It would seem the Achilles’ heel of the self-storage industry is people in transition. Reduce the movement of the population and, suddenly, no one needs a storage unit anymore. At least, that was our experience this year at Synergy Self Storage in Merrimack, N.H.
As the world ground to a halt with the onset of the coronavirus pandemic, so too did traffic at our storage location. Tenant move-outs slowed somewhat, but new move-ins reduced significantly. At its worst, our facility saw a net decrease in occupancy of about 35 units for the calendar year-to-date. We also began to feel the financial effects of the downturn.
Like many other storage operators, in an effort to show solidarity with customers suffering the loss of employment or experiencing other pandemic-related difficulties, we paused rate increases, late fees and other delinquency-related activities in the spring. However, the loss of revenue couldn’t be ignored. To offset the negative financial impact, we began to look at reinstating our customary polices at the end of June.
We then had to make some difficult decisions: Who gets rate increases and by how much? What do we do about late fees and auctions? After much discussion among management, this became our three-part plan:
1. We started implementing rent increases for tenants who hadn’t received one for at least a year, which was our standard policy. The hikes were never more than a few dollars per unit, and always to a level just below our currently advertised street pricing.
2. We reinstated our standard late-fee policy with the following caveat: Late fees imposed since the beginning of the pandemic would be waived for those who lost their job. Documentation from the tenant’s employer would be required for our files. Actual rent would remain due, and a payment plan/schedule would be set up with the tenant. New late fees on future monthly rent would now be in effect.
3. Finally, we reset the auction status of delinquent units, with the new term effective as of July 1. Per our state laws, this gave the tenant another 60 days to pay the outstanding balance or set up a payment schedule before the threat of auction. Standard terms would apply for future rent due.
To date, the feedback has been primarily noncommittal or positive, with only one or two tenants giving pushback. Almost universally, our self-storage customers have been cooperative, including those hardest hit by the pandemic.
It has truly been a tightrope walk, however, between empathy for tenants and the going concern of the business, we believe our approach has been successful so far. As of this writing, our occupancy is still suffering a net reduction on the year, but the coming months hold promise. With good luck and godspeed, our end-of-year standing will find us full circle back to where we were on Jan. 1, 2020.