Overcoming Challenges When Competing Against REITs in the Self-Storage Industry

The Self Storage Show

May 23, 2024

Competing against Real Estate Investment Trusts (REITs) in the self-storage industry can be a daunting task for smaller owners and operators. Over the last decade REITs have been on a large scale invasion of the storage market. Currently they control close to 40% of the market across the nation. This means you are more than likely going to be or are currently competing against them for customers.

REITs have significant advantages, such as vast financial resources, extensive networks, and economies of scale. However, understanding these challenges and adopting effective strategies can help independent operators thrive despite the competition.

Key Challenges

  1. Financial Muscle and Pricing Power REITs have substantial financial resources, allowing them to invest in prime locations, advanced technology, and large-scale marketing campaigns. They can offer competitive pricing, often undercutting smaller operators.
  2. Brand Recognition and Customer Trust Established REITs like Public Storage, Extra Space Storage, and CubeSmart have strong brand recognition and customer loyalty. This can make it difficult for smaller operators to attract and retain customers.
  3. Operational Efficiency REITs benefit from economies of scale, enabling them to operate more efficiently. They have standardized processes, advanced management systems, and professional staff, which can lead to higher profitability.
  4. Access to Capital REITs have easier access to capital through public markets, allowing them to expand rapidly and invest in property upgrades. This can make it challenging for smaller operators to compete on facility quality and amenities.

Strategies to Overcome These Challenges

  1. Focus on Customer Service Personalize your service to create a superior customer experience. Building strong relationships with customers and providing exceptional service can set you apart from the larger, more impersonal REITs. Engage with your customers, respond quickly to their needs, and go the extra mile to ensure satisfaction.
  2. Niche Marketing Identify and target niche markets that may be underserved by REITs. This could include specific demographics, local businesses, or unique storage needs. Tailor your marketing efforts to resonate with these groups and highlight your specialized offerings.
  3. Leverage Technology Invest in technology to improve operational efficiency and customer convenience. Implement online reservation systems, automated billing, and smart security features. Utilizing technology can help you compete with the advanced systems employed by REITs.
  4. Community Involvement Engage with your local community to build brand loyalty and visibility. Sponsor local events, participate in community activities, and partner with local businesses. Being a visible and active part of the community can enhance your reputation and attract local customers.
  5. Optimize Facility Management Focus on optimizing your facility operations to reduce costs and improve profitability. This can include energy-efficient upgrades, regular maintenance to prevent costly repairs, and strategic marketing to maintain high occupancy rates.
  6. Offer Flexible and Innovative Solutions Differentiate your offerings by providing flexible rental terms, a variety of unit sizes, and value-added services like moving supplies, package acceptance, and climate-controlled units. Innovation in service offerings can attract customers looking for more than just basic storage. Also, be nimble. Give your store managers more power to make decisions on the fly. For instance, when a customer arrives in store with a price match, allow the manager to verify and make the adjustment instead of having to go up the food chain for approval letting the customer walk away.
  7. Strengthen Online Presence Enhance your online presence through a well-designed website, active social media engagement, and positive online reviews. Ensure your website is SEO optimized to attract organic traffic and invest in online advertising to reach a broader audience.

While competing against REITs in the self-storage industry presents significant challenges, independent operators can succeed by focusing on personalized customer service, niche marketing, technology, community involvement, and operational efficiency. By leveraging these strategies, smaller self-storage owners and operators can carve out a competitive edge and thrive in a market dominated by large REITs.

 

 

Checkout our other related content:

  1. Blog: https://crdrealty.com/revolutionizing-the-self-storage-industry-embracing-automation-technologies/
  2. Blog: https://crdrealty.com/looking-to-get-into-commercial-real-estate-investing-here-are-your-options/


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