YEC members represent nearly every industry, generate billions of dollars in revenue each year and have created tens of thousands of jobs. If they can go on your website and see that new rentals pay more per month than they do, theyâll be a lot less likely to gripe about their rate increase or move out to the facility down the street. For your facility, raising rates for all tenants once per year might be just perfect. Jana Haecherl As can be seen in the chart, you would need to raise the monthly rent in this example by at least $6 in order to break even after the loss of a tenant. Use tenant logic to predict the loss of tenants and control what you can to ensure for a successful rate increase. Marketing self-storage facilities have one primary goal, to increase self-storage rental conversion – moving tenants into empty units. Self-storage facilities rent space on a short-term basis (often month-to-month, though options for longer-term leases are available) to individuals (usually storing household goods; nearly all jurisdictions prohibit the space from being used as a residence) or to businesses (usually storing excess inventory or archived records). But consistent rental rate increases are a necessary part of a successful self storage business model. The management software comes with a fully integrated website that allows tenants to e-sign lease agreements, rent units online, and pay their bill via their own online account. Knowing how much and when to increase rent can be a delicate problem. Even if itâs a small change, curb appeal is huge. Some of these laws are clearly applicable to self storage, some clearly are not, and others are uncertain in scope. Offering over 1,800 self storage facilities nationwide to accommodate household or business commercial storage with a variety of self storage unit sizes specific for your storage needs. We understand that you are not looking for people who will rent living spaces, but spaces to throw their stuff in. Self Storage owners, keep your rental spaces clean. If your facility is enjoying near 100% occupancy, itâs a clear sign that your rates are too low. Nevertheless, industry analysts fear that this glut of new storage facilities will exceed demand in the short term, causing a decline in the decade-long high returns enjoyed by some of the largest players in the industry, including Public Storage and Extra Space Storage. On average the smallest units, for example a 5x5, can be rented for as low as $65/month while the larger ones, like a 10x20, can cost upwards of $135/month on average. While other emerging players in the self storage industry compete by offering on-demand services by storing tenants' items in distant, less-expensive storage warehouses, traditional storage operators are also having to adapt by designing more visually appealing facilities and building further from population centers. They pay way more per month than a typical tenant in fees every month, and they still donât move out. While storage operators are attempting to adapt by building more attractive facilities with smaller footprints, the burden of paying for these improvements will still fall on storage unit tenants. For example, adding truck rental can increase income a few thousand dollars on a self-storage facility. Every storage facility is unique, so it might be difficult to know the best way for you to approach a price increase until youâve actually done it. Know that no matter what you do, there will surely still be complaints. But consistent rental rate increases are a necessary part of a successful self storage business model. If youâre going to do a rate increase, consider the potential benefit of hiking rates up a little further. So how do you make the change smooth and stress-free for your tenants and managers? Use these 5 easy tips to rent more self storage units. They will just shoot you an email that your space rental increase. You can raise rates on indoor units more often than drive-up units and suffer fewer move-outs. Loyalty matters to your customers. Theyâre a necessary evil, but with proper planning and customer service, theyâre little more than a bump in the road. The UK Self Storage industry is one of the biggest in the world, coming second only to the US helped popularised with hit TV shows such as Storage Wars.Surprisingly, British residents rent 9 times more storage space than the Germans, and 4 times more than the French, causing a serious boom in the UK’s self-storage industry. and mingle with tenants. Pointing out the ways in which the facility has improved during their tenure will give them tangible proof of the necessity of their rent hike. A 5x5 foot storage unit … Placing a cap on supply growth while demand continues to increase will significantly increase rental prices in the medium to long term. Itâs also smart to just show the increase amount - and not their full rent rate - in your rate increase letter. So many … self-storage consumers. Google’s Remarketing platform is an effective way to bring leads who have left your website back for another chance at closing the deal. Always gauge the customer reaction, the retention rate, and the net increase in revenue. Population increases and more people need a space to call home. Description. Financial Independence In 3 Years Instead Of 30? Be strategic, using resources like your facility's economic occupancy numbers to make an informed decision. Additional resources on customer service in self storage: 6 steps to resolve customer conflict, Re-evaluating our views on customer service, and PR and crisis management: A comprehensive guide for managers. They also donât want to rent a moving truck and freeze their toes off when itâs below zero and biting cold in January. “But, an increase makes customers think, ‘Do I really need this? Without any note. If no new storage units are built in a city, occupancy at existing facilities will increase. All Rights Reserved, This is a BETA experience. In addition, over 5 percent of operators sell insurance at their facilities, a 1 percent increase over the past 1 months. Accordingly, people will either use that space to store their own items, thereby reducing the need for an expensive self storage unit, or they will rent out their empty garage space to others online. Plan a charity event or host a fun, on-site event of some kind (like a barbecue or wine tasting!) Minus first month promotions and such, you never want to ask current tenants to pay an increased rent rate without first adjusting your web rates to be the same price or more. |9 min read. Itâs simply tougher to move out when you have to carry things upstairs or use an elevator, and tenants who rent upstairs feel like theyâre getting more for their money with an indoor, climate-controlled unit. As the founder of a peer-to-peer storage marketplace in the U.S., here are my four predictions about the trajectory of the self storage industry in the coming years. Maybe your customer service is way better or your facility has recently been renovated. My final prediction for the self storage industry looks 10-20 years into the future. If you realize a particular method doesnât work for you, you can try something else next time â and when it comes to rate increases, there will always be a next time. You can help managers deal with complaints by prepping them far in advance and offering best practices and real life calls as examples of how to deal with a difficult customer who objects to the rate increase. SelfStorage.com has 234 storage facilities in Vancouver. In 2011, only $241 million was spent on mini-storage facility construction. Keep in mind, however, that certain customersâ prices are easier to raise than others. Inflation makes supplies more expensive. They likely chose you because you were the cheapest in town for the first month - and their price increase might spur them into moving out and finding the next cheapest rate. Of course, more than one tenant may leave, or none might leave at all. I use Extra Space Storage for 8 months. Easy Storage Solutions provides web-based self software for small & medium sized operators in the self storage industry. Some tenants may leave as a result of the price increase, but if theyâre willing to commit the time and money that it takes to remove all their belongings from their storage unit (the average move-out costs close to $200), they probably werenât planning on sticking around too much longer anyway and used your necessary rent increase as the excuse. Increased supply may result in lower unit rental prices as storage operators compete to fill their units. Rental Rates Typical rents of $0.50 up to $4 per sq. Renters of larger units, for example, will generally tolerate greater increases in their monthly rent in terms of raw dollar amount, while renters of smaller units will generally tolerate increases of a greater percentage of their previous rent. A graduate of South Dakota State University with a master's in mass communication, Jana enjoys bringing technology, web marketing and industry news and tips to self storage owners and managers. In addition, storage facilities may not provide the same amount of sales tax and other revenue as alternative commercial or industrial construction. When potential customers call your facility and ask for the price of your 10x10 unit, instead of simply answering, “The monthly rate is $99,” differentiate your facility by starting a conversation. Plus I remember in Ca, if you late with payment 10 or more days, they have rights to charge $10, each 10 days. Guidelines for Self-Storage Rent Increases: Frequency, Amount and Notifying Tenants. 2. New York joins other major cities, including San Francisco, Miami and Charleston, that have similar restrictions, with others likely to follow. Consider raising student prices on a yearly basis before prime student rental season. Thank a Vet! As the competitive advantage of physical location decreases, these online channels provide new opportunities for emerging storage innovators to build upon and disrupt the industry. Just list the increase amount. People will always come in and say they can get a better deal from the storage facility down the road, but can they really? Get a fresh approach to rental-rate pricing and learn how a varied, percentage-based increase strategy can reduce move-outs. In this case, youâll want to be sure to time your increase with a noticeable improvement to the property like a new, modernized gate, a freshly painted parking lot, or bright, beautiful landscaping. 1) Give the move-in price, not the monthly rate. Typically, the smaller the space, the less tolerant the renter is of a price increase, and students usually rent small spaces like 5âx5âs. Likewise, storage facilities can increase their prices due to the lack of new competition, effectively creating a monopoly in their local communities. You donât have to increase everyone at once. Every storage market is different, and what works for the storage facility down the street might not work for you. Self storage less volatile than other real estate types. Between digital ad spend, SEO and storage aggregators, there are many opportunities for storage units to be found and researched online. How Much Does it Cost to Rent a Storage Unit? Renters donât want to pay more, managers donât want to deal with a slew of tenant complaints, and owners donât want to lose customers who may already be on the fence. But if you put in the time and effort, you can increase your rapport with your customers and reduce the number of unhappy callers later on. What can I do? Much has been written by the self storage industry about rent increases, and each company handles them differently. View them. You donât need to give tenants a lesson on inflation or explain the economyâs effect on small businesses. The only thing tenants hate more than rate increases is unexpected rate increases they werenât planning on. First, youâll need to iron out all the nitty gritty details â when to increase and by how much, which tenantsâ rates to increase, how to inform the tenants, how to handle the potential flood of complaints, and of course how to maintain your sanity while politely responding to any furious phone calls. Explain to them the reasons why it is a necessity in self storage. © 2021 Forbes Media LLC. Tenants in small units will tolerate larger percentage increases in rents than large-space tenants. SelfStorage.com has 237 storage facilities in Tigard. This prediction excites us at Neighbor because we help people monetize their empty space and find nearby, affordable storage options. It costs tenants a big chunk of time and money to move out - theyâll need to get a moving truck or friend with a pickup, and take time out of their busy schedule to lift heavy boxes and sort through stuff before trashing or selling. While demand continues to increase, it will be outpaced in the short term by new supply. If you liked this blog post, you may also like: The complete guide to offering move-in trucks, Homelessness + self storage: How to be compassionate while preventing live-in renters, and A 4-step guide to attracting the college student market. Started at $110.00, then after 6 months became $160.00, now May 2019 it is $204.00. Taxes go up. To put that in perspective, only 1 in 17 American households used self storage units in 1995. Rather than requiring the construction of new storage facilities, tenants can rent underutilized space within existing residential, commercial or industrial properties. When increasing rates, use a combination of good business sense and simple logic to determine who sees price increases first. If your 5-by-10 units are only $60 per month, the same percentage would be a $3 increase. YEC members…. Many tenants set their rent payments on autopay and forget their actual rent rate. Of course, 7% might not be the right amount. On … Importantly, many of these laws create so-called strict liability offenses. You may opt-out by. And it is second time they raise rent $10. The decision cited a lack of space, displacement of businesses that produce high-quality jobs and a negative impact on the aesthetics of the city for the enactment of the law. Imagine the state of transportation and homeownership. The industry standard for price increases is to increase rates every nine months, but many REITs increase their prices more than that. For my company, that industry is self storage, composed of small facility operators and a handful of big-name players that dominate the market. Public storage rent goes up every 6 months with no justification. Individuals, families, and businesses can count on us as a reliable one-stop storage solution provider in Singapore at all times. Jana is a marketing communications specialist living in Kansas City. For example, moving boxes, packing materials and truck rentals offer customers a one-stop shopping benefit as an incentive to rent a unit from you. Nobody likes price increases. In response to this trend, for example, my company is seeking to unlock supply benefits that decrease prices for the consumer. Donât let rate increases ruin the fun you have running your storage facility. Tigard Self-Storage: With an average price of $121.00, self-storage is more expensive than in Portland. If youâre raising rent for ten customers all paying $50/month and you expect one tenant to leave because of the price increase, plan to make up the loss in the new revenue from your remaining nine tenants. ... Increase Visibility. Your self-storage investment has greater potential value for increased profitability if you offer products to sell in addition to the storage fees you charge. If a current tenant goes to your website and sees that a new renter can pay less for the same size unit, theyâll surely be upset - and for good reason! If youâve recently taken over the property and some of your renters havenât ever seen a rent increase, some of your long-term renters will be flabbergasted, and youâll need to handle them with kid gloves. The self-storage industry is competitive. Self Storage Rental Prices. What long-term changes do you expect to see in the self storage sector in a post-COVID-19 world? 4. Timing is critical to the success of a self-storage rent increase, especially in todays market. Self Storage rent increases are becoming harder to evaluate in the market for small investers with the number REITs using the demand marketing model. How much self storage should cost. Personal car ownership will likely become less and less popular, which will free up garage space. Renting a storage unit is a great way to store unused, but needed, items. I’ve also learned that several smaller cities intend to cap storage facility construction. Sugarman: Touchless rentals, remote operations … Security is our top priority, includes Gate access, Fully fenced, well-lit, and constantly monitored security cameras. In New York, for example, the city recently signed a zoning freeze into law. Tenants who came to you on a super-special discount are most sensitive to price increases. People would drive past a storage facility, remember the location and return to it later. Nitzberg warns against going toe to toe with the dumpster in the name of a small rent increase. You make money when you buy, operate, AND sell. Theyâll understand, of course, but they wonât like it. Never send out a rate increase letter before you adjust your standard rates to be the same or more than the rent rate youâre asking current customers to pay. Vancouver Self-Storage: With an average price of $114.00, self-storage is cheaper than in Portland. Despite being a mature industry, self storage is experiencing innovations and growth that continue to make it a worthwhile investment and an interesting area to do business. Show them that youâre sympathetic and let them know you hate to raise rent. Whether youâre renting an apartment, parking space, storage unit, or acre of farmland, thereâs just no way around rent increases for your space. Over 5 percent of self-storage operators now report the sale of ancillary items at their facilities, including boxes, moving supplies and moving vehicle rentals. On the other hand, if you were to raise everyoneâs rent by exactly 10%, the one with the large unit would be paying $15 more while the one with the small unit is paying just $3 more per month. Buying or building a new self storage facility and not sure where to start? Donât remind them! Plus, their space will soon be occupied by someone who is happy to pay you full price. Energy costs increase. Ready to make even more money? 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On the other hand, it costs them nothing to complain to you about rent increases - and as the old adage goes, âif no one is complaining, you probably didnât raise rates high enough.â For the few long-term renters who do decide to move out immediately after a rent increase, know that itâs likely they were already planning to move out and your rate increase just spurred their action. Chronically late tenants are much more tolerant of rent increases than on-time paying customers who are careful with their money. Online channels will become the primary way consumers find storage facilities. In order to match this growing demand, real estate investment trusts (REITs) have poured an enormous amount of capital into constructing hundreds of thousands of new square footage. Industry ownership is fragmented, with 18% of facilities owned by the six largest public companies, 9% owned by the next top 100 operators (minus the REITs), and 73% owned by small operators. I’m confident that homeowners sharing their unused space will become more commonplace as the sharing economy becomes the primary medium of transaction. The good news: your tenants probably already understand this concept, too. Self-Storage Rent Increases: A New Theory to an Old Practice Revenue management is a critical part of every self-storage manager’s job. Do whatever you can to get their mind off of the extra money theyâre now spending and back on why they love to be your customer. This trend isn’t just important because it affects building costs and supply; it also affects occupancy and consumer prices. Home > Rental Services > Storage Unit Rental Cost. You donât need to explain all of the reasons behind the increase - your tenants donât need to know about your occupancy, and they likely donât care anyway. 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