In the past, Real Estate Investment Trusts (REITs) attracted self-storage customers with higher initial rental rates, postponing the first rent increase in six to nine months. Subsequent increases occurred every six to nine months after that. This approach ensured that in-place rents closely mirrored advertised web rates. However, recent trends indicate that in-store rates and in-place rates can now surpass web rates by 30-50%, leading to decreased transparency in property performance.
The current pricing strategies deployed by the REITs with their self-storage web rates can be perceived as a deceptive marketing strategy by some. These rates are often presented as enticing offers to attract customers to rent storage units online. However, they may not reflect the actual rates that customers end up paying in the long term.
The term "web rates" typically refers to the rental rates advertised on a self-storage facility's website or online booking platforms. These rates may be lower than those offered to walk-in customers or those who inquire about storage units in person.
The deceptive aspect arises because customers may be drawn in by these lower web rates, only to find out later that the actual rates are higher due to various factors such as additional fees, insurance requirements, or regular aggressive rate increases after an initial hidden promotional period.
While web rates may serve as a marketing tool to attract customers, they can be perceived as deceptive if they do not transparently reflect the true cost of renting a storage unit over time.
At Storage Authority we arm our owners with the best guarantees in the industry because we want our customers to rent with confidence! One of the pillars of our guarantee to our customers is that "we promise your rate will not increase for at least one full year"
As industry experts, we understand and share with our Storage Authority owners the importance of adapting to evolving pricing strategies. The focus has shifted from teaser web rates to in-store rents, prompting appraisers to rethink their valuation approaches. Developers and investors must recalibrate their strategies to align with this paradigm shift, prioritizing in-store rates over web rates for accurate property performance assessment.
If you would like to learn more and start your journey to self-storage ownership click the link here: http://www.storageauthorityfranchise.com/opportunity2
This article was originally published on the Storage Authority Franchise Blog, March 2024
At Storage Authority Franchise we are a leading provider of comprehensive solutions for self-storage development and operations. With a focus on excellence and profitability, we empower franchise owners to achieve elite status in the industry as an alternative to consultants and 3rd party management. Our proven systems, expert guidance, and unrivaled support help self-storage facilities thrive and surpass all expectations. If you are thinking about self-storage you owe it to yourself to contact Garrett Byrd at Direct: 941-928-1354 or Garrett@StorageAuthority.com to learn more about the Storage Authority Franchise opportunity.
