December 1, 2003

8 Min Read
Handling Market Saturation

You did your feasibility study, went through the tedious trial of getting your plans approved, built your site, hired your managers and opened your doors for business. You have been open for several months now, but the rentals are just not coming as projected. Perhaps during the year it took you to go through the planning stage and the building of the site, other sites were being completed, converted or were on the drawing board. Competition is now very stiff in your area. What can you do to increase rentals and get your share of the market?

Your site has been established for years. You always enjoyed a 95 percent occupancy rate, but that has been steadily dropping over the past year, and now you can't seem to get above 80 percent. What is happening in your market area? Why can't you increase your rentals? Chances are you could be experiencing the effects of an overbuilt market. What can you do to combat this scenario?

Every day you see a new storage facility being built on what seems like every street corner or freeway exit. Your site is not movable; you can't change that. What you can control are three key factors: management, marketing and pricing.


Your on-site management personnel is one of the key elements in the success or failure of your facility. The manager will make or break you. Selecting the management staff is not an easy task: It takes time, diligence and common sense. Each facility has a personality, and in order to make your facility a success, you must choose a manager who's talents and personality will match that of the facility. A facility that is in an economically challenged area may need a manager that is a little more down to earth and hard-edged than a facility that is in an upper-end area where your clientele may identify better with a "yuppie"-type manager.

Once you have selected your manager, you must train, review and retrain them. Shop the other facilities in the area and see how your manager will compare to theirs. A manager at a 20-year-old facility who is customer-service oriented keeps his facility spotless, has marketing ideas and is willing to institute them, possesses good telephone skills, and can run rings around a mediocre manager at a brand-new, state-of-the-art facility. Remember, facilities don't compete for tenants, managers do. If your manager is not productive at your facility, then you must ask yourself if it is tools they are lacking, such as training, or whether it is something you probably can't change, such as a negative attitude. If so, then you must make a hard business decision and consider replacing that manager.

In a saturated market, not only do the on-site managers need to compete for tenants, but the owner must also compete for quality management. With new sites popping up almost monthly, not only does the tenant have a choice of where they might store their goods, but the quality manager now also has choices of where and who they will work for. As part of your feasibility study, you should have shopped the other facilities in your market area. If you did, then you will know who the top managers are. If those managers feel they aren't given the opportunity to manage, that they can't make onsite decisions, they are always micro managed, etc., (and, by the way, this is probably the number-one reason managers call my placement service seeking other employment), then these good managers will seek employment with the new facility being built down the road.

Owners should keep in mind that good management is worth its weight in gold. Paying managers a few hundred dollars a month more than the other guys in the area is just a drop in the bucket compared to the thousands of more dollars a good manager can bring in each and every month. A progressive bonus program, retirement plan or medical insurance, not to mention quality housing, if any, should also be considered when an owner competes for management staff.


Marketing is one of the key factors in a saturated market area. Most managers and owners think marketing is the largest Yellow Pages ad they can afford. In a saturated market, the manager must not rely on just the Yellow Pages ad to make the telephone ring, they must extend extra marketing efforts, and the owner must be willing to spend the money to support the manager's marketing efforts. The old saying "it takes money to make money" is so true when it comes to marketing and having a successful investment.

Knowing your market area will determine your plan of action when designing a marketing program. Obviously, a facility in an industrial, commercial area will market differently than a facility in a residential or rural area. Larger cities will market differently than the smaller college or military communities. Gather your facts, i.e., places to market, items you will use in your marketing efforts and the costs involved. Marketing will consist of the old, tried-and-true methods--outside ads in local publications, flier distribution, community involvement, print, audio and visual media, cold calling, etc. No matter what method you choose, the key factor is actually doing the outside marketing. You should have some checks and balances in place to make sure the marketing is getting done, then track the results of your efforts. Unless you are Bill Gates, you probably don't have enough money to throw away without knowing if the money you spent or the efforts you extended are paying off.

Motivating your on-site management staff to actually market is one of the most difficult tasks for an owner or supervisor. Not all managers are cut out for outside marketing, and trying to force a manager into a position he is not comfortable with will only cause your marketing efforts to fail. Look at your management staff, see which manager possesses the skills needed for outside marketing and make that manager your marketing expert. Your managers need to understand that in an overbuilt market extra efforts need to be utilized that perhaps didn't need to be in place several years ago. If you are just opening a new site and hiring management staff, then be sure to explain in detail and in writing the manager's job duties, your expectations and goals. If you have an existing site and staff, then now is the time managers down and explain the market situation and how you will work together to get your share of the market.


Lastly, pricing must be considered in a saturated market. If you have recently built or are considering building a new site, then part of your feasibility study consisted of shopping your competition and obtaining different site's rental rates. If you are an existing facility, then your management staff should shop the competition a minimum of every three months. To the tenant, price will very often determine where they chose to store their goods. Part of your manager's telephone training should be to use verbiage such as, "We are all within a few dollars of each other. You should not only be shopping price, but should also consider location, hours of access, convenience and so on. Please come in and have a cup of coffee with us and let me show you our complex."

You must price your facility competitively. Perhaps a newer, state-of-the-art facility with individual door alarms, video cameras, extended access hours, etc., or a facility with higher ceilings, hence more cubic footage, can charge more for their space than another facility in the area. However, this information must be expressed in all printed advertisements and utilized in the manager's telephone presentation in order to be effective in closing the rentals.

Discounting seems to be a way of life in the self-storage industry, but in my opinion, it is not healthy for the industry. It causes price wars and lower income. It erodes a manager's telephone sales presentation where all they have to "sell" is price--it's easier than taking the time to sell the facility and what they have to offer the tenant. I know of some independent companies that offer "pay three months, get three free--pay six months, get six free." Obviously, my managers in that market area had to be trained, motivated and focused on renting their space and competing within that market. If you must discount, then be competitive with what is happening in your area. Only offer one type of discount, i.e., pay two months, get the third free, or a 10 percent senior discount, but not both. Your discount program should also have an ending time, i.e., pay half price the first two months, then your rate goes to the standard rental rate.

Remember that your management staff, your marketing efforts and pricing of your space all go hand in hand when getting your share of the rentals in an over-saturated market. Don't be afraid to try new and unconventional marketing ideas. Don't be afraid to replace management staff that refuses to market or has a negative attitude. Don't be afraid to be competitive in your pricing or discount program. Tread into the uncharted waters; each facility, manager or community has its own unique personality.

With the year 2000 upon us, we begin to wonder where our industry will head. We know that as the population continues to grow--along with our need to amass as many personal items as possible--that storage will always be a needed commodity. What new security items, marketing techniques and management profiles we will need in the future is uncertain. One thing that is certain is that a saturated marketplace is something that we all will probably encounter. If we cooperate and keep our rates level, there will be enough business for everyone, and we will all make money forever.

Pamela Alton is the owner of Mini-Management®, the largest nationwide manager-placement service serving the self-storage industry. Mini-Management also offers full-service and operations-only property management, policy and procedures manuals, sales and marketing training manuals, inspections and audits, consulting and training seminars nationwide. For more information on the various services offered by Mini-Management, call (800) 646-4648.

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