Some tenants may leave as a result of the price increase, but if they’re 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 weren’t planning on sticking around too much longer anyway and used your necessary rent increase as the excuse. 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. Whatever makes you better, be sure to have your elevator pitch prepared when customers come to you and say “well, maybe I’ll just go to Cheaper Storage Place Down the Road instead!”. And it is second time they raise rent $10. Young Entrepreneur Council (YEC) is an invitation-only, fee-based organization comprised of the world's most successful entrepreneurs 45 and younger. You make money when you buy, operate, AND sell. 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). Tigard Self-Storage: With an average price of $121.00, self-storage is more expensive than in Portland. If they can go on your website and see that new rentals pay more per month than they do, they’ll be a lot less likely to gripe about their rate increase or move out to the facility down the street. Bad weather makes for an ideal time to increase rates. You’ve got the perfect facility and a beautiful truck your customers love. What can I do? Up until now, supply has kept up with demand, with over 90% occupancy rates being typical since 2015, according to the 2019 Self Storage Almanac from Mini Storage Messenger. Online channels will become the primary way consumers find storage facilities. You can either get a storage unit with electrical hookups, climate … Expertise from Forbes Councils members, operated under license. If you raise everyone’s rent by, for example, 7% each year they’re at your facility, the increase won’t catch them by surprise and you’ll be better able to integrate your projected earnings from your price increase into your budget. 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. Know that no matter what you do, there will surely still be complaints. 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. 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. How much self storage should cost. Every storage market is different, and what works for the storage facility down the street might not work for you. Email feedback@yec.co. Chronically late tenants are much more tolerant of rent increases than on-time paying customers who are careful with their money. Jana is a marketing communications specialist living in Kansas City. Whether you’re renting an apartment, parking space, storage unit, or acre of farmland, there’s just no way around rent increases for your space. Likewise, storage facilities can increase their prices due to the lack of new competition, effectively creating a monopoly in their local communities. Questions about an article? Self Storage owners, keep your rental spaces clean. Even if it’s a small change, curb appeal is huge. Inflation makes supplies more expensive. You don’t have to increase everyone at once. Placing a cap on supply growth while demand continues to increase will significantly increase rental prices in the medium to long term. YEC members represent nearly every industry, generate billions of dollars in revenue each year and have created tens of thousands of jobs. My final prediction for the self storage industry looks 10-20 years into the future. They’ll understand, of course, but they won’t like it. While their loyalty doesn’t make them exempt from rent rate increases, it’s a nice gesture to give them a small discount for their loyalty when compared to street rates for new renters. They will just shoot you an email that your space rental increase. Storage Space for Rent How Much Does it Cost to Rent a Storage Unit? For example, an extra $10 is not much when the renter has been paying for a large warehouse unit at $150 per month, but the guy paying $30 a month for his 5’x5’ will be a lot less happy. 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. Nitzberg warns against going toe to toe with the dumpster in the name of a small rent increase. Tech startups that aim to disrupt existing industries must know defining industry trends and understand where the industry is moving. Additional resources on rate and revenue management: Revenue management: The short-term and long-term solution to your storage facility's value, 15 metrics every storage owner should be tracking, and How to use your facility's occupancy rates to maximize profits. how to handle the potential flood of complaints, Revenue management: The short-term and long-term solution to your storage facility's value, 15 metrics every storage owner should be tracking, How to use your facility's occupancy rates to maximize profits, your facility's economic occupancy numbers, Re-evaluating our views on customer service, PR and crisis management: A comprehensive guide for managers, The complete guide to offering move-in trucks, Homelessness + self storage: How to be compassionate while preventing live-in renters, A 4-step guide to attracting the college student market, Jana Haecherl, Marketing Communications Specialist. Importantly, many of these laws create so-called strict liability offenses. This prediction excites us at Neighbor because we help people monetize their empty space and find nearby, affordable storage options. … If your facility is enjoying near 100% occupancy, it’s a clear sign that your rates are too low. Insurance The rental agreement on a storage facility must typically show any insurance protecting the stored property that is required by the renter. If you’re planning on doing consistent rate increases once a year, consider implementing them during a time of the year when moving out is inconvenient for tenants to discourage those who are grumping about the price and thinking about leaving from taking action. Young Entrepreneur Council (YEC) is an invitation-only, fee-based organization comprised of the world's most successful entrepreneurs 45 and younger. and mingle with tenants. If no new storage units are built in a city, occupancy at existing facilities will increase. 3. Read on for tips on nailing the details that will make your rate increase go a lot more smoothly. If you haven’t been doing regular rent increases, the first one will be most jarring to your long-term renters. Loyalty matters to your customers. Your rate is locked in and will not increase within your first year. For a small unit, it may only be $10 more per month - not an amount most people would scoff at or struggle to come up with. While this increased supply may temporarily halt rental price increases, many cities around the nation will continue moving to restrict or slow new self storage construction. 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. Tenants in small units will tolerate larger percentage increases in rents than large-space tenants. 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. You may opt-out by. Make sure managers know your competitors’ rates, how often they increase rent on average, when their last break-in was, and what makes your facility the better choice. 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. It’s also smart to just show the increase amount - and not their full rent rate - in your rate increase letter. Plus, their space will soon be occupied by someone who is happy to pay you full price. ft. per month in high population markets. Marketplace Networks: A Solid Advertising Attribution Opportunity, Navigating Google E-A-T For SEO Success In 2021, When Gatekeepers Become Allies, Everybody Wins, less and less popular, which will free up garage space. 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. Furniture self-storage costs. The self-storage industry is competitive. Energy costs increase. Today, if you just have one price increase per year you are either (1) having big jumps in rental … The average price of a self-storage unit is about $90/month, which is down 2.5% from 2017. Self-Storage Rent Increases: A New Theory to an Old Practice Revenue management is a critical part of every self-storage manager’s job. Marketing self-storage facilities have one primary goal, to increase self-storage rental conversion – moving tenants into empty units. ... Increase Visibility. Use tenant logic to predict the loss of tenants and control what you can to ensure for a successful rate increase. The good news: your tenants probably already understand this concept, too. Maybe your customer service is way better or your facility has recently been renovated. They pay way more per month than a typical tenant in fees every month, and they still don’t move out. While this may not be the first thing you think of, it can be very useful when you’ve downsized, bought a new item of furniture, inherited some furniture from a relative, or are moving into a new home. Renting a storage unit is a great way to store unused, but needed, items. To put that in perspective, only 1 in 17 American households used self storage units in 1995. Financial Independence In 3 Years Instead Of 30? Buying or building a new self storage facility and not sure where to start? Increasing real estate costs are just part of life. For example, adding truck rental can increase income a few thousand dollars on a self-storage facility. New York joins other major cities, including San Francisco, Miami and Charleston, that have similar restrictions, with others likely to follow. In 2011, only $241 million was spent on mini-storage facility construction. Learn more at yec.co. Much has been written by the self storage industry about rent increases, and each company handles them differently. First and foremost, arm your team with research about your competitors. Explain to them the reasons why it is a necessity in self storage. 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. Many tenants set their rent payments on autopay and forget their actual rent rate. 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. Too much and too often could have your tenants racing to your competitors. You don’t need to give tenants a lesson on inflation or explain the economy’s effect on small businesses. Do whatever you can to get their mind off of the extra money they’re now spending and back on why they love to be your customer. 1 in 10 households rent self storage units. People would drive past a storage facility, remember the location and return to it later. Taxes go up. Survey results released by the Self Storage Association show that self storage units are rented by 1 in 10 U.S. households. Keep in mind, however, that certain customers’ prices are easier to raise than others. Consider raising student prices on a yearly basis before prime student rental season. Editor’s note: This post was originally published in January 2014 and has been completely revamped and updated for accuracy and comprehensiveness. Click the image below to get our FREE guide for new storage owners with everything you need to know to start your search for self storage technology, security, and more! Long-lasting, ... A “Rent with me, use this truck for free” or similar slogan can be particularly effective. '” He recalls a Self-Storage Association study which found that the sector’s single biggest competition was the dumpster. Just list the increase amount. 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. View them. More and more, however, customers are turning to the internet to find storage options. 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. Do you need to increase your occupancy rate? One self-storage option that many storage facilities offer is furniture storage. Renters don’t want to pay more, managers don’t want to deal with a slew of tenant complaints, and owners don’t want to lose customers who may already be on the fence. Especially if they are leaving some type of valuables. Upstairs and indoor tenants are more tolerant of price increases than drive-up tenants. The industry standard for price increases is to increase rates every nine months, but many REITs increase their prices more than that. If you’ve recently taken over the property and some of your renters haven’t ever seen a rent increase, some of your long-term renters will be flabbergasted, and you’ll need to handle them with kid gloves. Always greet your customers with open ears and a smile on your face, and think of ways to show your customers why you’re worth the rent increase. America's Top Givers: The 25 Most Philanthropic Billionaires, EY & Citi On The Importance Of Resilience And Innovation, Impact 50: Investors Seeking Profit — And Pushing For Change, New Online Fashion Brand Aims To Get Eco-Friendly Clothes From Factory-To-Closet At Affordable Prices, How The Woman Behind The Monopoly Game Lost Out On The Billions It Generated, How This Entrepreneur Digitally Transformed Her Business And Helped Her Customers Generate $2.1M In Revenue, Eight Important Ways To Promote Inclusion And Diversity In Your Workplace, Small Business Debtors Get A Boost With Amendments To The Bankruptcy Code. You don’t need to explain all of the reasons behind the increase - your tenants don’t need to know about your occupancy, and they likely don’t care anyway. Whether you’re renting an apartment, parking space, storage unit, or acre of farmland, there’s just no way around rent increases for your space. For example, if your 10-by-30 units rent for $250 per month, a 5 percent increase is $12.50. If your 5-by-10 units are only $60 per month, the same percentage would be a $3 increase. Self Storage Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026) The Self Storage Market can be segmented by User Type (Personal and Business) and Geography. In addition, over 5 percent of operators sell insurance at their facilities, a 1 percent increase over the past 1 months. That number has increased every year, and in 2018, nearly $5 billion was spent on new facilities, per U.S. Census Bureau data on private construction spending. There are currently an estimated 58,000 self storage units in the U.S. Every storage facility is unique, so it might be difficult to know the best way for you to approach a price increase until you’ve actually done it. 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. In this case, you’ll 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. Vancouver Self-Storage: With an average price of $114.00, self-storage is cheaper than in Portland. Finally, be sure to let tenants know a few weeks before the actual increase so they aren’t blindsided by the sudden increase in one of their monthly bills. self-storage consumers. So how do you make the change smooth and stress-free for your tenants and managers? Everyone has a different customer base, a different management style, and a different relationship with their tenants. Sugarman: Touchless rentals, remote operations … SelfStorage.com has 237 storage facilities in Tigard. If demand is high enough, they may filter out old tenants in favor of acquiring new customers who will pay higher rent each month. 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. As baby boomers begin to downsize, the need for storage units is predicted to increase. But don’t let this discourage you - if your marketing is on point and your rates are competitive, you’ll fill that space in no time. While demand continues to increase, it will be outpaced in the short term by new supply. When rolling out price increases to tenants at your facility, you can sort tenants into more than just unit and price groups using tenant logic: Delinquent tenants tend to be most tolerant of price increases. Now, it takes two years just to obtain the special permission to build. Step one in dealing with complaints: Expect complaints. Plan a charity event or host a fun, on-site event of some kind (like a barbecue or wine tasting!) Some of these laws are clearly applicable to self storage, some clearly are not, and others are uncertain in scope. Guidelines for Self-Storage Rent Increases: Frequency, Amount and Notifying Tenants. Thanks for reading! As disruptors continue to emerge, stagnant industries, including that of self storage, will be forced to shift, adapt and innovate, creating a better experience for the end user. Public storage rent goes up every 6 months with no justification. People will always come in and say they can get a better deal from the storage facility down the road, but can they really? Self storage less volatile than other real estate types. Always remember your basic customer service skills and remain calm when talking to customers. Rather than requiring the construction of new storage facilities, tenants can rent underutilized space within existing residential, commercial or industrial properties. Just like their apartment rent increases from year to year or lease to lease, they likely expect their storage unit rental rate to increase, too. All Rights Reserved, This is a BETA experience. 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. 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