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Pricing Self-Storage Units During COVID-19: Facility Operators Share Their Strategies

Pricing your self-storage units for new and existing tenants has never been trickier than now, during the coronavirus pandemic, when many customers face financial challenges. In this Q&A, facility operators share their new-world approach to revenue management.

Self-storage unit pricing has become more complex in recent years as facility operators aim to up their revenue-management game. Dedicated software systems and other innovations have emerged to help owners and managers answer the questions, “How much can I reasonably charge new customers in light of the current market?” and “How much can I realistically raise rates on existing tenants?”

Enter the coronavirus pandemic, and those questions have become vastly more difficult to answer. People still need self-storage, but with many out of work and struggling to make ends meet, what they can afford has changed. And let’s not forget legislation that may now restrict how much operators can get for rent. What’s the new-world plan for unit pricing?

We asked a handful of your fellow storage companies to share their concerns and strategies around revenue maximization in the COVID-19 environment. Here’s what they had to say. As you’ll see, there’s no one-size-fits all approach.

Note: These responses were gathered in early August. Some circumstances may have changed since.



How has the coronavirus pandemic affected the way you manage rate adjustments for both new and existing self-storage customers?

We halted existing-tenant rate adjustments and have not yet started them up. We did make certain our rates were in order, increased a few of them for new customers coming in, and are changing up our specials periodically.
―Diane M. Gibson, President, Cox's Armored Mini Storage Management Inc.

The coronavirus pandemic did affect the way our revenue-management models were implemented across our portfolio. Rates were lowered and concessions were increased for new customers, and relief was provided to existing customers through the deferral or reduction of rate increases during the early stages of the pandemic. This has now changed, and our model is in full effect across most of our markets.
―Korey Hanson, President, Argus Professional Storage Management

The COVID-19 pandemic led to us hit pause on any existing-customer rate increases from April to July. Our street rates for new customers were not affected much at all. We actually had a really strong March and April, as many others in our industry also reported.
―Ben Hendricks, Chief Operating Officer, Five Star Storage

We’ve offered many existing customers who’ve come to us with a hardship situation a COVID-retention discount ranging from 10 percent off a month’s rent up to the equivalent of two months free rent. Our move-in specials did not change much, as they were already competitive. Move-in activity slowed about 30 percent in March and April but picked up a lot in May and June. Move-out activity also slowed in March/April but picked up to normal levels starting in May.
―Natolie Ochi, CEO and President, SKS Management LLC

It has been a delicate balance to ensure there is protection for revenue and customers. Our concern changed from maximizing revenue to ensuring stable occupancy that we could protect revenue with the unknown that we were facing at the onset of the pandemic.
―Tocarro Williams, Director of Operations, Donald Jones Consulting & Service LLC



Have you implemented any rate increases on new or existing customers since the U.S. pandemic hit in mid-March? If so, how did you approach it? How did customers react?

We haven’t implemented any rate increases on existing customers. We also have not had any issues renting new units to new customers since March.
―Diane M. Gibson, President, Cox's Armored Mini Storage Management Inc.

During the months of April and May, we either halted or reduced significantly our rate increases on existing customers across our portfolio. In June, we restarted in some markets, and by July, it was back to business as normal. We are actually taking a more aggressive approach in certain markets as we near the end of leasing season. With the early part of our leasing season interrupted by the pandemic, we feel the need to do this to catch up and get back on track.
―Korey Hanson, President, Argus Professional Storage Management

We began with rate increases taking effect Aug. 1 on the majority of those customers who would have previously had an increase throughout April to July. The reaction from our customers hasn’t seemed much different at all in comparison to “pre-COVID-19.” We’ve had about the same percentage of customers that voice their dislike for the increases and similar small percentage who actually move out.
―Ben Hendricks, Chief Operating Officer, Five Star Storage

We stopped rate increases for about four months, mid-March through July, and started back up recently with nominal increases, starting with those who were up for increases prior to the pandemic. If someone comes to us with a hardship situation, we work with them to defer the rent increase on a case-by-case basis. In some California counties, there’s a 10 percent rent increase cap, which we made sure to stay under regardless of county.

We’ve had some complaints (less than 5 percent), some referring to the current pandemic, but we get some complaints every time we do increases. We’ve instructed our teams to be extra compassionate if the tenant needs a deferment; but generally, our team members know the habitual complainers who would’ve complained even prior to the current situation.
―Natolie Ochi, CEO and President, SKS Management LLC

We decided not to increase rental rates for any customers from March through the middle of May. We also waived fees in March and April for customers who were affected by job loss due to the pandemic. We put in a moratorium for any auctions for 60 days as a goodwill gesture to our customers to allow them to pay their balances.

In June, we increased street rates at some properties based on their occupancy; each property was handled individually. Due to our ideology on the frequency of raising rates, we haven’t experienced many complaints. We respected that some of our localities were affected because their entire industries evaporated, i.e., oil and manufacturing communities. In those communities, we haven’t raised occupied street rates yet.
―Tocarro Williams, Director of Operations, Donald Jones Consulting & Service LLC



What’s your pricing policy now and moving forward, as the health crisis continues? Will you attempt to revert to a “business as usual” approach?

Yes. We may start to test the waters in September to see how existing customer rate increases will fly.
―Diane M. Gibson, President, Cox's Armored Mini Storage Management Inc.

We owe it to our clients to be as aggressive as we can with pricing to improve the bottom line, however, we are taking into account any COVID-19-related issues that our tenants report to us, such as loss of income, and our clients are supportive of this. We’ve been working with tenants to defer or reduce rate increases if they have been negatively affected by COVID-19.
―Korey Hanson, President, Argus Professional Storage Management

At this point, we’re essentially operating our pricing and revenue management as “business as usual,” but we are very aware of the unique and unprecedented times our world is in right now. We’re ready to make any necessary adjustments at a moment’s notice.
―Ben Hendricks, Chief Operating Officer, Five Star Storage

We’re maintaining competitive pricing with the surrounding market. Some markets are experiencing full occupancy and standard prices on new rentals have actually been raised.
―Natolie Ochi, CEO and President, SKS Management LLC

We are 99 percent back to business as far as our business/financial model. We strive to have a harmonious relationship with the owners, customers and managers in all aspects but especially in rate management as it's the primary factor that involves all three of the groups. Maximizing revenue is the goal yet respecting the community to whom we provide services. We’ll continue to raise rates as occupancy increases and re-evaluate street pricing if occupancy decreases greatly.
―Tocarro Williams, Director of Operations, Donald Jones Consulting & Service LLC



Are you using an automated revenue-management system, or are you handling rate adjustments manually?

We use an automated revenue-management system. However, we include a human touch, as this is very important, especially in today’s environment. Our site managers and district managers have influence and approval power over rate increases on a case-by-case basis. They know their customers better than anyone, and we typically don’t want to lose a customer over a rate increase.
―Korey Hanson, President, Argus Professional Storage Management

We use an automated system that provides us with recommendations for our standard rates and existing customers’ rate adjustments, but we still manually select, modify and approve.
―Ben Hendricks, Chief Operating Officer, Five Star Storage

We use both an automated system and also review the list manually.
―Natolie Ochi, CEO and President, SKS Management LLC

We handle rates manually at every location as we know our customer base better than an automated system. This allows us to interface with our managers on their knowledge of each customer’s situation to preserve long-term accounts. We look at payment history, the date of their last increase, discounts on their accounts and occupancy of the size code of the unit they rent as we consider rent increases.
―Tocarro Williams, Director of Operations, Donald Jones Consulting & Service LLC



Do you find that you’re having to offer more discounts or specials to entice new renters in this time, or is business strong based on asking price?

We have been changing up our specials, but the end result is always the same … just different perception on how people look at it. We haven’t had to give away any more than usual, and most will pay asking price.
―Diane M. Gibson, President, Cox's Armored Mini Storage Management Inc.

During the earlier stages of the pandemic, we reduced prices and increased our concessions in order to keep rental velocity higher, as many of the REITS in our market did as well. However, in the months of July and August, rates have increased significantly, and business has been strong.
―Korey Hanson, President, Argus Professional Storage Management

Most [of our] locations are experiencing very high levels of occupancy. Demand is strong this summer, although accounts receivable is also high due to the delay in auctions during the first three-four months of the pandemic and extra leniency and rent deferments.

Income isn’t meeting last year’s levels at most locations. Lease-up facilities experienced high levels of move-ins in June and July, but lost momentum in leasing up in the first three months of the pandemic, which put a strain on meeting budget targets. We read a report by the Pew Foundation that 22 percent of Americans have moved (including college kids moving back home) or know someone who has moved since March. Self-storage starts as a temporary solution that often ends up being a long-term one for many of these people who have moved!
―Natolie Ochi, CEO and President, SKS Management LLC

We’ve assisted in opening a new development and the facility is offering specials to assist with their lease-up. We have three facilities where the economy is struggling, so we’ve reduced rents on specific units, while in other jurisdictions we offer a specific discount on certain issues upon move in. Since June, pricing in our markets has stabilized and we’re able to forgo specials or reduce rents at this time.
Tocarro Williams, Director of Operations, Donald Jones Consulting & Service LLC

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