I talk with owners and managers across the country all the time. While there are some markets that appear to be unaffected (I promised not to name names or locations) in today’s economic climate, more and more people are reporting reductions in occupancies and a drop off in telephone inquiries and office drop-ins. I am curious if you feel that simply cutting your asking rents would really make a difference.

Remember that making a profit is a key to everyone reading this to still have a job. So let me know how much of a percentage cut in rents do you feel would result in a jump in your rental activity. Please vote in the anonymous poll and let me know.

MisterJim444

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Learning Never Ends

Sounds like you are being told rental activity is down based upon inquiry activity being down. If people are not inquiring then it would seem rate never enters the equation.

Determining rate influence to closing activity can only be measured by closing % by unit type. And even then, rate may not be why close is not occurring. It could be curb appeal, it could be sales technique, it could be poor professionalism by on site management. The old saying of 'people, product, promotion and price', in that order, determines your ability to sell, especially in todays climate is ringing true.

The real question seems to be 'are your inquires down?' and what methods are being used to drive more on the front end so you have more closings on the back end?

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Self Storage Management
Storage Career Center

We have recently started using a 24/7 answering service, and along with that I got myself a smart phone with high speed internet service. I think this has helped our occupancy rates alot the last 2 months we have had it.

Before we did this we would have constant problems with phone calls not getting answered or messages not returned in a timely manner. And since it was a family member running the office, there wasn't much we could do to fix the problem. So I decided it was time to take that out of their control.

Now I get the e-mails of missed calls on my phone, I can use my phone to remotely connect to the office to get information and return those calls day or night in a timely manner. I really think that customers would rather talk to a person instead of a machine, and we can get back to them before they just pick someone else.

Edit:

And about rates we simply just lower/raise rates depending on the number of units we have open of a particular size. 3 or more of a size we will drop it in price 5 or so dollars, 2 is normal rate, 1 or waiting list higher than normal rates.

...some of them are just 'spooked.' I use this analogy to remind myself (and other managers) that excuses for falling occupancy frequently have little basis in reality. People always need our services, regardless of the economic landscape- as self-storage shoppers, they just become more savvy and consider choices more carefully before they "bite."

In our experience, in competition with other facilities for customers, knowledgeable and helpful managers with excellent customer service skills trump price concessions 99% of the time.

We haven't modified a price downward at our facility in nearly two years...

Let the competitors lower their prices -- we will be raising prices this year by 5%.

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Wayne
All American Self Storage
Palmdale, CA.
webmaster@all-americanselfstorage.com

I am trying to get the owners to raise prices we are cheapest in the area and I don't think they have raised prices in 4/5 years. :P They are afraid if we raise them that occupancy will go down.
Colleen

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Manager
Mason Mini Storage
Mason Michigan

I just raised our rates after 3 years of holding steady. We have always been the low cost provider in our area and have had pretty good occupancy levels since we opened in 1987, although we are at a low point now. I often get people that rent from me that are sick and tired of getting their rent elevated every 3-6 months at the other places.

I was likely about 15% below the market on rent, so I raised my current tenants 10% and made it clear that they will ALWAYS be paying less than a new tenant that comes to the door for the same size unit. (It frustrates me no end that in the cell phone industry a new customer gets a far better deal than I do after being customer for many years.) Our current rates now are still less than anybody else, but only by a few dollars. Even at the lower rates my occupancy was down, so I'm confident the problem with occupancy right now is not price.

With the increase in rates, more than 20 tenants would have to move out to not show an increase in gross income. So far, I have had ZERO move out or notify me that they would be, they know I'm treating them fairly.

We are adding a free truck to the mix now, I have not ever felt that people decide on a facility due to price, they decide on convenience, amenities and the personality of the person that talks to them. That last quality is called salesmanship, and is hard to find. If people think you are gouging just because you can, they'll bolt....often times to my facility

Here is how we see it... we do raise rates on current tenants after 1 year. We typically do 10% as well. We have had the few come in to complain and after we explain that the cost of eletric, ins. and etc. have gone up on us, the usually understand. And if not then we explain that it will cost them gas,possibly a rental truck and a full day of work to move. So in the end the small amount we increase is small potatoes even over a years time.
When we first took over at this site we had to update alot (50) units or so on rent. Out of those we lost 2. Not to bad!

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Proud Karate Mom

Colleen:
I don't think you will have to wait long for your owners to realize that Michigan self storage operators are getting hit with a major tax increase. Here are a few comments from Maurice Pogoda's email from yesterday just in case you and your owners might not have received it:

"By now you should have received your first quarterly tax filings. As you are aware, last year’s State budget fiasco resulted in a 21.99% surcharge to the new Michigan Business Tax (MBT).

In addition, significant changes were made that have resulted in dramatic increases to the commercial real estate sector. These changes, which are permanent, unless repealed or modified, will significantly impact the value of your real estate for years to come.

In fact it is common to hear from companies across the state that they have experienced a 200, 300 even 400% tax increase due to the new MBT and surcharge. As an example, in one of our properties we went from having an SBT bill of $12,000 to an MBT bill of $54,000!!"

Nothing like a $42,000 increase in taxes to make you pass through a rent increase.

MisterJim444

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Learning Never Ends

It seems by the survey results most everyone doesn't believe lower rates will help. Well it depends on what kind of help one needs. People in my region are not very well off to begin with and now with the economy in a slump, many (if not all) are looking to save a few dollars. People are still inquiring about storage space so the need is still there.
I took a look at my occupancy and decided that I had quite a few small sized units that had very low occupancy and they were just sitting there in inventory.
So I lowered rates on four sizes by 8% and advertised them as specials for a month. It's working, in that people are responding for the chance to save a few bucks. The units are idle anyway so what's the worst that could happen, they move out in a month or two. I've still collected some rent. Or, new customers may stay for several months. Some rent is better than no rent.
Is lowering all rents the answer to all our problems....no I don't think so. We do, however, need to be resourceful and inventive to capture as many customers as we can in these tough times.