social-token platform, they’re more likely to remain loyal to the investments within its ecosystem. Whether they trade their tokens for goods and services (e.g., a free month of self-storage) or decide to buy more tokens, their participation is likely to bolster the financial health of the overall community.
The $STOR token will allow self-storage participants to create deal flow at scale. At present, there are 15 groups of investors with an average of two to five members, each with room to grow. All token holders share in the collective success of the portfolio and its individual facilities. They can also buy a stake in other token holders’ deals. It’s important to note that, at present, there are no clear U.S. Securities and Exchange Commission paperwork requirements for token transactions. For the time being, that means faster mergers and acquisitions as well as 1031-exchange transactions.
With a Starbucks-like rewards model for self-storage customers who own small amounts of tokens and a general-partner model for those who hold significant amounts, the social-token approach allows people to buy a stake in the community and possess decision-making powers. It also encourages a franchise model among facility owners because it incentivizes streamlined marketing efforts that ensure customer acquisition and retention. The tokens bring together more customers, owners and other stakeholders, thereby broadening the community reach; and all participants contribute to the ecosystem’s health and growth.
A Fresh Alternative
The commercial real estate market has been quick to jump on the trend of tokenization and DAO ownership. From luxury vacation rentals to corporate offices, DAOs have been used to build high-performing real estate portfolios. In the future, these assets will be on the blockchain because it authenticates buyers and sellers as well as provides added value to consumers within localized crypto economies.
The self-storage industry is poised for massive growth over the next few years, and social tokens offer investors a fresh alternative. For industry customers, a community like $STOR creates a high-touch experience that’s generally lacking in the market, incentivizing them to participate financially and as influencers. These token holders—no matter how small—will be motivated to remain in the ecosystem even if they no longer rent a unit at any of its facilities. You can be at the cutting edge of this movement toward increasing asset value. It’s an exciting time to be part of this ever-evolving industry.
Scott Meyers, an advisor to the $STOR token team, has acquired, developed and managed more than 2.5 million square feet of self-storage since 1993. His company, Kingdom Storage Holdings, syndicates projects through private-equity partnerships and traditional debt sources. He’s also the founder of selfstorageinvesting.com, a self-storage education company that publishes books and software, conducts live seminars and podcasts, and offers coaching services through www.thestoragemastermind.com.