by Mark Lusky
For brainstorming purposes, periodically re-evaluate your self-storage facility to determine if you want to expand, renovate and/or do a cosmetic facelift. Those who explore and discover new opportunities may advance their profits, while those who stand still in their space may get left behind as more progressive competitors advance.
The discussion is well framed by Inside Self-Storage in a recent article that notes, "Vibrant colors. Lush landscaping. Interesting architecture. These hardly seem like phrases to describe self-storage facilities, but that's exactly what you'll find in today's unique mix of retail marries storage. Whether it's single-story buildings stretching over several acres in the heartland, or giant structures with multiple floors in the heart of the city, self-storage design is embracing colors and textures, walls of glass, and spacious and inviting offices."
Start by considering your near-to-mid-term plans. Are you in it for the long haul? Do you want to sell? What profits do you want to make over the next 3-5 years? Are competitors gaining on you or leaving you in their rear view mirrors? If so, why? If not, why not? What's the marketplace doing overall? What tenant trends are you seeing? What governmental/legislative/regulatory developments on the horizon or newly-enacted may impact your business model? How do you adjust your business model to best accommodate these new developments?
As you consider options, it might help to address them in light of the following:
1. Although self-storage traditionally has been viewed as a function-over-form industry (e.g., just give me secure storage regardless of what it looks like), there are strong trends toward all types of upgrading-from blending traditional storage with office and retail uses to improving cosmetic appearance.
Think of it as the difference between a functional, but dated dwelling unit in a condo complex and a completely renovated unit in the same complex. If demand is strong, both may be highly marketable. It's a matter of evaluating the costs and time of renovating versus the increased profit potential. However, if demand is weak, it may require upgrading to avoid vacancies, inability to sell profitably, etc.
This is where looking at trends, competitors and your tenants can help paint the picture of what you need to do (or not do) to optimize whatever outcomes you seek.
2. Get clear about what both existing and prospective tenants want today. Preferences and requirements vary widely based on location and other factors. If you offer a highly secure, well-lit facility in an area where many competitors have suffered numerous thefts, a cosmetic or other upgrade may not be necessary. But, if your facility is an eyesore amid otherwise attractive surroundings and tenants/prospects indicate that they would like to see improvements, you may want to think about, minimally, such upgrades as a fresh coat of paint and cleaning up blighted areas.
3. Do you see a great opportunity to beat up on the competition by being the first facility in your area to upgrade? You may discover that, counter to just "holding your own," there may be a highly profitable benefit to reaching for the brass ring. Of course, always view these scenarios in the context of your crystal ball about the economy and other factors impacting self-storage. Then, do "expect the best" and "prepare for the worst" pro formas and decide if the potential upside outweighs the potential downside-and proceed accordingly.