One goal in self-storage ownership is to reach full occupancy. With the average occupancy rate across the United States at 87%, full occupancy is a big win. (Source) Many self-storage owners today would celebrate quickly and move toward finding ways to increase revenue.
If the owner shared their success story at an event like the ISS World Expo in April, the celebration would be short and followed by suggestions of what to do next.
What do you mean…what to do next? Isn’t full occupancy the pinnacle of self-storage?
Let’s pause for a moment and consider that full occupancy is a great problem to have. Full occupancy means consistent cash flow. Why would there be suggestions of what to do next? Full occupancy usually means missed revenue. It depends on the individual goals an owner has for their business and the growth direction they prefer to head. If a business owner wants to expand, it’s time to get creative with the full occupancy situation. If a business owner is satisfied with their current situation, no action is required. Let’s consider what to do if a business owner is growth-minded and at full occupancy. There are steps to take today to increase revenue. Let’s dig in.
Turning away customers in need of storage presents challenges. Consider this example. ABC Storage has no occupancy, but a new manufacturing plant is opening nearby and bringing tens of thousands of employees with it. ABC Storage is the closest storage facility for miles, but there are no available storage solutions. Here are some steps to consider when facing a great problem like full occupancy.
Price Increase
If a self-storage facility is at full occupancy, it’s time to consider a price increase. Most storage businesses use software to determine when to raise rates and what percentage to raise them. Strategies can be used to raise rates in a way that encourages customer loyalty. Self-storage tenants do expect to face rental increases from time to time. Focus your business on building customer relationships, maintaining the property, and offering excellent customer service. Most tenants do not want to move their belongings to a new storage facility, so they’re less likely to vacate if they receive good customer service.
Price increases during summer months are less likely to encourage tenants to move. If it’s already hot, the last thing a tenant wants to do is pack up and move a storage unit full of stuff they don’t use.
Grow
It might be time to consider a period of growth. At full occupancy, the demand for storage is high. It might be time to consider expanding to fill the space available. Look at the units that are most in demand and find ways to build additional units of that size. Consider a consultation with a self-storage-focused brokerage to assess what type of expansion is most needed in the specific area.
Change Promotions or Incentives
If your self-storage is at capacity, bring promotions and incentives to a stop. There is no need for the “first month free” or to offer discounts. Promotions and incentives are great when working toward a high occupancy rate, but once that goal is achieved, it’s time to back off these types of promotions and increase revenue to expand.
Revenue Assessment
If you’re unsure of which strategy to use in this situation, call experts to help guide you through. A revenue assessment to determine which units should have a rental increase would be beneficial if pulling the trigger on an increase across the board is nerve-wracking. Consider which units are most inquired about and raise the rent on that specific size. This may provide information about which units are most profitable.
Call Coastal Storage
If you find yourself in this position, there are options and experts to help you navigate the situation. Call the experts at Coastal Storage today at 904-591-0140. With over 40 years of experience in the self-storage industry, we offer strategies for growth and expansion to every type of self-storage investor.