When John Fayard Self Storage opened its second facility in Santa Rosa, Fla., a year ago, the goal was to provide the ultimate customer experience. Not only does the property resemble a grand hotel, its services expand well beyond unit rentals. From the impressive lobby retail display to covered vehicle storage to the conference room, the facility represents a new era in self-storage.
As the industry evolves into a more retail-style business, operators are experimenting with add-on products and services that will attract a broader customer base and diversify their business. “The ancillary services get people in the door to showcase the features you offer,” says Mary Limberg, manager of the John Fayard site in Gulfport, Miss., which also offers gun and wine storage.
Whether its offering well-tested ancillaries or experimenting with up-and-comers, facility operators aren’t just providing greater customer service with add-on offerings, they’re generating extra cash flow. Presenting more makes your site a one-stop-shop, helping it stand out in a crowded market. It also increases foot traffic, exposing people who aren’t currently customers to your numerous amenities.
“The more products and services we offer, the more we are top-of-mind for our customers and potential customers,” says Lenorah Durel, operations manager for Elmwood Self Storage & Wine Cellar in Harahan, La., which features vehicle, records and wine storage as well as other services.
Invest in Retail Therapy
Moving and packing supplies such as tape, bubble wrap and boxes have long been staples available in the self-storage office. However, the importance of offering a variety of quality products has increased in recent years as operators began to maximize their value. This has led to bigger retail centers packed with more options.
“The secrets to success are having a clean, professional, well-stocked retail display combined with an enthusiastic manager who listens to the customer’s situation, and then recommends ancillary products accordingly,” says Ed Hainrihar, vice president of operations for Compass Self Storage, which operates more than 80 facilities across more than a dozen states.
Whether your retail area is big or small, it should be well-lit and attractive. To keep everything organized, think shelving, baskets and bins. Slat walls and peg boards are also ideal. While it’s important to stock common supplies such as locks, boxes and packing tape, consider specialty items such as mattress and couch covers, dish-packing kits, wardrobe boxes, moving blankets, rope, labels, and permanent markers.
The key to moving inventory is to marry similar products and catch customers’ attention with artful designs. For example, boxes can be displayed through clever stacking. You can also create a “mover’s bundle” consisting of an assortment of boxes, tape and dispenser, a utility knife, and a marker. “It’s also important to have knowledgeable staff to suggest what products would be good to use, given the customer’s reason for storing,” Hainrihar says.
Park It Here
Vehicle storage is one of the most prevalent profit centers in the industry. The service is also diverse, allowing operators to taylor their offering to their market. From simple open parking to covered parking to fully enclosed units, there’s something for every customer.
In addition to creating revenue for the rental space, operators can charge tenants for a variety of perks, including 24-hour access, concierge or shuttle service, and electrical hook-ups. Some even partner with local mechanics to provide vehicle-maintenance services to tenants.
Facilities near bodies of water and recreation areas are ideal for vehicle storage. Both John Fayard facilities are centrally close to the Gulf of Mexico and other waterways. “Due to neighborhood restrictions, boat and RV owners are not always able to park at their homes. We offer them another option with covered/non-covered spaces and 24-hour access if needed,” Limberg says. “Our Gulfport location has an amenity station with a pressure washer, vacuum, water and air. We do charge for the pressure washer and vacuum, which does generate revenue and is a nice convenience for tenants who want to clean up their vehicles between trips.”
Uncork a New Business
Wine storage can be a profitable business for facilities in the right market. “Our wine cellar is 100 percent leased and stays that way. We have a waiting list,” Durel says.
In addition to having the right location, a successful wine-storage center includes enhanced security, temperature and humidity control, and wine-themed décor and even social spaces to attract attention. “Our facility has a wonderful wine-storage room with mahogany cabinets and a tasting area. Although most of our local customers have private collections for their enjoyment, we do have some collectors who store long-term,” says Limberg.
Many operators will also accept wine deliveries on behalf of their customers, which can be a nice bonus for collectors. If considering this service, check your state’s regulations. “Mississippi state law considers it contraband to bring wine and such products into the state,” Limberg says. “For this reason, we can’t allow deliveries, which somewhat limits the success of our wine storage.”
Keep It Safe
For some customers, storing a precious item offsite is a must, whether it be for space or security reasons. This makes gun and vault storage worthwhile profit centers. These offerings typically feature multi-layer security and stable temperatures, which enables operators to charge a premium. They’re ideal for storing specialty items such as art, collectibles, documents, photos or negatives, and weapons.
In addition to its other profit centers, Elmwood offers safety deposit boxes, and vault and gun storage. The gun cabinets are 2 feet by 2 feet, and the facility has a separate section for smaller guns or ammunition. “We only have a few and would build more if we had space,” Durel says.
John Fayard’s Gulfport property is near several military bases and retirement communities. “Tighter security at these complexes do not allow visitors or residents to enter with a gun even if it stays in their vehicle. For this reason, we do offer a place for them to store that fits their needs,” Limberg says. “Our gun storage has a separate access with beautiful, felt-lined mahogany cabinets in a temperature- and humidity-controlled environment.”
Be File Friendly
Despite the move to go “paperless,” many businesses still produce volumes of documents, making records storage a great money-maker. The space is typically charged by the cubic foot rather than the square foot, which means operators can generate more revenue from existing units.
There are also variations on the profit center, allowing a storage business to tailor its service to its market. Some operators will simply outfit units with shelving and charge a premium. Other sites offer a full-scale operation that includes box retrieval and re-filing, pickup and delivery services, and more. Elmwood has found success with its “Elmwood Records Center,” which provides a full-service program that includes physical records storage, digital-document services, scan on-demand file delivery and even document shredding. Customers also have access to a Web-hosted repository to store, search, retrieve and print any electronic record.
Many self-storage operators already have relationships with existing businesses that need the service, making the profit center an easy sale. In addition, records-storage tenants are long-term customers, who’ll typically need more space as their business grows.
Operators should be aware, however, that there are specifications and strict compliance requirements for storing sensitive records and data as well as staff requirements. “It can be very profitable, but don’t assume it’s just placing file boxes in a unit,” says Melissa Stiles, marketing manager for Storage Asset Management Inc., a management and consulting firm that oversees more than 90 properties and three UPS Stores. “Records storage could also require more time if you have a setup that requires your staff to pull files for clients or pick up files.”
Reduce Risk, Increase Income
Although perhaps not as “sexy” as some other profit centers, tenant insurance or protection programs should be high on every operator’s list. Not only do they ensure your customers’ goods are covered in the event of a catastrophe, they can be profitable.
“Depending on location and size of facility, our stores generate between $30,000 and $70,000 in insurance sales per year,” says Stephanie Tharpe, senior vice president of operations for A+ Storage of Tennessee LLC, which operates eight facilities in the state. The company introduced the program in 2014, but it isn’t mandatory due to state regulations. Rather, the rental agreement requires all tenants to insure their contents by some means and provide proof of insurance in the form of a declaration page.
To encourage customers to participate, A+ managers cover the program during the rental process. “Let’s be honest: Even though rental agreements state insurance is required, tenants rarely read them. They assume that if something happens to their belongings, the facility will take care of it,” Tharpe says. “That’s simply not the case. Then they get a bad taste in their mouth of what they perceive as terrible customer service.”
What’s more, the revenue generated from tenant insurance is all “found” money. “When properly put into play, the tenant-insurance tool, in most cases, generates more revenue than truck rentals, boxes, locks and packing supplies,” Tharpe says. “If you’re not already offering it, look into it. It’s a great barrier of protection for you as an owner and can significantly add value to your properties.”
Offer Business Solutions
Some self-storage facilities are serving as an office for entrepreneurs, telecommuters and commercial business owners, offering everything from free WiFi and computer work stations to conference rooms. Some of these services are free to those who rent a unit, but accessible for a fee to any community member or group.
“Our conference room is available for rental but is offered free of charge for tenants and nonprofits,” Limberg says. The room contains seating for 16, a large white board and big-screen TV for presentations. “We have a large counter area with a beverage center. After their meeting, a tour of our facility is available to anyone interested.”
Some sites also feature furnished offices that include phone and Internet hookups, electricity, and communal restrooms and kitchens. These can be rented alongside a storage unit for even bigger profit.
Facilities without office or conference space for rent can still be a partner to this demographic by providing related business and shipping services. These might include copying and printing, package shipping and acceptance, mailboxes, notary services, and even passport photos. In an average month, these amenities can draw more than 650 customers to a storage property, according to Stiles. “These are potential customers who’ll be exposed to the self-storage component of your business,” she adds.
Another perk you can offer customers is notary services. “It’s a great ancillary product because the notarizations usually coincide with the life event that triggered the need for storage,” Stiles says.
Facilities with larger units have found that outfitting them with a few extras can make them more attractive to creative types, including musicians and artists. This was the case for STORExpress, which operates nine facilities in Pennsylvania. “What started as a way to fill some unused space in larger buildings has grown into a steady revenue sources and a niche product with growing demand,” says Steve Mitnick, company president.
The spaces are designed with the use in mind, whether it be rehearsal space for a band, a unit for a contractor or an artist’s studio. They might be equipped with electricity, soundproofing, natural lighting, chalkboards for projects, shelving for tools and other amenities. STORExpress charges a premium for the spaces and enjoys long-term tenants. “These folks require little management, are respectful of themselves, others and the facility,” Mitnick says.
The company also enjoys great word-of-mouth marketing. “Due to a lack of real competition in this space, the referral opportunities are very robust,” says Mitnick, adding the company regularly hosts open houses to highlight its specialty units.
Move It Along
Whether you rent your own trucks or contract with a national dealer, truck rentals supply one of the key elements your new renters need—a vehicle to move their stuff. “Since these two programs have synergy between each other, they’ll immediately gain an advantage over their competitors and fill more storage rooms,” says Tom Kardys, program manager for the U-Haul Dealer Group, which operates a nationwide truck-rental program.
The partnership can even be launched at no cost to operators. “All we need is a couple of parking spaces and a person to do the Web-based contract,” says Kardys, adding that U-Haul provides online training and mentorship from a district manager.
Most truck-rental companies even handle all the marketing. “If they want a true competitive advantage by providing a service that almost half of their storage customers need, adding truck rentals will take them to the next level of their business,” Kardys says.
Go Valet, All the Way
A profit center that’s just emerging is valet storage, which offers door-to-door pickup and delivery of belongings via an online platform. Although the concept seems more like industry competition, some valet-storage companies are looking to partner with traditional storage owners by paying them for referrals. Some self-storage operators are keeping their own warehouse and providing the service themselves.
“Whenever an operator is unable to help a customer with a storage need, instead of turning him away or referring him to ‘the guys down the street,’ he can make money on that referral by sending them to Closetbox,” says Chris Griego, vice president of partnerships for the company, which has nearly 200 locations in more than 80 cities. “We’ll even provide a unique hyperlink and a special offer for that customer so operators look like a hero regardless of whether they were able to serve that customer. And revenue can add up quickly over time.”
When considering a valet partner, do your research. Referral programs come in all sizes. “Because valet storage is still relatively new to the industry and there aren’t many players, you might find only a few that have a formal program or that operate in your market,” Griego says. “You always want to go with the biggest brand with the biggest coverage so you can be sure your customer can be served—that’s what helps you generate big referral fees.”
Grab a Coffee
Few people would link “coffee” and “self-storage,” but the combo is match for Crystal and Kyle Bundy, who are building a drive-thru coffee stand called Northern Grind alongside their new 11-building Town and Country Storage facility in Rochester, Wash. Located just outside the gate to the facility, the 16-by-20-foot structure will feature a drive-up window on both sides and offer hot and cold coffee beverages, teas and smoothies. The couple also plans to sell pre-packaged muffins, cookies, breakfast burritos, oatmeal and more at the location, which is slated to open in February.
“We have a lot of traffic on the highway that we’re building on and only one other coffee shop in the town that’s in a poor location and is much older,” said Crystal Bundy, who’s heading up the project with assistance from a woman who owns a similar espresso stand in Olympia, Wash. “A successful stand can earn quite a bit of money, and we will have no rent to pay on our property.”
Try a Cell Tower
If you have the space, allowing a cell tower to be installed on your property can be an easy way to generate continuing income. The key is negotiating the best contract terms. A cell-tower lease should be viewed as a utility transaction, not a real estate transaction, according to Hugh D. Odom, president of Vertical Consultants, a telecommunications-consulting firm. “You’re not leasing space to a tower company, you’re leasing the value from which the tower company is benefitting from that space,” he says.
If considering this ancillary, it’s wise to seek advice from a telecommunications expert to ensure the lease is structured for long-term benefits, not just immediate cash flow. “While it’s important to understand what’s being offered to you, it’s more critical to comprehend what you’re offering to the cell-tower company,” Odom says. “They’ll never disclose the true benefit they achieve from getting you to sign an agreement.”
More to Explore
The products and services you can offer at your facility are really limitless. If you have land ripe for development, boat and RV storage could be your next venture. Or perhaps your site is in an upscale area that’s in desperate need of secure wine storage. Properties close to colleges and universities often do well with smaller locker-type units, mailboxes, and pack and ship centers. Other possibilities include manufacturing bays and mobile storage, which can generate revenue for years to come.
Before diving into any profit center, ensure it makes sense for your area. “Understanding the market where your storage property is located is key to what’s offered,” Stiles says.
Most important, set sales goals and closely monitor the results to ensure you’re making money with your new program. If a profit center isn’t working, it may be time to cut your losses rather than invest more money and effort. “Finding the right profit center for your area is important. Do your research, and you’ll find what’s successful for you,” Limberg says.