26 Apr 2024
During the recent ISS Las Vegas World Expo, we had the opportunity to engage with industry experts, gaining insights into the current self-storage landscape. James speaks with Jason Koonin of Sunbird Storage, discussing Sunbird Storage's pricing model which emphasizes transparent pricing as well as the effectiveness of ECRIs and the importance of brand reputation over price in attracting customers.
James: We're here with Jason Koonin from Sunbird Self Storage. So Jason, we really wanted to talk to you because there's a lot of buzz in the industry about ECRIs and aggressively raising your customers once they get through the door. But your sort of pricing model goes against the grain and I'm just curious about what you've seen in terms of length of stay when you sort of make transparent pricing on the front and the focus of your organization.
Jason: Yeah, absolutely James. I appreciate the question. I think we've seen tremendous success, especially in Canada first and then in the US more recently. Our whole mantra is really about the transparency in everything that we do with our customers especially when it comes to pricing. So we don't really believe in offering introductory pricing and then increasing rates after every three months. We find that leads to very short length of stay. So what we do is we guarantee our rents for a year and by doing that we've seen lengths of stay anywhere from one to five years at most of our locations. What that ends up achieving is a much higher effective rent. So if you bring in lots of new customers, you're churning your store 50% a year, customers are only staying six to nine months, there's no way you can really get to $20 plus rents per square foot. You're bringing them in at $10 or $12, most of them are leaving after three to six months, the model just doesn't work. So I haven't really seen any evidence that ECRIs are working and what I really expect is with all the rates right now being so low, the street rates, I actually think the effective rents in many of the markets are going to start to fall as we move into the second half of the year.
James: Well, only time can tell. So when you, your strategy and your sort of pricing strategy, do you find that it's almost more effective in tertiary smaller markets where everyone knows each other and the reputation of facility comes first as opposed to densely populated urban centers where people just need storage or rent storage for the cheapest price? Have you noticed a difference in where your facilities are located or do you speak to that at all?
Jason: Yeah. We've operated in very large cities such as Toronto, we've operated in very rural locations as well. In all the cases, I think the customers are not always looking for the cheapest price. We really kind of specialize in a high quality customer experience. So the customers that we're seeking are looking for a certain level of quality and security and safety, cleanliness. They're not looking for the cheapest price. Some people who go for the cheapest price, they kind of fall for those teaser rates. After three to six months, they get their second rent increase. You know, some of them come to us crying and they become customers for life. So I think even in the largest markets, we've had prices that were twice the price of our competitors across the street. We've held the line. Sometimes it affects our lease up for the better part of a year, but eventually word gets out and ultimately the brand reputation will prevail. So we're willing to be more patient in our lease up. We're much more focused on revenue than just occupancy. And ultimately it's the overall rating of the brand that matters most to us.
James: Jason, thank you so much for that breakdown. I'm looking forward to everything you guys do this year and seeing your brand continue to expand in the United States as well.
Jason Thanks, James.
