February 2018 Newsletter
2018 Self Storage State Of The Union
New Construction is the Story of 2017 & 2018!
Self-storage records were broken in 2017 and looks like even more will be broken in 2018. 52 Million square feet of new self-storage may sound like a lot, but unless you are in one of the top 10 metropolitan cities it will have little effect or even a positive effect on your Storage Authority Facility. 40% of these new facilities were built in just 5 cities. And take one of those cities, Miami for example, they still need new construction to meet the demand. But the immediate concern is when you build 2 – 200,000 sf facilities on the same side of town it is going to increase the rent up time from 24 months to 48 months. The 1000 new facilities equate to a 2-3% increase in the number of facilities but if you look at the average over the last 10 years it is well under 1% growth leaving unmet demand in many locations throughout the US.
In 2017 many operators exceeded their 12 – 14 month projected rent up timetables. And vacancies remain at or near historic lows with increased rental rates.
Whether you like or hate Trump the good news is the new tax codes provides immediate tax savings for savvy self-storage owners. Now if you do component depreciation the previous 5yr – 7 yr and 15 yr component depreciation items can be depreciated in the first year!
So what does this all mean? For the REITs and large developers who want to add 5 or 10 or more facilities to their portfolio, it means it will not be easy or cheap in 2018. The self-storage facility inventory for sale continues to be very low and continues to be priced high. The large players like to be in metropolitan areas where they can have multiple large facilities and these are the areas where the bulk of new facilities were built in 2016, 2017 and will be built in 2018 and 2019.
For the individual investor and Storage Authority Franchisee all the new construction and associated abundant news is good news in many respects as it is bringing in new technology and new renters using for the next generation self-storage facility. As long as you are looking to build a single facility outside of the major metropolitan areas, you have the opportunity and luxury to take your time and typically find a location where there are no new facilities in your 3-mile radius.
The new growth has spurred a lot of self-storage technology growth that will make your facility more renter friendly. This allows you to rent for more and allows you do more with fewer employees. As the new self-storage quality and security standards are increasing so are the number of people who want to rent at a new generation facility vs an older facility.
Also, the new technology allows us to do a mini demand review in 15 minutes which only a year ago would take two days. Check out https://www.unionrealtime.com/radius.html it will cut your research time by 90%. Let James know Marc from Storage Authority sent you.
Many self-storage will not Cater to the Modern Consumer! The self-storage world is in the middle of going cloud-based and customer base. In a few short years, we have a two-tier self-storage world. Motel 6 vs the Hampton INN or a $1.99 coffee at Dunkin donuts vs the $4.99 coffee at Star Bucks. The world needs both but you have to decide which one you want to be a part of and the profits from. The High Tech – High Touch model may take a little more work but you will make substantially more profits
For most new developers it will take longer to develop a new self-storage from the ground up if you are not multi-tasking all the time. The Vendor capacity has not caught up with the new development demand so 60-day building designs are taking 120 days. Building delivery times for many manufacturers is 6 months.
Even bidding has gone form 30 days to 90 days. In some cases, the bidders have so much work they are not doing the proper work to keep the bids low but rather making a quick estimate and adding 20 or even 30% to the price. Or they bid the plans your provide which often means they are bidding 75% of the job leaving 25% as extras. In the past, they would have contacted you to make the bids complete.
Tips You Can Use Today:
Even with great demographics and self-storage demand, a new large nearby competitor can double you rent up times.
In 2018 it is going to be much easier to find good locations for single story facilities than multi-story facilities without
If you are looking for land the new internet-based tools that provide the existing self storage rates, locations, square footage, climate control sf vs non climate control square feet, populations, mile radius maps and the existing self storage square footage per person on a single page will turn two days or research into 15 minute review so you can quickly look at more sites. See Radius for more details on internet research.
As part of our Dynamic Ease Self Storage Development Series, we help our franchisees around the development landmines, including finding land, designing, financing and building a premier self-storage facility and to understand the options and prepare accordingly. _______________________________________________________________ If you want to learn more about Storage Authority Franchise there is a wealth of information on our website www.StorageAuhorityFranchise.com Don’t forget to check out “Why Storage Authority” and our blog/newsroom. Then the next step is to apply on our website or email or call Garrett Byrd (Garrett@StorageAuthority.comor Direct 941-928-1354)
Select Merchant Solutions is the approved preferred Credit Card Merchant provider for Storage Authority. After a lot of research and firsthand experience, the choice was easy for many reasons. First, we have unbelievable pre-negotiated rates for all our franchisees which will save you $$ thousands per year compared to the other options and the rates are guaranteed.
Everyone touts customer service but few ever provide. The entire team at Select Merchants Solutions is ready to help us 24/7. And even better than that we have our own customer Storage Authority National agent John Berry that understands the Storage Authority platforms. I have tried the others and their guaranteed rate disappeared in the first year and our promised agent turned out to be a random person after waiting on the line for several minutes.
It may sound corny but Select Merchant Solutions really is a small group of professionals with the long-term goal to help us succeed. I am sure their service is why they have been voted best of the best year after year. When compared to the international conglomerate’s alternatives, the difference is huge.
Don’t forget to read the Tips you can use today below to learn if your merchant provider is ripping you off.
$$ Saving tips you can use today
Take a look at your current and last several Merchant bills to see if it has something to the effect “there may be new fees and new rates to better serve you” and if you object your option is to provide the 30-day notice you are leaving them.
Simple take you merchant Account bill from a year ago and compare it to last months bill. Chances are very high for the same amount of money processed the bill is significantly higher now due to new rates & fees. Time to change?
Exchange fees are much lower for debit cards. So it is important to let your managers know this so they can get used renters debit cards when possible. A change in your rental script may be required. ” our clients love the convenience and no late fee savings of our Automatic payment plan. If you have a debit card I can get you started now”
Industry News & Tips You Can Use Today
Marc Goodin’s Self Storage Development Book has been updated for 2018 with over 200 development tips. Available on Amazon or email Garrett@StorageAuthority.com before the end of February for you your free copy.
There are incredible new software programs that can provide the 3-mile competition and the existing square footages, rental rates. population, existing square footage of self-storage per person and much more. Want to know more email Marc@StorageAuthority.com & Check out Radius.
The SBA standard operating procedures have been updated for 2018 which require owners to manage their own facility, which means most owners who use a 3rd party management company will not be able to get a SBA loan. Storage Authority franchise has been approved by the SBA.
Two pieces of equipment I find most facilities missing that would help them save time and keep the facility cleaner for higher rents are a cordless DeWalt vacuum to clean units and a $200 rubber maid clean cart available on Amazon.
The presentation of auto-pay is everything, how you say it, how you deliver it and the sub-conscious triggers the customer reads all work as a synergy to optimize your auto-pay program. As you start lease presentation “All I need is your ID and the debit card you would like to keep on file.” As you swipe the debit card remind the customer their card will be debited on whichever date their move-in date is every month and we will send an email confirmation. Because people stay 2 extra months if they are on auto pay an extra 10 auto pays a month is worth $30,000 a year.
Self Storage News
2018 will be the first time self-storage security becomes cloud-based. This means several things such as automatic updates and gives us the ability to access our keypads, cameras & our gate systems from off-site to assist our clients after hours and keep an eye on our facilities 24/7.
Self Storage Articles
The seller paid $2.9 million for the 3-acre property in 2016. Records show it scored $8.2 million in construction financing from Stonegate Bank in October. The 84,000-square-foot, climate-controlled facility was completed earlier this year and is made up of two buildings – one two-story building and one three-story building.
All in Build price $11.1M at $132.14 dollars per square ft.
Sale price $15.7M at $186.90 dollars per square ft.
Assuming all numbers are factual seller will net $4.6M in 15 months of developing and this is before one unit is rented. If the developer would have taken the time to lease the facility up he could have doubled his profits!
Goodbye Macy’s, hello self-storage.
Long considered anchors of the shopping mall, many department stores are undergoing a long, painful death. That has left mall owners scrambling to find suitable tenants to fill the large empty footprints left behind. Enter self-storage.
Department stores are slowly withering, as the internet and other apparel retailers suck the life out of them. *Sparefoot Storage Beat
With Storage Authority on your team, we will help you every single step of the way, from finding land to operations, to driving your revenue year on year. If you have a question we have the answer, we will help get you developed and lease up faster than if you were to go it alone. Team up with the experts to maximize your profits.
ARE YOU READY?
“You cannot change your destination overnight, but you can change your direction overnight.” ~ Jim Rohn
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