From a feasibility and acquisition due diligence perspective, knowing the residential demographic profile data is vital to making a development or acquisition decision. For an existing facility, the zip code data of your established customers clearly shows the marketplace drawing power of your business. For a proposed new facility, a determination must be made regarding what target market areas the new complex will serve. Industry professionals have typically used a five-mile radius as a rule of thumb, while others use a drivetime dynamic. In determining the residential population and household formation data sets to be used, the information must be carefully analyzed to look for hidden trends within the numbers.
"In both cases, demographic data provides a future road map for the marketing of the business."
The source of this residential profile information must come from a reliable source and be as current as possible. It's been 9 years since our last census, so information obtained from the U.S. Census Bureau is dated. There are a number of sources that can provide a wealth of information to help in making a knowledgeable decision.
New data tools such as the Radius+ platform, provide location and square footage information on over 47,000 facilities nationwide. In addition, these tools provide valuable rental rate data and rental trends and are opening new doors in making better informed development and acquisition decisions.
Another essential reference book every owner should have available is the national Self Storage Association’s 2017 Consumer Self Storage Demand Study. This study provides information on who uses self storage, how and why and, most importantly, helps to project future demand. It provides insight to understand the current incidence of usage and how it is tied to area demographic characteristics. Lastly, it provides a point of view on what drives demand, with insights on how customers use self storage.
On the operations side, as an owner and manager, you are creating and collecting the data from every aspect of the facility’s operation. For example, you know when a customer moved in and how long they have stayed; you know their address and zip code. You should know whether they are using storage for personal or business reasons.
In addition, you know if the customer is male or female. Recently, I was reviewing several reports directly from a facility’s computer and I was alarmed to see that 9% of the facility’s customers were male and 14% female and 77% were listed as unknown. Capturing this data is essential!
Security gate information is also available; showing when customers enter and exit your facility. I always recommend that managers look at this data for abnormalities.
"When you identify a customer with a 5x5 or 5x10 unit who is always at the facility after the office closes and staying for many hours, I want to know what they are doing."
Unfortunately, what I am finding is that we are collecting all of this operations data, but many operators are not taking advantage of the information at their fingertips. In some cases, managers and owners do not even know it's available to them.
Today’s state of the art management software programs can show you the trends of how many customers are on automatic payment or pay online. You can determine how many people are paying by cash, check or debit credit cards and whether or not that trend is changing. A significant shift, for example, in the number of people no longer paying by credit card could indicate a negative change in local community economics.
Another critical data point in operations is delinquency. Staying on top of the customers who are making late payments will be vital to the future success of the business. Yes, it’s extra income. However, the impact and burden late customers represent for managers is costly to you and your business.
Access to third-party data allows facility owners to watch changing rental rate patterns within their specific market area. A simple monthly report can provide a competitor’s rental rates instead of you or your manager having to mystery shop your competition. This type of objective third-party data can provide improved reference points for making decisions on rental rate increases.
The bottom line take-away message is to understand that we are awash in data. But it is all meaningless if we were not using it to its full potential. Take a step back from the forest and look at some of the data trees all around you. In the year ahead, make it your business to take advantage of this data and the sources whether building, buying and especially in operating your self storage facility.
Interview with Copper Storage Management
We spoke with Brett Copper of Copper Storage Management at the 2023 ISS World Expo in Las Vegas.
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Interview with Live Oak Bank
We spoke with Anna Taylor of Live Oak Bank at the 2023 ISS World Expo in Las Vegas.