These days, the story of industry disruption through innovative technology is a daily occurrence. Interestingly, each new innovation triggers a series of disruptions by applying that technology to other industries. For example, Uber was a major disruptor in transportation services and today there are countless “Uber of …” across myriad industries. Within the storage industry, we have observed this through the emergence of companies like Clutter and Neighbor. As real estate specific technologies (aka Prop Tech) continue to emerge, self storage owners and investors should be prepared to experience a similar phenomenon. One area in clear need of innovation is brokerage and investment sales.
Historically, real estate brokerage has been a business built on subjective information, where brokers tout pro forma underwriting and a proprietary rolodex of buyers. This antiquated approach to navigating the real estate market was first disrupted in residential when Zillow launched their online data aggregation platform. By aggregating vast sums of objective data, Zillow is able to provide unprecedented visibility into the housing market, which benefits both buyers and sellers. Subsequent innovations have allowed Zillow to incorporate their aggregated data into a proprietary algorithm, which generates pricing guidance through the stroke of a key. Needless to say, these efficiencies have caused buyers and sellers alike to rethink the traditional sales process.
As several market intelligence solutions are now available to self storage owners and investors, the role of the broker has transitioned to serve as a conduit of market data versus a source of market data. Based on disruptions that occurred in the residential market, it is safe to assume that empirical data aggregation will soon be combined with predictive revenue algorithms that can offer objective property valuations within seconds. This reality combined with the efficiencies of digital marketing inevitably leaves brokerage clients questioning the value in traditional brokerage fees.
In the meantime, storage owners contemplating hiring a broker should be focused on the use of subjective versus objective information. Buyers increasingly rely on objective data aggregation tools, which is not auspicious in the sales process. Transparency and visibility create transaction efficiency, which results in better outcomes for all parties involved.
About the Author
Seth Bent is the founder and CEO of Storage Exchange, an operator-centric brokerage transaction platform specializing in the self storage market and StoreLine, a technology enabled self-storage management platform. Bent is also the founder and former CEO of Red Dot Storage.
About Storage Exchange
Founded in 2019, Storage Exchange is a technology enabled real estate brokerage platform focused on providing maximum value to buyers and sellers within the self storage industry while focusing on delivering data driven transparency and efficiency. For more information, please visit StorageExchange.com.
