Real estate is a fast-paced industry, and for many investors, the goal is to build properties to sell – and then move onto the next project. This “merchant builder” strategy aims to get in and get out as soon as possible, making a quick profit.
But the risks and challenges associated with this plan are high. Real estate developers who intend to flip a property quickly are subject to short-term capital gains taxes – or they need to find a similar investment property to qualify for a like-kind exchange. This rapid turnaround creates intense pressure to continue the investment loop, even if market conditions change.
But at my company, we take a different approach to real estate development: we build bigger, grow smarter and stay longer. All Storage is a family-owned and operated business, but it’s also one of the top three privately owned self-storage operators in the country. Over the last few years, we have made a huge push toward improved innovation, design and customer satisfaction (three areas you might not associate with self-storage!). To support our objectives, we often make choices that don’t involve the cheapest or easiest initial cost or the quickest planning. We are focusing on large, long-term growth for our real estate business, and these are the practices we’ve found most effective along the way.
Assess Your Past
Before you decide what your next steps should be, take stock of the decisions you’ve made up to this point. Look back on your company’s history, and see what you can learn from past hits and misses. What added value to your business? What would you have done differently in retrospect? What are the key takeaways? Why is your best performing site so successful? You want your business to be in good shape before you start to grow.
Know Your Audience
Who is your audience? This may seem like an overly simplistic question, but companies can lose sight of it, especially during periods of growth. Get to know your audience and what they want, need and value. For example, tenants in a suburban multifamily residential complex will have different priorities than medium-sized businesses in retail centers.
For us, our audience is often going through a major change in life: a move, a loss, a new chapter. Many of these transitions are difficult and emotionally fraught, so we try to make them easier for our customers. We look for ways to lighten their load, both literally and figuratively.
Invest In Branding
Your branding and marketing create a customer’s first impression of your company. What does your current branding say about you? Does that align with the identity you envision? What sets you apart from competitors in a crowded market?
A few years ago, our company decided to rebrand. Our brand identity felt outdated and disjointed, and that identity carried over into everything from our written messaging to our storage facilities. We saw ourselves as creative, forward-looking, ready to shake up a dusty old industry – but that’s not what our brand was communicating.
Self-storage is often associated with appealing to the masses. After all, PwC reports that there are 55,000 facilities in the U.S., and one in every 13 people uses them. But we didn’t want our branding to be bland and safe and forgettable. We created a new identity to unify all of our locations and convey the bright, cheerful efficiency of our company.
Don’t be afraid to be bold and stand out. As part of our rebranding, we designed and trademarked the leasing office in our new facilities to look like a giant cardboard moving box, complete with open corrugated flaps and “Fragile” and “This Side Up” labels. Our existing customers loved the “box office.” And it attracted brand awareness (it’s not every day that a post about self-storage gets more than 63,000 views on Reddit) and new tenants.
Be Different With Site Selection
As you grow, pay attention to which sites are the most advantageous to your business goals. Look past the initial investment cost to the long-term vision. What areas do you want to be in to reach your audience? What size properties or lots will be the best fit for your strategy? What projects do you want to have ready in the queue?
What has allowed our business to scale is investing in several large facilities at a time. We end up spending roughly the same amount of money and time permitting and zoning for a 250,000-square-foot facility as we would for a 25,000-square-foot space. A bigger property gives us more bang for our buck. And lenders get more excited when we have five to ten deals in the pipeline, instead of just one. If we had taken a slower approach, buying one small property at a time, we wouldn’t have reached this stage of our expansion. When we first started our larger – more than 150,000-square-foot rentable space – facilities, not only was our business acumen questioned but also our sanity. But soon after, a large REIT started following suit in larger builds and similar aesthetics. Our strategy clearly made sense, not for everyone but for those with similar goals.
By understanding your company’s identity, audience and long-term goals, you can create a comprehensive growth strategy that will propel you forward.