Storable CEO, Chuck Gordon, is joined by Timothy J. Dietz, President & CEO of the Self Storage Association (SSA), for a fireside chat focused on the impact COVID-19 has had on our industry, how operators across the country are dealing with differing legislation and the quickly evolving economic situation.
Last week’s Navigating Uncertain Times webinar was another operator roundtable hosted by Storable CEO Chuck Gordon. He was joined by Raheem Amer, Senior VP of Operations for Devon Self Storage, Melissa Stiles, VP of Marketing and Sales for Storage Asset Management and M. Anne Ballard, President of Marketing, Training, and Developmental Services for Universal Storage Group.
Together they discussed how to shift to a contactless operation without losing the personal connection with your customers, simple steps to stay in front of online shoppers and why it’s more important than ever, and how they’re currently handling liens and late fees.
After the webinar, we sent our guests some follow-up questions to help provide even more guidance and clarity to other operators.
Are you offering special promotions for customers that opt-in to autopay?
M. Anne Ballard:
“We call it the “NO LATE FEE GUARANTEE” and invite all customers to enroll at move in using an assumptive close like, ‘here at Anne’s self storage we prefer all customers get our no late fee guarantee, which credit card will you be using?’”
“We are not doing a promotion, but we did have our stores purchase gift cards to local small businesses. We are using these as a giveaway to customers who sign up for auto pay. It’s a win in giving back to our communities and enticing customers to enroll in autopay. If someone signs up for autopay, they are entered to win the local business gift card in an allotted period of time. Additionally, we explain the benefits of autopay.”
“No incentive has been given. We make auto pay part of our sales process. We inform the customer we are an autopay company and proceed to put them on autopay. For new customers it works great. Current customers that have been grandfathered in…it’s a challenge. We use waiving late fees as an incentive for them – we will waive your late fee if you go on auto pay.”
Where are you cutting or increasing your marketing spends at the moment? Specifically, are you making any changes to Google PPC?
M. Anne Ballard:
“We increased PPC last two years and continue with our in place plan; heat mapping where we want to be number 1 and price scraping the comps daily to match or promote best values.”
“We are evaluating this. We are decreasing some spend on Google PPC in markets where there are stay at home orders and we have seen conversions fall. We are looking at search lost budget to evaluate the decrease rather than a straight across the board number. We have not cut facebook ads spend. On both platforms, we added in copy, videos, and language that states about using storage to create space for working from home and contactless online rentals.”
“With the increase in online traffic in social media (due to working from home) we have increased our spend on FB ads. We are seeing some good returns over the last month. Having a strong digital presence will make a difference for your brand awareness and performance. Don’t expect to see CPC drop during this time period, because the REIT’s are ramping up on digital marketing spend. Recommendation would be to focus your spend based off of lost impressions share due to budget.”
How are you handling landscaping of the property? Are you asking your managers to take on this task?
M. Anne Ballard:
“All landscapers in place and no change to this as curb appeal is critical especially now.”
“In most areas, landscaping has been essential and we have not yet run into this.”
“We are spread out from the East to West coast. We haven’t seen landscapers not coming out.”
Is anyone limiting the amount of traffic on the properties? How many people can be on the property at the same time?
M. Anne Ballard:
“All stores offices are locked with managers inside, using Ring Doorbell and posted signs to communicate via phone or cell phone.”
“As of now, we are not limiting traffic onto the facilities. We are not allowing customers to enter into the office, though. We are serving them through phone and online.”
“Not limiting to our customers. We are limiting manager to manager interaction. One manager in the office while the other must be on the property. They switch off during the day.”
Storable CEO, Chuck Gordon, is joined by Raheem Amer, Senior VP of Operations for Devon Self Storage, Melissa Stiles, VP of Marketing and Sales for Storage Asset Management and M. Anne Ballard, President of Marketing, Training, and Developmental Services for Universal Storage Group. Together they discussed how to shift to a contactless operation without losing the personal connection with your customers, simple steps to stay in front of online shoppers and why it’s more important than ever, and how they’re currently handling liens and late fees.
2020 is officially the year of social distancing. Rightfully so as we all continue to do our part to slow the spread of COVID-19. But, as more states enact shelter-in-place orders, countless businesses are having to quickly shift how they operate in this new world. Grocery stores are limiting the number of people shopping at once, restaurants are exclusively offering takeout and, unfortunately, many other businesses have simply had to close.
However, as many of you likely know, storage has been deemed essential in most states. And where they haven’t been listed as essential, they haven’t been listed as non-essential either. We’ve heard from many of our clients that they remain open and ready to serve their communities.
As such, it’s more important than ever that you’re taking the necessary precautions to successfully operate your business while limiting customer interaction to keep everyone safe. To do that, we’ll cover some capabilities we’re hearing operators say are critical.
As more and more people are working from home, storage operators included, it’s vital to have the ability to access your facility management software from anywhere. Which is where a browser-based interface comes in, as it gives operators the capability to access their software from their smartphone, tablet or computer. While this has usually been a nice-to-have , it’s quickly become a need-to-have as we continue to navigate this crisis. For more on how Storable can help you with that capability, go here.
We’re glad to see that people are still reserving and moving into units. So, it’s important to limit physical contact between your staff and your customers as much as possible. One crucial way to do this is with online move-ins. Many operators are opting to offer an online move-in experience. In doing so, they can protect their staff and customers while maximizing move-ins during this period of social distancing.
A critical part of any online move-in process is the ability to sign documents electronically. With eSign capabilities, your customers can accomplish this with a smartphone, tablet and even a computer. They can even do this if they’re at the facility, allowing you to remain a safe distance apart. eSign is a must if you’re going to implement online and contactless move-ins, as you’ll still need a signed lease agreement. This is such a critical capability during this time that we’ve actually seen our feature utilization go up by over 20% in the last 30 days.
Autopay & Online Payments
With fewer tenants venturing out of the house, it’s also important to offer flexible payment options. By offering autopay and online payment options, you’ll give tenants convenient ways to stay current with their payments while ensuring you’re capturing every dollar of revenue that you can. Plus, this is useful long-term as it’ll free up more time for your staff even after the stay-at-home orders are lifted.
With so much uncertainty, it’s more important than ever to stay in close communication with your tenants. With two-way texting and email, you have a way to instantaneously share communications with your tenants as well as receive feedback. We’ve even seen operators using these features as a way to give a contactless tour of their facility when tenants move in.
Safety First and Last
We believe the key to success right now is, above all else, safety. Safety for you, your family, your staff and your customers. Luckily, the technology exists to empower and keep operators safe at a time like this. And while the concern today is safety, the truth is, it’s capabilities like these that will drive growth for your business long into the future.
On March 27, President Trump signed a $2.2 trillion stimulus package, the largest in U.S. history, to help stymie the economic downturn brought on by the COVID-19 outbreak. The package includes everything from direct cash payments, to expanded unemployment benefits, small business loans and more.
This package is different from the one passed in 2008 in that Congress has emphasized more aid toward workers, families and small businesses. Whereas the last stimulus package provided a much-needed lifesaver to larger corporations like banks. However, airlines are receiving substantial assistance from this current package as they’re experiencing monumental losses. There’s likely no business, big or small, that won’t be negatively impacted by this crisis, in the end.
As a majority of storage operations in the country are small to medium sized business, operators can stand to benefit from this current relief package. Plus, there are already murmurs on Capitol Hill of possibly more relief in the coming months. But nothing is official in that regard.
A chunk of this stimulus package will direct-deposit into taxpayers’ bank accounts or arrive in the form of a check by mail. Direct payments will be up to $1,200 per adult and $500 for each child. The $1,200 scales down for individuals earning $75,000 a year and phases out completely for anyone earning more than $99,000. For couples the amount scales down for those earning more than $150,00 and phases out completely for those earning more than $198,000 a year.
Unemployment benefits have also received a huge boost from this bill in terms of benefit value, who is eligible, and how long people can receive benefits.
Also, the IRS has officially delayed Tax Day to July 15. So, if you haven’t filed your taxes yet you still have a few more months.
You can read more about the full package breakdown here.
Now, some or most of the elements of the package won’t necessarily benefit storage operations directly. But, they could greatly benefit any of your tenants that have fallen on difficult times as a result of this crisis. And, in our eyes, that can only be good news.
Small Business Relief
Now, this portion of the relief package could benefit storage operators more directly. To qualify for this assistance, a business must have 500 or fewer employees. So, outside of the biggest storage companies out there like Real Estate Investment Trusts, most operators across the country would qualify for small business relief.
Provisions for small business relief include emergency grants of up to $10,000 to help cover immediate operating costs related to COVID-19. Existing loan relief programs which can cover up to six months of payments for small businesses already utilizing a Small Business Association loan. And payroll protection, which are loans of up to $10 million per business to help cover payroll, rent, existing debt and other operational costs. These payroll protection loans can be forgiven, provided the borrowing business keeps their employees employed through the end of June.
This bill is intended to give businesses like those in the storage industry the means to weather this storm. We encourage any operators who have been impacted by this crisis to explore these options with guidance from a lawyer. To learn more about the small business relief you can visit the SBA’s website, here.
For an even more in-depth look at how storage operators can benefit from the stimulus package, you can read this article from SSA.
This is an unprecedented crisis that requires an unprecedented response. This stimulus package from the US government will help countless people in the weeks ahead as we all continue to navigate these uncertain times. And, as we do, we’ll continue to bring our perspective on the unfolding crisis and any news we feel you stand to gain from.
As always, we hope you’re continuing to stay safe and healthy.
Storable CEO, Chuck Gordon, breaks down the current state of the industry. Chuck discusses how Storable has responded and is working through the crisis, covers recent trends we are seeing in the market and goes into detail about technology capabilities our customers say they’re relying on more than ever.
During our first Navigating Uncertain Times webinar on March 27, Storable CEO Chuck Gordon was joined by Kerry Richard, SVP of Operations for Simply Self Storage, Bill Roberts, Director of Operations for StayLock Storage, and Brad Minsely, Co-Founder of 10 Federal. Together the panel discussed how they are navigating their operations through the COVID-19 outbreak and current economic downturn. If you missed out you can watch that seminar here.
We had the audience submit questions for our panel to answer after the webinar concluded. There were a lot of questions, naturally, so we grouped together similar questions that we felt were most relevant at this time.
Our next panel discussion is this Friday, April 10, and they’ll answer even more questions from operators in the industry. If you’d like to submit a question for our panel you can do so with this form.
Q: What are your predictions for how collections and delinquencies will look in the coming months?
Bill Roberts: “We expect delinquencies to increase. How much will depend on when the economy gets working again, how long that takes, and unemployment and bonus checks.”
Kerry Richard: “I think it is too early to tell. I do believe we will see a higher level of delinquencies as our customers have a harder time paying. I think we have to wait and see how the Government plans help customers/businesses and how soon the virus gets under control. Too many variables right now.”
Brad Minsely: Hard to say, but here are some statistics we find meaningful. In the 2008-2010 recession unemployment increased from about 4.5% to 10.1%. In reviewing the annual reports for PSA and CUBE during those periods, both experienced very similar results with respect to Same Store Revenue Growth over those periods… from 2008 to 2009 both saw a 4.0% decrease in Same Store Revenue. From 2009 to 2010 their Same Store Revenue was flat and thereafter it was positive. So, the question becomes, will this period be worse than 2008-2010? And how does the precipitous drop in unemployment affect performance versus the +18 months it took back in 2008-2010 to reach 10% unemployment… my guess is this period will be worse, but I don’t think you will see a collapse in rent payments.”
Q: How are you handling overlocks and access to units for delinquent tenants?
Bill Roberts: “To this point, we have continued to limit access for delinquent customers.”
Kerry Richard: “We are following all state and local mandates.”
Brad Minsely: “We are using our DaVinci Lock system which allows for the renter to remove their overlock on their own. DaVinci’s are also used on securing vacant units and the method is the same there as well where the new renter can remove the lock on their own.”
Q: How are you handling tenant ID capture for online move-ins?
Bill Roberts: “Customers email or text a photo of their ID. Just as they had been doing before the crises.”
Kerry Richard: “Currently working through that with the customer via electronically collecting it or have them drop it off on site.”
Brad Minsely: “We do not require capturing any IDs for online move ins… we have been operating that way for five years without any issues.”
Q: Can you speak to the challenges you’ve faced in transitioning tenants to electronic payments and how you’ve overcome them?
Bill Roberts: “No challenges. The crisis has given customers additional incentive to use this form of payment. We always encourage tenants to use autopay or pay online but we’ve seen an increase in the number of tenants paying this way. We do make it easy for them by including links to our pay online portal in the emails and SMSs we normally send.”
Kerry Richard: “We have not seen a large challenge. Most customers are very open to paying online, especially now.”
Brad Minsely: “We experience this when we acquire facilities and a lot depends on the starting point… worst case, if a facility is 100% cash / check and has been around for a long time with a tenant base that is older then we see up to a 10% drop in occupancy as those tenants fail to transition… most of the time the attrition rate is less than 5%.”
Q: Are you asking vendors for a discount on services at this time like janitorial, landscaping, etc?
Bill Roberts: “No.”
Kerry Richard: “We have not yet but we are currently working through our landscaping contracts. We do not have janitorial contracts except at the Home Office.”
Brad Minsely: “Not at this time.”
Q: How are you all evaluating properties in this current environment for those that are in acquisition mode?
Bill Roberts: “We are moving forward with a property we recently put under contract. Will not pursue new acquisitions until the economy gets back to work and then we will re-evaluate.”
Kerry Richard: “We have put acquisitions on hold for now until we see the market stabilize somewhat. What we are hearing in the market is that all transactions that had non-refundable earnest money up are moving forward to close. However, we are not hearing the same thing in regards to transactions that were not non-refundable. We have heard that buyers have walked away from some of those transactions and we would anticipate that would continue. This is worth monitoring as it could change daily.”
Brad Minsely: “We are closing what we have in the pipeline however we are going to pause thereafter for 60 days and will reevaluate at that time… I will be interested to see what delinquencies are looking like as well as the debt markets, etc… if things get bad enough, then our acquisition criteria may shift from acquiring ‘value add’ opportunities to ‘distressed’ opportunities.”
The world is gripped by a crisis unlike any in memory.
Millions of Americans are on lockdown as authorities enact extreme measures to halt the spread of COVID-19. Businesses from coast-to-coast are being forced to shut down as the number of confirmed infections grow each day.
The stock market has tumbled. Unemployment is spiking. Hospitals are preparing for the worst. These are unprecedented times.
As the novel coronavirus situation unfolds hour by hour, our industry finds itself facing a great deal of uncertainty. However, if history serves as a guide, we know that self-storage is one of the most resilient businesses in the context of market volatility. Storage is an essential service in the best of times and in the worst of times.
This is why we are launching our Storable blog now, in the midst of the current state of affairs. As we all navigate the coming weeks, we’ll keep our finger on the pulse of the industry. Informing you of any changes, positive and negative, we see happening now or in the near future.
The way we see it is, we’re all in this together. There’s no proven playbook for a situation like this. Because of our unparalleled view of the industry, we feel a responsibility to work with our customers and storage at large to create one.
Together, we’ll find the way forward.
Storage is essential
As authorities across the country have enacted stay-at-home and shelter-in-place orders, they’ve done so while outlining essential businesses that are allowed to remain open. And, in most cases, storage has made the cut. In fact, CISA of the Department of Homeland Security, has labeled storage as essential infrastructure in their guidance.
We’ve heard a number of stories about how storage facility owners have stepped up in this moment of need to help their communities. For example, an operator in Alabama is waiving April fees because most of their tenants are suddenly unemployed.
It’s our belief that self-storage is more than critical at a time like this. With software platforms like ours, there are a number of measures that can be put in place to reduce contact between tenants and staff. Which is vital as we continue to try and slow the spread of COVID-19. We’ll be sharing more about these measures in upcoming posts
You can find regular updates from SSA about which states have deemed storage essential, here.
This is a recession
One that was four years past due. After the 2008 financial crash, recession has a more negative connotation than ever. Not to downplay how bad that moment was but, in general, recessions are far from a disaster. However, the truth is, we are concerned. It’s too early to tell how long or severe this downswing could be. We believe storage is resilient. And we’re determined to help our customers, and the industry, weather this storm any way we can. As history has taught us, when markets go down, they always come back up. Usually, stronger than ever.
Even still, this recession is unique in how quickly it began and the unexpected cause of it in the outbreak of COVID-19. It is impossible to predict the depth of the economic impact and other challenges ahead of us. We will continue to share all of the signals we see that may give us some sense of where the industry is headed.
We’re in this together
As we mentioned before, right now, we’re all on the same team. Our first priority as a company has been to help slow the spread. As of March 16, we’ve closed all of our offices, yet we remain 100% operational as our team works from home. We’ll continue to play our part in that effort and strictly adhere to guidance from our local and state governments.
Our second priority is to ensure we remain a trusted partner, not only for our customers, but for the entire industry. We aim to accomplish that with a series of market updates and articles to follow on this blog and a weekly webinar that starts this Friday, March 28. You can sign up here (link).
The important thing to do now is stay calm. In moments of crisis decision making becomes a day-to-day or even an hour-by-hour process. And our aim is to provide you with all the information we can to inform that process. We’ll do our best to add calm and clarity as this crisis unfolds.
More importantly, take care of yourselves, your family, your employees and your community.
Storable CEO, Chuck Gordon, is joined by three industry leaders and operators in Kerry Richard, SVP of Operations for Simply Self Storage, Bill Roberts, Director of Operations for StayLock Storage, and Brad Minsely, Co-Founder of 10 Federal.
They discuss the immediate actions their organizations have taken in the wake of COVID-19, and what they’re putting in place for the longer term health of their businesses.
The COVID-19 outbreak has thrown the world into turmoil. Simply put, no one was ready for it. As a result, the economy has rapidly fallen into a recession.
Now, more than ever, storage operators must make the right decisions to ensure that they are putting themselves in the strongest possible position over the months ahead. Our goal is to sift through the signals and noise and bring the industry helpful guidance and support during the present turmoil. The coronavirus response will have broad-ranging effects on our industry, and Storable wants you to know that we are all in this together.
The state of the industry
Before the coronavirus became a global pandemic, the self-storage industry was already facing a number of new headwinds including oversupply, shifting consumer expectations and rising operating costs.
Over the last three years, more than 2,800 new self-storage facilities have come online. The surge in facilities has led supply to exceed demand in 40% of the Top 100 markets in the country. That has resulted in downward pressure on average national rates. For example, the average price for climate-controlled 10×10 units has dropped 12% since last year. 1
In 2019, the time consumers spent on mobile devices exceeded the time spent watching television for the first time in history. More and more, customers expect to conduct a majority of their transactions online with a mobile device, and renting a self-storage unit is no exception. Operators that do not upgrade their technological capabilities risk being left behind as their competitors embrace the ability to reserve and lease units online. That need has become even more paramount as consumers limit face-to-face encounters during the current pandemic.
The shift to digital has led operators to spend more than ever before on digital advertising. With the effectiveness of online ads now firmly established, the cost and competition continues to rise. In 2019, we saw the cost of Google Pay-Per-Click ads rise as much as 60 percent year-over-year for non-branded self-storage terms. This trend means that the cost per customer acquisition is going up, and the efficiency of marketing spending is going down.
The net effect of these various trends has led to a deceleration in self-storage industry net operating income growth across the board. Costs are going up, while revenue is going down.
Add to that the economic effects of the coronavirus response and it’s clear why many self-storage companies are rightfully concerned about what is in store.
Since the declaration of a national emergency on March 13, the economy has gone into a state of shock. The market has reacted in the following ways so far:
- Benchmark index declined 30% since February 19.
- The Dow Jones saw it’s largest single day drop since 1987.
- The Federal Reserve dropped interest rates to between 0% and 0.25%.
All of this indicates that we should expect the market to face more challenges as the coronavirus crisis continues to unfold.
Frankly, it is too early to tell what this all means for the self-storage industry. With California, New York, Illinois and other states ordering citizens to stay home and most businesses to close, the ramifications those orders pose to the storage industry will be realized in the coming weeks. While specific state rules may vary, storage operators should know that federal guidelines identify self-storage specifically as critical infrastructure.
However, there are some encouraging early signs that the self-storage industry will remain resilient in the face of recession:
- The SpareFoot network saw self-storage reservation volume increase more than 40% during the first two weeks of March, with a 1,233% spike in demand from college students.
- A report from the National Self Storage Group at Marcus & Millichap indicated that stabilized facilities are well-positioned to withstand the near term economic impacts of the coronavirus.
- So far, self-storage has been the third-least impacted commercial property type. Overall, commercial real estate valuations have fallen 24 percent since Feb. 21, while self-storage has only dropped 16 percent, based on an analysis of REIT sectors conducted by Green Street Advisors.
As the effects of the coronavirus response continue to ripple through our industry, we will continue to bring you the insights and guidance we are using to navigate these uncertain times.
- Behrens, P., Lucas, D., & Shatzer, E. (n.d.). 2020 Self Storage Almanac: 28th Annual Addition. MiniCo Insurance Agency LLC, (28)