The Forgotten Pot Of Gold In Your Self Storage Site
With the Self Storage industry well into its maturity phase, the focus has shifted to maximising income from rent increases. But are they being done effectively?
Self Storage is a revolving door when it comes to storers. Hopefully, your site will have more move-ins than move-outs.
Rent increases have been an integral part of the Self Storage industry and FMS (Facility Management Software) like Sitelink has Revenue Management as an integral tool for delivering sophisticated dynamic pricing for both new renters and delivering smart rent increases for existing storers.
How to maximise yield with existing stores
Once the decision is made to raise rents for spaces, an immediate shortfall of revenue is realised on every space rented at the old rate. There are a number of factors that might control whether rates should be increased for existing storers.
1. Time of occupancy
It is not recommended to just blanket increase rental fees for all customers. Timing the increases for w time after they have settled in is more effective. It is common to do this at around 9 months or later after they move in to avoid encouraging non-desirable customer churn.
Competition should be considered when making this decision. For example, if you have a new competitor close by who is in the let up phase and is offering lower rates or bigger incentives it might be wise to wait before raising rates.
3. Prepayment of storage fees
Prepayment of storage fees usually means that it’s impossible to raise storage fees.
Using your FMS software should mean that a site has good opportunities to raise rents to existing storers and the software has tools to identify specific storers that match rental increase criteria.
These increases, generally are incremental in nature but can add up to a lot of additional income and it’s essential to apply rent increases to existing storers to ensure that unit prices are optimised.
There are times when your FMS software can identify when spaces are too expensive. The software identifies and flags these spaces to reduce rental rates to make them more attractive for rental.
What is a premium space? These are the most convenient spaces. These might have roller doors, be located on the ground floor or be close to the lift. They may have wider access and may have a higher roof line.
These are the first places that you should be looking if you want to increase rates because they are the most valuable units. These command a premium price and any increase not passed on is a reduction in premium rentals.
Every dollar not charged is more than ten dollars on your valuation.
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