Self-Storage’s Return to Normal: Operation Benefits
The self-storage industry is experiencing a return to normalcy after a period of significant growth.
Self-Storage’s Return to Normal and this presents an opportunity for self-storage operators to refocus their efforts on core fundamentals such as revenue management and marketing to ensure a smooth landing. By paying attention to industry trends and key performance indicators, operators can gain valuable insights into their own market and make informed decisions to navigate the changing landscape.
One effective way to gauge the national self-storage sector is by monitoring the reports of publicly traded real estate investment trusts (REITs). These reports provide data on investments, development activities, and operational metrics like rental rates and expenses. While the REITs have a vast footprint, smaller operators can use this information as a benchmark for their own facility’s performance and stay informed about emerging trends in their market.
Recent indications suggest a cooling demand and a softening of rates across many self-storage markets. This trend is supported by the performance of REITs and online tracking resources within the industry. This return to more normal conditions was further emphasized during a keynote presentation by Mike Burnam, president and chief investment officer of StorageMart, the largest privately held self-storage operation in the industry. Burnam shared proprietary information, spanning two decades, to highlight that the current market conditions are indicative of a post-pandemic normalization.
While the high revenue growth experienced in the previous years was exciting, the industry is now witnessing a slowdown. To address this decline and make strategic decisions to mitigate its impact, operators must focus on maintaining strong fundamentals. The key lies in effectively managing day-to-day operations, which is why experts like Rick Beal and Magen Smith, co-founders of Atomic Storage Group, emphasize the importance of pricing, marketing, and expense management.
By delving deep into performance data and forecasting future demand, operators can gain valuable insights into their business. Analyzing these numbers can help identify areas for adjustments, including pricing and expenditure, to maintain success in a changing market. Additionally, technological advancements in automation can offer opportunities to increase efficiency and reduce costs, ensuring favorable margins.
The current market conditions provide an excellent opportunity for operators to assess their business and strengthen essential areas that drive its success. This includes ensuring well-trained managers who can analyze financial reports and leverage the knowledge gained to implement actionable changes. By consistently executing core principles, businesses will be well-positioned to capitalize on market shifts, be it in challenging or prosperous times.
If the markets in which operators operate are experiencing a slowdown, doubling down on tried and tested aspects of the business will bring stability and facilitate a smooth transition. Emphasizing revenue management, marketing, and efficient operations will lead to a successful landing in the face of changing market conditions.
