Determining Your Competition’s Occupancy Levels is Critical

One of the trickiest parts of researching your market is determining your competitor’s occupancy levels. You need to know what your competition is doing if you are going to determine your own potential occupancy levels. You may have found what you think is a great opportunity, the occupancy levels are low, and the property is in fairly good condition. You plan on going in and putting in new management, improving the marketing and bringing up the vacancy levels to improve the income. However, if you don’t know that the occupancy levels for the entire area are low because the market is oversaturated, you won’t know that your goal is not realistic.

You usually cannot call up your competition and ask them what their occupancy levels are. They are not going to just give you that information. However, you can get a pretty good idea of what their occupancy levels are by their pricing. Most storage facilities use dynamic pricing. This means that their prices go up and down based on their occupancy levels.

For example, if you go online and a storage facility doesn’t have their rates listed, they might be close to full, or they may be low in inventory in a particular size self-storage unit. This is a great time to pick up the phone and call and ask about that size unit in particular. Hopefully while you are talking to the person at the facility, they will tell you how many units are left in that size. Often, they will do that as a way to put pressure on you to hurry because they only have 2 units left.

Now that they have given you an idea of how many units they have left, you are going to determine how many units they have. You can do this by finding out what the gross square footage is of the property. Often, you can find this information on the county assessor’s home page. Find out what the gross square footage is of the property and then you are going to divide that by 110. This will give you an approximate number of units.

You also want to go to your competitor’s website to find out what amenities they offer. Do they have Boat and RV storage or are they just self-storage? What kind of security do they offer? What kind of gated system do they have? Are there cameras? You want to know about your competition. While this is a time consuming step, it is an important one.

You need to repeat this process for every self-storage unit that is within your marketing area whether that is 2 blocks or 5 miles. Once you have done that, we can calculate the demand. Yes, you will get this information as part of your feasibility packet, but if you already know that the occupancy levels are bad across the area, it may save you time in your negotiations. As always, happy investing.