The self-storage industry has been trending upward over the last few years, but some recent changes in the industry are important to consider. Our 2023 self-storage industry outlook unpacks these changes and explores remote management as a solution.
Self-Storage Profit Margins Are Thinning…but Why?
If you’ve been keeping tabs on the self-storage industry, you’ve most likely noticed that it’s changing. Occupancy is dropping, which means the move-in-to-move-out ratio is declining, and rental rates are decreasing.
1. Occupancy is Dwindling: According to Storable, “industry occupancy rates fell during the leasing season for the first time since 2019. Average occupancy in September was 1.1% lower compared to the start of the busy rental season in May.”
2. Operating Expenses are Increasing: Additionally, operating expenses are on the rise. Storable stated, “Year-over-year same-store property operating expenses increased 6.9% for the 3rd quarter of 2022 and 5.9% YTD compared to the same periods in 2021. The increases primarily resulted from increases in property tax expense, utilities, marketing, and credit card processing fees.”
How Can Remote Management Help Increase Profit Margins?
While it’s clear the market isn’t where it once was, remote management can increase profit margins and simultaneously mitigate profit-eating trends. Here are a few high-level ways remote management is a solution.
- Save money on operational expenses. When you work with a remote management company, you save on operational expenses. Automation and technology limit in-person management duties, paperwork, and time.
- Promote convenient and exceptional customer service. With remote management, customers are able to access information and scheduling when it’s most convenient for them. Customers can sign leases, make payments, and receive instructions with ease and convenience.
- Remove the need for in-person management. Perhaps the most significant benefit of working with a remote management team is eliminating the need for in-person staff. You will not need to pay salary or benefits, plus systems will be streamlined and automated as needed for convenience.
What’s the Difference Between Traditional Management and Remote Management?
- There isn’t an onsite manager.
- A maintenance schedule is provided.
- The use of technology is supported and integrated.
- You’ll experience a high level of customer service.
- Your experience as a partner will be simple and fast.
Hiring a remote management team will reduce expenses, increase revenue, enhance the customer experience, remove hiring challenges, and experience less delinquency.
2023 Self-Storage Outlook Acquisition Case Studies
There was a storage facility recently purchased in Tennessee for $1.4 million. The investor decided to hire Copper Storage Management as their remote management team, and the investment was appraised for $4.2 million in less than eighteen months after Copper Storage Management implemented changes.
In Holt, Michigan, a 31,200-square-foot property was built for $1.8 million. After just eleven months, the property was at 74% occupancy, with $21,000 expected in monthly income. The current asset is valued at $2.8 million, but we expect the value to continue to grow to $3.8 million once the property is 90% occupied.
Self-Storage Industry Outlook Recap
We have seen a steady decline in occupancy, and the price evidences a lesser demand. Additionally, we are witnessing buyer confidence dwindle; therefore, people are holding off on making significant life decisions, which also affects self-storage.
When it comes to self-storage, the industry is changing, but remote management can help increase your monthly revenue while also cutting excess charges. Don’t let someone else make your money. Worry about finding deals instead, not operations. Let Copper Storage Management take care of the rest.