Development and investment in self-storage is at an all-time high. There are more than 2,500 known projects in varying stages of developments across the U.S. right now. Self-storage supply is slated to increase by up to 8% in the next two years.
Supply and Demand
Developers and investors in self-storage use market data to discover and analyze markets and make determinations about opportunities that may exist in those markets. Fundamentally, this is all about determining the relationship between supply and demand in any given market, therefore data on demographics, pricing, inventory availability and derived data such as square feet per capita, saturation, market wealth and so on, form the backbone of this analysis process. Ultimately, the goal is to answer the question; is there an increasing demand that is not being met by current and upcoming supply (and therefore an opportunity to meet that demand)?
This is not a simple data challenge. There are nuances and gradations to the answer as well as numerous factors, which often require assumptions, that could impact the determination of the answer. Of course, there are other factors such as the cost and ease of doing business in the market, the opportunity for acquiring or building, the process of getting permission from the relevant parties and so on.
However, there is another potentially significant market indicator that is often overlooked by most developers as it does not relate or correspond to this fundamental equation of supply and demand in the market.
To explain what this is, let us review an example. Let’s imagine that Market A and Market B both have 15 Stores, a similar demographic profile and similar supply/demand dynamics. But then, let’s imagine that Market A is populated by a group of Stores who do minimal marketing. They don’t buy search terms, their websites are generally uninformative, they don’t have 1-800 numbers or 24-hour live chat and when prospective customers run Google searches they see Stores from a neighboring market who have bought those terms. The competition in the market from a supply perspective is one thing, the competition from a marketing perspective is another. In this market the operators do not have the fundamentals in place to capture the customer.
Market B is different; it’s populated by REITs and mid-sized professional self-storage operators who understand marketing; the first page of Google is a pitched battle of SEO indexing and SEM bidding, the store websites are dynamic, updated, full of promotions and available to be contacted around the clock.
This is not a supply and demand factor; this is about incumbent market competitiveness. It is an important thing to know about a market; based on the description above, any developer would be more interested in Market A than in Market B.
Measuring competitiveness to create a data factor
The question then becomes; how do we create a scoring system that enables us to measure markets side-by-side in this way so we can then use that statistic as another input into the overall analysis of markets?
Well, the answer is both simple and difficult. The solution is to create a weighted scoring index that measures all of the various marketing and competitive activities that a self-storage store could perform (in effect defining the ‘perfect’ marketing profile for a store) and then a process whereby each Store can be scored across these activities. The difficult part is then automating the discovery of these marketing factors each day to generate a daily score per store, and then rolling those scores into Market Scores.
To find out more about StorTrack’s Marketing Scorecard, available now in the OPTIMIZE platform, contact StorTrack on 1-800-969-7424.