How Facilities Can Stay Competitive in 2023 and Beyond

If you’ve been interested in self-storage investing for a while now, you may be familiar with the role Covid played in recent industry performance. The onset of Covid-19 in early 2020 initially created a decline in occupancy and rent levels, before eventually driving an incredible amount of demand for self-storage in 2021 and 2022. 

Between people relocating out of cities, spending more money on goods, receiving stimulus checks from the government, and enjoying historically low mortgage rates, the need for self-storage hit an unprecedented high.

But now we’re three years past the height of Covid, and that initial boom in demand has (as predicted) slowed, and consumers are facing new economic hurdles—such as rising interest rates.

Where does that leave the self-storage industry and its investors? And if demand has declined, what can investors do to keep their facilities competitive? Let’s take a quick look.

Self-Storage Demand Declines Post-Covid

Across the board, it’s been difficult to navigate this post-covid era of economic recovery. The housing market slowed as inventory of single-family homes fell and mortgage rates rose. In terms of self-storage, this shift in the housing market is significant.

Around 44% of people who rent self-storage do so because they’re moving.[1] When fewer people move, the demand for self-storage decreases. 

The encouraging news is, real estate trends differ by community. What’s happening nationally may not be the case in your neck of the woods. At Belrose, we conduct local feasibility studies when acquiring a new facility for just this reason. What matters most to us and our potential to turn a profit is what’s happening on a local level. 

Maintaining a Long-Term Outlook

While we may be experiencing a slowdown in the market now, keep in mind that bumps in the road are no reason to run. While growth has declined since the Covid boom in 2020, we are still enjoying growth rates above pre-pandemic levels. Perspective is important here, especially as we continue navigating such a challenging economic environment.

If you’re concerned about this recent decline in growth, just consider the stock market and its ongoing volatility. Any asset class, whether traditional or alternative, is going to have its ups and downs. What matters most is doing your research, conducting your due diligence, and working with an experienced team who knows how to help your investment weather any storm.

Staying Competitive Despite Recent Challenges

At first glance, most self-storage facilities appear fairly the same. They’re large buildings with individual units, garage doors, and concrete floors. When combatting challenges like declining demand, what do we do to make sure our facilities stand out from the competition and generate cash flow for investors?

Addressing this question is one major advantage of working with a sponsor like Belrose (as opposed to DIYing your investment), as we’ve helped facilities generate income in a number of economic climates. As experienced operators, we’ve found what’s worth putting our energy and capital into in order to draw renters in and charge higher rates. Having a facility that’s clean, well-maintained, and offers modern amenities is, for example, a simple way to increase the value of our investment. 

Why? Even though people don’t spend much time in our facilities, they still need to feel confident that their belongings are safe. If every time they visit their unit the building is falling apart, dirty, or otherwise unkempt, they’re going to take their business elsewhere.

Here are a few other areas of focus that help us stay competitive in today’s market:

Location

People tend to choose a self-storage facility based on familiarity. When they walk by or drive by a facility and see its signage every day, they’re more likely to become renters when the need eventually arises.

For this reason, we pay close attention to where we put signs, with the goal of making it clear as possible to passersby where our facility is located. If there’s any doubt whatsoever about how to find our facility from a major road, we know this will lose us valuable customers. Simply put, visibility is a huge factor in making a facility successful.

We even include QR codes on our facility signs, so people can scan the code and get all the information they need in an instant. They can even sign up for a unit directly from the link, meaning they never even have to step foot on the property to become new renters.

People

We have to trust the people operating our facilities to put their best foot forward every day. They answer the phones, greet new renters, and keep the facility clean and well-maintained. Most storage facilities don’t have actual salespeople on their team, so we like to think of our desk clerks, managers, and maintenance staff as our sales team. They’re the ones interacting one-on-one with customers every day, and they can make or break our reputation as a facility. 

Technology

From QR code sign-ups to online payments, clients expect a digitally driven experience. Technology has the ability to take away any friction potential current renters may be feeling by automating payments, providing secure facility access, and more. 

Specialty Storage

A facility should reflect the demands of the community it’s in. If we purchase a facility along the coast, for example, we want to make sure we’re offering specialty storage for boats, RVS, or anything else that demographic of customers may be looking for. If a facility is an especially hot, humid, or cold region, climate-controlled units may be a priority as well.

The Bottom Line?

Here at Belrose, we’ll take these recent bumps in the road over stock market volatility any day. Real estate investing (and more specifically, self-storage) has proven time and time again that it has the ability to help investors achieve their goals of security, growth, and reliable income.

Not to mention, knowing how to make a facility more competitive is just one advantage of working with an experienced team like Belrose. If you’d like to learn more about investing in self-storage, send us a message today.

Sources:

[1] Self Storage Income