With yet another summer leasing season underway, the self storage industry is off to a solid start.
A recent report from Storable showed that operators started leasing season in May with record high rental rates, with an average monthly unit price of $111.31 per square foot. Rates continued to rise through June reaching $115.88 per month average for all unit types. Operators started the leasing season with record high occupancy as well.
The report found a healthy rate of churn through May and June, suggesting that tenant demand is holding steady and for the most part customers are absorbing increased rates with minimal resistance—at least for the time being.
The future macroeconomic picture is looking murky, however, with many economists signaling that a recession is likely in the next 18 months. How that plays out for the self storage industry remains to be seen.
But as the data shows, the self storage industry is well-positioned to weather a potential downturn. Additionally, the turmoil of 2020 showed that the industry is able to adapt quickly to changing conditions.
So, what should self storage operators do now?
Self storage rents and occupancies will likely continue to increase through the summer, which means operators should focus on revenue management and optimizing rates based on market data. Consider how a nominal price increase on your existing tenants could result in greater NOI and a higher valuation for your facility should you wish to sell in the near future.
Looking over the long term, you may want to consider preparing for the possibility of a market correction causing a big change in the current supply and demand situation. Start thinking now about how you would generate demand in a scenario where occupancy rates are dipping and there are more open storage units available than customers who want to rent them.
For example, in recent years consumers have expressed a strong preference for conducting transactions online using mobile devices. Upgrading your facility website to offer this experience is quickly becoming essential if you want your facility to be competitive, especially in a scenario where overall demand is falling and every lead counts.
Whatever comes next, the self storage industry remains a recession resistant business. How well you resist it depends on how well you can market and compete with all of the other operators that have rushed to enter the space over the last few years. Maybe it’s time to see how Storable can help you upgrade your technology and take your business to the next level.
Al Harris is the editor of the Storage Beat and content manager at Storable. Based in Austin, Texas, Storable is the world’s leading provider of self storage technology, delivering a full suite of products including management software, websites, access control, insurance, payment processing and the internet’s largest marketplace for renting self storage units. Storable’s mission is simple: to empower storage operators to do more.
