Self Storage has more value than just Real Estate
Self Storage is a 20 billion dollar industry in Australia and as the Internet age take hold of the industry, leading Self Storage organisations are ramping up their digital presence.
The Self Storage industry has been slower than other industries to move to the digital age, but some operators took the lead and developed digital strategies early on.
The Yellow pages was the major spend item for Self Storage when it came to advertising up until about 2013. The internet was growing fast and major US Storage businesses worked fast to ramp up their exposure on the Internet.
Some operators both in Australia and overseas have been using the internet as a core source of new business for over 5 years now.
Like every other vertical market Self Storage has been infiltrated by opportunist web start-up businesses who feel they have the “secret sauce” to building business on the internet in the Self Storage space with offerings from aggregator sites to valet Storage and more.
All of these businesses are characterised by their investment in web technology and not the actual real estate. Many of the largest businesses in the world have no real estate or ‘skin” in the industry they are involved in.
Dallas Dogger, a pioneer in the Self Storage business in Australia believes that real Self Storage businesses can compete with these web startups.
“Whilst some self Storage operators have been caught napping by active web-based companies, all wanting to share a part of the Self Storage pie, motivated Self Storage operators can develop their own cost effective digital strategy to deliver real estate backed business.
This cannot be done by web-based middlemen type businesses”. He said.There will always be a higher cost.
This is evidenced by many motels fighting back to take back the gound taken by aggregators like Wotif.
A recent stay at a leading hotel showed that a leading aggregator site charging more for motel rooms than the actual hotel on its own website.
We all know Uber and Air BnB are successful and one of the reasons there are is due to “industry market blindness” The Taxi industry is a perfect example of ‘not keeping up” with market change. Uber came along and stole a big chunk of their business, whilst they sat around crying in their coffee. They took their customers for granted, underestimated negative sentiment and did not make changes to suit changing consumer demand.
They assumed everyone was happy with taxis. FAIL!
“Self Storage is a service based business, but consumers methods of finding and interacting with Self Business has changed”. Dogger said. There is now strong evidence that Self Storage businesses without a clear, planned digital strategy are not only missing out on renters, but more than likely their value could be impacted” He said.
“Self Storage businesses have relied on traditional advertising and location to build the business. Renters want to be able to interact with Self Storage on their terms and that means offering Self Storage 24/7”. He said.
Malcolm Collins is a respected Self Storage valuer and he says Self Storage values are affected by the digital strategy of their owners.
Collins has valued Self Storage businesses and added ‘Portfolio premium” to groups and sites that have strong and commanding digital market presence.
Collins said “The industry now faces new challenges to stay relevant, front-of-mind, and profitable. Astute owners and operators will need to recognize this earlier rather than later or risk seeing their value(s) erode.
In our “disruptive” economy where change is relentless, current and future value relies upon management innovation and proactivity as well as cutting-edge operational systems to monitor, amend, report, present, publicise and tailor the business to client expectations and needs – and to potential purchasers who demand transparency of operational numbers! This is fundamental as the world gets ever smaller and the choice(s) gets ever wider”. he said.
Michael Dogger, General Manager of Centreforce Technology Group, who developed “RapidStor” an online rental tool for Self Storage, says that since the first online rental back in 2011, over 8000 online rentals and many more reservations have been made using this technology.
“The first user of this tech received their first paid up rental, only 40 minutes after going live on the Internet” he said. From that day on, more and more consumers use these toolsto rent Self Storage spaces day and night.
Collins went on to say “Freehold going concern and leasehold Self Storage values will be open to future forces of which we are only just beginning to recognise beyond the traditional measurements of performance in the market we know, and their impact on current and future value adds one more complexity to the creation and continued possession of that value.
But there is now no doubt Self Storage Digital Real Estate exists, it’s real and it has value.
The keynote speech at Self Storage Expo 2017 will be ‘Digital real estate, do you have any”
Self Storage operators from around Australia, Asia and New Zealand will be attending Storage Expo 2017 for 2 days of “Self Storage in the Digital Age”