Don’t get too focused on your turkey and red wine yet. There’s business to be done in self-storage.
We all have heard the adage that storage is all about transition: divorce, going to war, relocating for employment, switching school districts, downsizing, upsizing, even jail-sizing. If one’s life or business is in one of these transitions, it’s more than likely there will be a need for self-storage. Thing is, not all of these things are events that occur in autumn. Companies usually wait till Q1 to start fresh and make layoffs. Parents wait for the summer break before relocating and switching school districts. And generally, people just move and do more things of action during the spring and summer seasons. It is natural, then, that Storage property owners often grumble about the slower autumn and winter seasons that are affected by winter weather in addition to the lower level of life-transitional events.
Is the Great Autumn Seasonal Tick-Down in Self-Storage Occupancy a fallacy?
This fall, Autumn 2011? September was Record-Strong. October on-pace with 2010 or slightly down. Storitz surveyed ten of its clients, who combine for more than 1,000 of the 4,000 properties that are renting and reserving units on Storitz.com every day, and covering the four geographic quadrants of the country. All that said, everyone saw near-record or record move-ins for September, and a flat or slightly lower October.
Comments from a Northwest operator: “Yes, we have seen a decline in traffic as well due to seasonality. It has dropped more in October, we did not see a drop in September.”
From a Southern California operator: “We saw had near record move-ins for September. But had a bit more move-outs unfortunately. That was the tough part. October is shaping up to be a push or slightly better but it still remains to be seen. “
On the strength of October, and in response to Storitz’ own observations of a tick-down of move-ins in October: from an Eastern Seaboard (including FL): “ September was [sic] very good month, unusually active. It may be that difference you’re perceiving – it will be tough to beat”. More on September vs. October, from a Western States operator: “Our MTD same store rental activity for Oct is tracking even with Sept ‘11 and 12% higher than Oct ’10.”
So the question is, other than marcroeconomic and seasonal drivers affecting occupancy, what other global effects are impacting storage operatrs. A regional operator asked a very pertinent rhetorical question regarding overall occupancies…the REIT reports may be flowery and strong, but what does all of that mean to Regional and Local owners? “In Q2 PS was at an average 90% occupancy for their same stores, and I believe that Extra Space was around 85%. I wonder if they’re just capturing more of the demand than the smaller, regional operators? …I’ve noticed that all of the three largest REIT’s (Public Storage, Extra Space, and Cube Smart) have continued to be very aggressive with rates.”
And so, to prepare for more aggressive rates from the big REITs in 2012, storage operators are spending this fall season prepping their budgets. Spoken like a true and budding corporate executive, his/her geography unimportant: “While we’re working on the 2012 budgets, we’re also focused on completing our 2011 business plan action steps, as well as finalizing our plan for next year. We’ll also be bringing in all of our store managers and DM’s for our annual meeting where we’ll review our goals and how we plan to go about achieving them. It’s a lot of work, but also a lot of fun!”
Yes, truth is, Storage is still having an immensely “fun” time when compared to most other commercial real estate asset classes. Enjoy budgeting, fellow self-storage professionals, and make time for Turkey. The storers will be coming soon.