Modern Money Maker: A Self-Storage Renovations Case Study
Self-storage as we know it today has been around for more than half a century. While we’ve seen new facilities multiplying in record numbers over the last couple of decades, the market remains filled with aging facilities in need of a facelift in order to remain in the game. Unfortunately, that so called “mini lift” just isn’t enough for most.
There’s no denying the growing demand for storage across virtually all demographics, and whether you’re surrounded by equally aging facilities or have brand new ones popping up around you, outshining your competition is critical for remaining relevant. So how do you revive a dated facility to meet the demands of today’s customers, increase revenue, and outmatch your competition?
For Travis Morrow, president of National Self Storage, and his four facilities in El Paso, Texas, the answer was quite simple: Replace their dated gate access system with a modern smart entry solution and replace their aging doors with brand new, ADA complaint roll-up doors. Morrow wanted a renovation that would go beyond mere aesthetics. By replacing his doors and access control system with brand new smart doors, National now has a huge competitive advantage over the age-ridden facilities near his stores and can remain competitive with any potential new facilities.
Door Replacement With Pre-Installed Smart Locks Why were door replacements and smart locks at the center of their renovation strategy? Because these are easily two of the biggest returns on investment when renovating old, outdated storage facilities.
Door Replacements The look and operation of your unit doors gives the customer his/her first impression of the facility. The perceived safety, security, and value of the entire facility rest heavily on the look and operation of that unit door. If a customer gets the impression that a storage owner doesn’t care about his or her own property, chances are they won’t exactly get the best feeling about storing their valuables at your facility.
How the customer sees these critical items will dictate an owner/operator’s ability to either rent that storage space as a low-cost provider or rent that space as the market leader at premium pricing levels.
Pro Tip: You can have 20 to 25 doors replaced in less than 24 hours with little to no disruption in business.
Smart LocksThe demand for fully automated rentals is at an all-time high. While the technology has been around for a while, more and more businesses and customers are now using the technologies and expect to be able to do just about anything they need to do from their smart devices. The way we work, eat, and shop is more convenient than ever before, and as for the self-storage industry, automated rentals have become the new “norm.”
From selecting the unit, contract signing, and payment to immediately receiving a digital key that provides access to gates, man doors, elevators, and all the way down to the individual units—it doesn’t get any more convenient. For site managers, smart locks eliminate manual processes like lock checks and overlocking, collecting monthly payments, or physically unlocking units for new tenants to move-in as these labor-intensive tasks are done automatically.
Pro Tip: You can charge premium rates for smart units to accelerate ROI, and research shows customers are willing to pay for it. For National’s El Paso facilities, they’ve seen an overall increase of about 25 percent.
So, what do you get when you pair the two together with smart locks pre-installed on the doors upon delivery? A match made in heaven!
This is exactly what National Self Storage did at their El Paso facilities: 200 beautiful new ADA compliant doors complete with the industry’s most advanced, all-in-one, Bluetooth smart locks pre-installed upon arrival, eliminating additional installation time and the need for low voltage wiring—the perfect solution for renovation projects.
Having owned and operated numerous self-storage facilities, Morrow is a well-known industry veteran who certainly knows a thing or two about creating a modern self-storage experience and meeting today’s customers where they are. You might remember his National Self Storage facility in Marana, Ariz., dubbed “The Ritz Carlton of self-storage.” If not, it’s worth taking the time to look it up! Needless to say, Morrow and his team understand the importance of a well-maintained, customer-centric facility and the revenue that comes with it. For him, combining the latest and most advanced smart lock technology with brand-new, long-lasting doors to these renovation sites was a no brainer.
“Over time, a facility will age,” says Morrow, “and in order to keep a facility looking good and ahead of the curve, you have to take care of it and do renovations and improvements if necessary.”
Not Everything Gets Better With Age Most would agree that aged cheddar is good, but an aged facility, not so much. One of the big issues at these El Paso facilities was the majority of the roll-up doors were jamming and running off the tracks, making it difficult for tenants to open their units. Unsightly, worn out, or malfunctioning doors are one of the most common things that need to be replaced when renovating an aging facility.
If the doors are flaking, chalking, have broken springs, jamming, running off the tracks, or are 15 to 20 years old, it’s definitely time to consider replacing them. Not only were these old, hard to operate doors a major inconvenience for these National Self Storage tenants, but they also posed a risk of injury for both customers and employees, which could easily result in legal action if not addressed.
Smart Users Demand Smart Tech There was also a demand for higher security and automation. There are over 20 self-storage facilities in the El Paso area and all of these facilities are at least 20 years old without any kind of real security or smart technology solutions in place.
You might be surprised to find that close to 90 percent of Americans have a smartphone and over 90 percent shop online; even the Silent Generation loves texting and Amazon. We use them to listen to music, follow the news, pay bills, book/check in to hotels and flights, and sometimes even to make phone calls. Smartphones have become a constant presence in both our professional and personal lives.
Nearly every other industry has adapted to the expectation of today’s customer by providing more convenient and secure ways of doing business with them, and for self-storage, customer behavior is dictating that we provide full, online or mobile options as well.
Although National Self Storage knew this was the renovation plan that would provide the greatest return on investment, there was still the challenge of these facilities being occupied upwards of 90 percent and navigating the project with minimum disruption.
Finding The Fountain Of Youth National Self Storage underwent a full door replacement project combined with smart locks, for enhanced unit security, as well as adding smart entry access to their gates. The 200 new doors were delivered complete with the external Bluetooth smart locks pre-installed and ready to put those tired, worn-out doors into retirement.
Before the renovation began, National Self Storage sent out a letter to tenants making them aware of the facility improvements taking place to enhance their storage experience. This letter also provided details regarding the process for replacing these doors, ensuring them that security would be on site during the exchange, the entire process would be recorded, and there wouldn’t be any inconvenience for them.
“The tenants have been great during the process,” Morrow says. “And we’ve had an overwhelming amount of positive feedback about the project.”
Each facility is now equipped with the gold standard in self-storage roll-up doors, individual unit security, customer convenience, and operational efficiency.
The Long-Lasting, Modern Result After completing the renovations, these four National Self Storage facilities are able to charge premium rental rates and their tenants are loving the improvements.
“Because of the advanced security and smart technology features this project delivered, we are now getting about 25 percent higher rates overall than before,” Morrow says.
For example, their 10-by-10 units were priced at $110 per month; after replacing their doors and adding smarter security, they’re now able to charge $124 per month for these units alone—without a drop in occupancy.
“The customers are excited about the improvements and the fact that they don’t have to remember gate codes or keys and have the ability to digital key share with their friends and family,” adds Morrow.
Not only is National Self Storage receiving higher rental rates after completing the renovations, but they were also able to take advantage of some pretty sweet tax savings through cost segregation. This allows them to rapidly depreciate the new doors and expense them in 2020, including the smart locks, which means the $140,000 spent at the El Paso facilities gets expensed in 2020 and the owner doesn’t have to pay taxes on that $140,000 in income. Depending on their personal tax bracket, let’s say it’s 25 percent, that would be $35,000 they wouldn’t have to pay in taxes, whereas they normally would.
The operational improvement that adding these smart locks has made to their facilities is also undeniable. We all know that a huge chunk of a site manager’s time is spent on tasks like lock checks, overlocking, and cutting locks. Now, their managers are able to spend more time in the office focusing on customer service and less time dealing with these time-consuming manual tasks.
Let’s face it, site managers have a lot on their plate and having to keep an eagle eye out for strange activity doesn’t make it any less stressful. With these industry leading smart locks now in place, every unit is equipped with a thermal motion sensor built into the back (or interior side) of the lock. So, if a fire starts inside of a unit, if someone attempts to break in, or even if a tenant tries living inside of a unit, a notification will be sent to the manager alerting them of the issue.
The managers also have visibility into exactly who’s on the property (and units) at any given time, allowing them to easily keep a closer eye on the property at all times from anywhere in the world.
Completing a self-storage door replacement will ensure a safer environment for your tenants and provide peace of mind that their valuables are taken care of. With newer, safer, and more secure doors, you not only reap savings through the tax advantages, but you can charge more for unit rentals as well. It’s a win-win.
When it comes to smart storage units and smart entry systems, storage owners can charge a premium rate (we’ve seen as high as 30 percent over traditional units with Bluetooth-enabled smart locks) to accelerate ROI. With these methods, the ROI for smart entry can be shockingly fast, with some achieving positive ROI in only 12 months.
If you’re conducting a major facelift at your facility, you’ll likely be raising rent for all tenants anyway. After all, aren’t premium rates the whole reason you want to retrofit your facility in the first place?