It was a very different Self Storage Association convention in Las Vegas this year for me.
Today I want to talk about my big takeaways from the convention.
This is a global, 30,000-foot view that we can take down into our submarkets as we look for our next deals.
For the first time in years, I was just a participant at the convention. I wasn’t trying to attend classes in-between working and managing a booth. I really missed having a booth where I could connect with more people. But I was able to focus on my company’s growth and use the time to reflect on where we are and where we are going.
One of the main areas of my focus was our facility management. Over the next quarter I’ll be using things I learned to dive deep into how management can create real value for a facility and portfolio.
I say often that self storage has a very bright future over the next decade. The convention validated that for me.
Three main reasons our future looks great:
1. Self storage is becoming a main stream product. A larger percentage of the population will be using it.
2. Population growth (i.e. population growth = more demand).
3. There are other demand drivers at play:
- home ownership is still down from the peak at 69% (currently around 62%)
- extraordinary events that cause transition for people, etc..
Our product has a lot going for it and the last recession proved that.
However, for the first time in my self storage career (I missed the 2004-2006 boom period), we are at the end of a 12-month construction boom.
It seems like there’s a lot of construction of self storage going on, right? You see it everywhere.
In perspective, we are still not at 2004-2008 construction levels yet, but there is still a lot going on.
How does that affect us?
Analyzing self storage properties for acquisition is one way we’re affected.
When I look at a facility, I need some method to determine if the market is healthy enough to move into. This has to happen before I can decide if I should order a feasibility report.
I do this by going to the nearby competition and checking them out. If pricing was high, discounts low, the facilities looked full, odds are there was still a lot of demand.
It worked well for me. A few times the feasibility report turned up something in the pipeline. But for the most part, I felt I knew the submarket fairly well after going through this process.
I learned at the convention that I better rethink this. It’s time once again to up our game in doing our homework on the next project.
For example, If I was looking in Dallas (which I am) my current process doesn’t take into account are the 125 potential facilities that are in some phase of entitlement in that market.
The feasibility report would uncover that information and how it might impact an opportunity I found. But I would most likely have to let that one go, and the one I could have purchased in another market is then gone.
Do enough of that and buying becomes very expensive.
I realized I need to create some structure in my preliminary analysis. Something that allows me to get some handle on pipeline property for the market I am looking at in general and the submarket in particular.
Factor that into the mix, and I have upped my game.
I have two sources for entitlement properties I am exploring. I want a quick reference to determine the potential in a particular market or or part of the country.
My goal is to create a one sheet form that will help determine the potential market demand in a preliminary analysis. This will help us quickly understand if we should focus on an opportunity at all.
As I get further into this discovery, I will share my findings and update the courses.
But the takeaway is that we all need to do our homework on the markets we are considering at a whole new level. If I go after too many properties I have to let go, I won’t be in business long. I’ll have spent too much money chasing dead-end opportunities.
I will be sharing any new procedures I create that work for me in this area. If I create a new form, I will add it to the QuickStart Academy courses that many of you are using to support your acquisition process.
I also have many more management specific ideas I will share over the next quarter. But for some reason issues around the acquisition process really resonated with me at this Self Storage Associations convention.
Please share with me your challenges and successes as you grow in this awesome business.
