Scott Beatty, CEO of Absolute Storage Management

Due to its countercyclical nature, the self-storage industry performed strongly during the entire health crisis, with steady growth in rents and development activities across the country. Although the demand caused by the pandemic has begun to weaken in recent months-the traditional seasonal return-rent growth remains high by historical standards.

To learn more about the performance of the industry in the past few months, Multi-Housing News contacted Scott Beatty, CEO of Absolute Storage Management. The company has a management portfolio of 128 properties in the South and Midwest. As of the end of September, the occupancy rate of its facilities reached 94.4%, much higher than the 89.5% in the same period in 2020. Below, Beatty talks about fuel requirements and shares his views on the future of the industry.

Also read: Will self-storage prosper after COVID-19?

What are the main challenges in the storage field this year?

Beatty: One of the biggest challenges we face in the first half of 2021 is to find and attract talented team members when we introduce new locations, re-staffing locations where we have reduced working hours during the peak of COVID-19 in 2020, or respond to resignation In our existing team. Fortunately, with the decline in the COVID-19 infection rate and the return of labor in large numbers, most of the challenges in this area have eased in the third and fourth quarters of this year.

Where do you see the greatest demand? 

Beatty: We have seen significant growth in almost all states and regions. This is mainly due to the increased demand that the industry has experienced in the past few years. Compared with the period before COVID-19, our occupancy rate has increased by nearly 6% and has remained at a high level even during the fall and early winter.

Our tenants continue to need our services because the sales of homes in our market remain strong. As companies respond to supply chain issues and begin to accumulate more products to meet demand, we have seen an increase in company and corporate rents this year. In addition, service industries such as house builders and plumbers have never been so busy because homeowners want improvements, and these companies are contacting our facilities to meet their storage needs.

Major markets such as Nashville, Tennessee, Atlanta, and Charlotte, North Carolina continue to grow at an exciting rate, as do the smaller secondary markets we operate.

Nationwide, self-storage rental growth has begun to slow. Should this be a cause for concern?

Image courtesy of Florin Palamarciuc via Unsplash

Beatty: At the moment, we don't think this is a problem because some of it is simply due to the traditional influence of seasonality. In most years, spring and summer are the most prosperous months for self-storage, while autumn and winter are slower. For most of 2020 and the first half of 2021, COVID-19 excludes traditional seasonality. However, as students return to schools and campuses, the behavior of consumers or tenants has also begun to normalize.

The basic laws of supply and demand are affecting our rent requirements, which in turn are starting to slow rent growth.

In addition, new development properties have been added. These properties started construction about 12 months and 18 months ago, so the increase in supply will naturally have an impact on the surrounding micro market.

Since the outbreak of the health crisis, how has your management strategy changed?

Beatty: Since the outbreak of COVID-19, we have made greater progress in using technology in all aspects of our operations. We are very fortunate to have launched our online rental platform before the health crisis, so we were able to focus a lot of time and attention on other operational functions of the hotel.

The pandemic has greatly affected our human resources, and we quickly turned to using technology to help perform basic functions such as collections, auctions, security, and property maintenance. We turned to looking for ways to provide customers with remote services through on-site contactless leasing processes and provide additional self-service capabilities for their customer experience.

We attach great importance to communication. From the perspective of a third-party management company, we changed our strategy around customer communication, most of which were done in person before COVID-19. We launched a new owner update platform and ensured that we communicate effectively as the crisis progresses and we encounter various staffing and other operational challenges.

We are also very concerned about internal team communication, because we quickly realized that we need to find ways to keep our culture healthy, keep the team in touch, and help the team during these difficult times. We have made various plans, such as "Watch Wednesday", "Fun Friday" and "Coffee and Chat" activities, which continue to this day.

Also read: Top 5 Sun Belt Markets for Self Storage Trading

What are the main features that self-storage facilities should not lack in 2022?

Beatty: Safety and security are still at the top of every client's needs and expectations list, and these should not be overlooked when developing new properties. Developers should consider adopting the latest technologies, including Bluetooth access control systems and personal door locks. These not only provide a higher level of security, but also provide customers with great convenience. There should be strong security systems and remote monitoring options, and the lighting on the property should not be overlooked.

What do self-storage providers need to maintain a competitive advantage in 2022?

Beatty: In my opinion, being customer-centric and providing the highest level of service possible is always the key to success. This does not necessarily mean that we cannot make full use of technology, we need to return to the pre-COVID-19 model, but it does mean that customers should be in every process, every system, and every interaction. If storage vendors focus on customers, they can usually overcome some of the more tangible storage components that can make competition challenging—such as location, age of property, and other physical characteristics.

How do you expect the market fundamentals to develop in the next few months?

Beatty: Employment growth, declining unemployment, continued housing strength, and wage increases will continue to be positive signs for the storage industry. It is difficult to predict how the latest COVID-19 variant will affect our model, but at this time the outlook for the coming year looks very promising.

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