As a business owner, part of our job is to always have an eye on the future. What self-storage trends do we see coming at us from the future that will impact our self-storage business?
Here are three trends I see that are reshaping the self-storage business and what will impact us in 2019.
1.Data Driven Decisions.
“Back in the day”, we would see a tract of land or an empty building and think to ourselves, this would make a great self-storage facility.
We would buy the land and start building.
At some point (for me it was in the early 2,000’s) the idea of getting someone to help us determine if there was enough demand for our storage facility became the practice.
That was my first real dive into making data-driven decisions.
I can remember it saved my tail a few times.
For years I used to tell people this was a very boring industry. The last big innovation was climate controlled space back in the late 1970s or early 1980s.
I don’t say that anymore.
The industry is changing faster than I can keep up with it.
One of the biggest changes I see is how owners and operators make decisions now.
You know, I hardly even run a preliminary analysis without knowing about what the current self-storage per capita is in the submarket of the facility or location I am looking at.
I know exactly how our pricing is compared to the rest of the submarket in which that facility is.
And I also know what specials our competition are running each day, and what we may want to offer today based on what they are doing.
All of this is now possible for smaller investors. Yes, it costs money. Yes, it isn’t always exactly correct. But, know this: the larger players are using programs like this to make decisions every day. In fact, it usually sets their rental rates for the day…automatically.
As owners, if we are not making data-driven decisions like this we are going to become irrelevant against the REITs and larger players.
We are going to have to change up how we do things, be willing to experiment and fail, get up and try something else, and willing to learn new ways of running our businesses.
I see using software that offers real-time data on markets as a real differentiator between self-storage companies in 2019.
Currently, we are using Yardi Matrix and Veritec Solutions as our data-driven software companies.
2.Continued Downsizing.
Do you know every day 10,000 baby boomers become 65?
Do you know that will continue for the next 12 to 15 years?
It is very likely this demographic trend will create lots of downsizing over the next few decades. This is all good news for us now as we look into the future and are making decisions about getting in or growing our self-storage businesses.
Although self-storage as an investment class of real estate is relatively new compared to multi-family, retail, office and industrial, it has proven it is a viable investment asset and can hold its own, especially in economic downturns.
I think this downsizing trend will continue into the foreseeable future. This is a positive factor for us.
I would pay attention to where people are retiring to, where they are moving from, and how much they typically downsize in making decisions about where you may put future projects.
We also see that Boomers tend to like full-service facilities with lots of different services. So keep that in mind as you think about your customer base and what you are going to design in your project.
3.Automation
People have been talking for the last number of years about automation. In 2019, I think it is going to be a real driver.
Not only is the Baby Boomer demographic impacting the self-storage industry, but the Millennial generation is now coming into its own spending power.
If our facilities are not relevant to them, they won’t even see us.
How do we be relevant to this growing demographic and their spending power?
Automation. Automation of all kinds.
We are now putting a kiosk at every facility. Even larger facilities, the ones over 50,000 square feet.
I used to say it, but now I have really seen it:
I have seen the millennial go to the kiosk rather than the person to do business even if there is a manager in the store at that time.
Being able to rent online is now a must in my opinion. For many customers, if they can’t be in control of the rental process, they just move on.
One of my partners was harping on being able to have our customers install an app on their phone that would allow them to use it to enter our facilities. I thought, what is the big deal about entering a code.
Now, the technology is available where they just have to be close to the card reader for the box to pick up the data from the customer’s phone and input it into the gate and open it for them.
As we are designing our facilities and deciding what features to have, every decision will now lean towards more automation.
Why?
To stay relevant. The millennial generation is only going to get more powerful as their spending power grows.
With the downward pressures on rental rates I see over the next few years with so much new space hitting at once, the more we can automate and the less personal cost we will have.
I got in the business 20 years ago and we typically had one employee for every $250,000 in gross income we generated.
For us, this is now $350,00.
Think of that. One full-time employee for every $350,000 in gross income is incredible. I bet there are very few industries that can claim this.
And for us the difference between the $250,000 and the $350,000 is automation.
Embrace it. Don’t resist it.
No telling where the next tech breakthrough for our industry is. Maybe we should have wireless cameras where customers can look at their stuff from their phone and save a trip to the facility to try and find something.
Perhaps is inventory bar coding where the customer can keep an inventory of what is in their unit.
Who knows. But whatever it is – lean in towards it.
These are the self-storage trends I think will shape our industry in 2019. We are making choices and decisions incorporating these trends this year as we grow our business.
Share your thought in the comment section and let everyone know what you see as self-storage trends shaping our industry this year.
