From The MSM Archive: The Pitfalls Of Free Rent Is The Industry On A Slippery Slope To Falling Rates?

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    As the slow economy lingers well into 2008 and self-storage occupancies continue to fall in some areas, more and more operators are feeling competitive pressures to offer an assortment of incentives to get new tenants in the door. The first plan of attack for some, and the last resort for others, is free rent. As free-rent offers drive down prices, the phenomenon has taken the industry into places some operators don’t want to go. “It has taken us down a slippery slope,” says Dean Jernigan, president and CEO of Cleveland, Ohio-based U-Store-It Trust.

    Jernigan recounts how operators can slide into an abyss of competitive consequences. “First month free is no longer effective because everybody’s doing it. So, what do you do if first month free is not effective? First two months free. If that’s not effective, half off your first six months. That’s effectively three months of free rent.” The REIT executive fears that these promotions are teaching customers to ask for free rent before they sign on the dotted line. “We know 50 percent of the customers showing up every day are firsttime users and they didn’t know it was available,” he says. “We’re training the customer to ask for the first month free.”

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    About The Mini-Storage Messenger Mini-Storage Messenger is the leading monthly trade magazine covering the global self-storage industry. MiniCo Insurance Agency publishes Mini-Storage Messenger in both print and digital formats. Other publications include the “Self Storage Almanac,” “Self-Storage Canada,” “Self Storage Now!,” and the “Self Storage Buyer’s Guide.” For more information, please visit: https://www.ministoragemessenger.com]]>

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