Depending upon who you ask, the self-storage industry is approximately 50 years old. Whether the business concept began in the 1960s or the 1970s, and whether it first appeared in Texas or Florida, are irrelevant to the point that self-storage is an aging industry.
In its infancy, self-storage facilities were much simpler in design than the state-of-the-art multi-story properties being built nowadays. As a matter of fact, the vast majority of storage sites built in the 20th century consisted of rows and rows of single-story metal buildings with nothing more than walls, roofs, floors, and roll-up doors. Climate-controlled features were unheard of, and security was limited to individual door locks and perhaps chain link fencing.
Although there are plenty of newer self-storage facilities popping up across the country, Troy Bix, president of the R3 Division at Temple, Ga.-based Janus International Group, LLC, guestimates that, of the industry’s approximately 60,000 self-storage facilities, most are 20 years old or older. And, according to independent industry research, up to 20,000 self-storage sites around the United States are either unsafe, outdated, or underutilizing their space.
“There are old sites all over the country,” Bix says. “With that comes security and safety issues.”
Of Your Customers
Of course, as a self-storage owner and/or operator, keeping your tenants, your tenants’ stored belongings, and your staff safe must be your priority. However, with an aging self-storage property that can become a more challenging obligation. While accidents can happen at any facility at any given time, there’s a plethora of problems that can arise at an older facility that is becoming dilapidated, such as break-ins, roof leaks, or personal injuries.
“We have a maturation cycle that has changed the self-storage climate, so old facilities may be dysfunctional and unsafe, with not very secure doors, so there is a big risk of compromising security, safety, and functionality,” says Bix. “There’s a need for safer, more functional sites.” He adds that restoring, rebuilding, and replacing worn-out facets of a facility can eliminate safety risks and increase its value.
Bix suggests taking the time to look at your self-storage facility from your customers’ various points of view. For starters, Bix notes that female tenants are less likely to rent units at dimly-lit, unkempt properties that have minimal security features. Therefore, since more than half of renters are female, think about what improvements could be made to make them feel more safe and secure when they are on site, such as adding access control features, additional lighting, security cameras, and “panic buttons” or intercoms.
In addition to females, Bix reminds owners and operators that there is “an aging demographic using self-storage”. This could prove to be problematic for facilities that are not easily accessible. “Sites are in need of ADA compliance,” he says, adding that being ADA compliant is helpful for the elderly as well. When focusing on ADA compliance, take your site’s parking lot, bathrooms, entrances, and roll-up doors into consideration. For instance, roll-up doors should have sturdy pull cords and handicap signage should be properly displayed. Bathrooms may require remodeling to ensure the toilets, sinks, mirrors, and handrails meet the specified ADA requirements. Ramps and wider doorways may be required as well. Per Janus’ R3 webpage, “If your current doors aren’t in keeping with the regulations mandated by law, you could be hit with a hefty lawsuit.”
Last but not least, let’s not forget about the millennials, the younger generation of tech savvy tenants. This age group prefers to be surrounded by the latest and greatest technologies, so an older self-storage facility with no bells and whistles is not going to wow them into renting. To capture this demographic’s interest, Bix recommends upgrading to what’s now being referred to as “smart units”, which he says has become a successful selling point for storage operators who utilize Janus’ SecurGuard Electronic Lock/Overlock/Monitor product and Smart Entry System at their facilities. With wireless individual door alarms, continuous monitoring, and easy gate and unit entry via key fob or mobile device, they have created a fully automated experience for millennials. What’s more, Bix mentions that the continuous monitoring of the unit’s lock and door status can be useful data for operators as knowing access information can help them identify illegal activity.
As Bix sees it, self-storage operators with aging facilities have three options: let the facility continue to age without making any improvements, build a new facility, or restore the facility to remain competitive.
“To compete with the new high-tech large operators and other nearby modern stores, older facilities give concessions, or they get quite literally get crushed,” says Bix. “Eventually, more and more tenants gravitate to the modern facilities and the older locations are no longer viable. That’s when bulldozers move in and demolish the storage buildings and developers replace them with more profitable real estate classes.”
“What’s the next frontier?” he asks. “R3. Restore, rebuild, and replace to maximize value and rent and stay relevant in the marketplace.”
While it may not make financial sense to scrap your property and build anew, it’s likely in your best interest to consider making some upgrades to at least level the playing field, as Bix informs that the newer, well-lit multi-story facilities are starting to take the market share. And that news hardly comes as a surprise, since most of the multi-story self-storage facilities that have been built since the Great Recession have more convenient locations, more visibility, more amenities, more security features, more curb appeal, and better lighting than the single-story properties located in industrial parks.
Moreover, those modern facilities also have more revenue than their aging competitors because they can charge premium rates for their state-of-the-art storage space. However, Bix, who advises operators to create functionality at their sites, asserts that any improvements made to facilities can be used to justify rental rate increases, which, in turn, helps negate the renovation costs.
“You can pass on the cost of the unit improvements onto your tenants; up to $10 per unit per month,” he says. “Just think about how you’ll be able to recoup the cost of this technologically savvy investment in no time. Your bottom line will never be the same!”
Another way to stay relevant is to consider changing your facility’s unit mix or adding rentable square footage through new building stories and/or portable storage units. These options can be great solutions for facilities with occupancy rates nearing 100 percent.
“The genesis of R3 is to add value to the site,” says Bix. “It’s taking 30 to 40 years of self-storage building and bringing them up to market relevance and adding value to them.”
Reduce Your Premiums
Besides creating a more secure, appealing, and functional site that demands higher rental rates, rehabbing your aging property can actually reduce expenses in certain instances. For example, Janus International’s R3 Certification can result in decreased insurance premiums. According to Bix, new roll-up and swing doors seal better than older doors and are more secure. “They are harder to break into,” he says.
R3 Certified properties have replaced all their facilities’ existing roll-up and swing doors with Janus International’s doors. Because new doors are more secure, some of the site’s risk for break-ins and theft is eliminated. Hence, Tenant Property Protection and Universal Insurance Program, two insurance companies partnering with Janus International, have begun offering discounts to R3 Certified sites. Bix states that some facilities have received double-digit discounts after becoming R3 Certified.
The company also offers another more sophisticated level of certification: R3 Certified Secured. This option includes complete door replacement as well as a retrofit of the security system with International’s SecurGuard Smart Entry System.
According to Bix, both R3 Certified and R3 Certified Secured sites can take advantage of lower insurance premiums. What’s more, R3 certification doesn’t just benefit a self-storage facility’s bottom line—its tenants may be able to enjoy reduced insurance rates as well by notifying their tenant insurance carrier that they are storing their belongings at an R3 Certified site.
Therefore, R3 Certification can become a good selling point when attempting to convert leads into rentals. Bix says that the company also provides R3 Certified signage and information to facilities to display in their offices and utilize during sales pitches.
“All R3 Certified and Certified SecurGuard facilities should make references to their investments with their call centers and websites,” Bix says. “It’s an instant call to action to raise rents by creating a safer, more secure, and more functional unit for their tenants.”
Breathing New Life Into The Industry
With aging self-storage users, female renters, and an ever-increasing percentage of millennial tenants, there’s no time like the present to consider making your storage facility more easily accessible, safe, and secure. And clearly, as more state-of-the-art facilities come on line and fill up, it’s evident that the time for building sprawling sites of basic metal storage sheds has long passed.
“The mistake a lot of people make is being afraid of renovation costs and having little to no faith that their investment will pay off,” says Bix. “If you’re one of these people, I really encourage you to step back and take a look at the self-storage market. This is truly a recession-proof business model; people will always need a place to store their extra items in good times, bad times, whether they’re large young families or aging baby boomers.”
Indeed, perhaps the time has come for the aging self-storage industry to adopt an “out with the old and in with the new” attitude.
Erica Shatzer is the editor of Mini-Storage Messenger, Self-Storage Now!, and Self-Storage Canada.