From The MSM Archive: Considering Specialty Storage Adding Revenue In A Soft Market By Aaron A. Swerdlin
It appears as if all eyes are turned to the self-storage industry as investors and analysts anxiously await the outcome of the sector’s performance through the economic recession of the last couple of quarters—and at least the balance of 2008. Those of us in the industry are cautiously optimistic about the chances to outperform expectations.
There is definitely a good reason to be optimistic about our performance against other sectors of investment real estate, especially against retail and office. The multifamily sector likely will benefit the most, as homeowners unfortunate enough to suffer the woes of the subprime resets lose their houses and are forced to take residence at apartment complexes. Self-storage is classified as a consumer discretionary. However, the service the industry provides—to those storing excess furniture; those needing more space, but who are unable to expand the size of their residence; and those storing goods as they transition from one part of the country to the other—will not be among the first things that those looking to scale back spending will trim.
The focus of the industry for the last nine months—and the next six months—has, and should continue to be, maximizing the efficiency of the existing business. As has always been the case, both rate increases and occupancy management are property-specific issues. There is no rule of thumb for rate increases, rent specials, or other incentives such as free rent. That having being said, a general rule to follow, as the industry navigates the recession, is to shy away from aggressive rental rate increases—at least without a solid reason.
Mini-Storage Messenger is the leading monthly trade magazine covering the global self-storage industry. MiniCo Insurance Agency publishes Mini-Storage Messenger in both print and digital formats. Other publications include the “Self Storage Almanac,” “Self-Storage Canada,” “Self Storage Now!,” and the “Self Storage Buyer’s Guide.” For more information, please visit: https://www.ministoragemessenger.com