Turning a Property Around

by Tom Maxfield, Move It Management

March 31, 2020

It is all too common to hear about a particular facility not succeeding in its market, or, perhaps the facility was once successful but has since declined. For an owner or manager concerned about falling performance, rehabilitating a facility can be a daunting and often perplexing undertaking. However, most of the time, the keys to a successful turnaround program are right under your nose. So, don’t panic about the situation. Instead, become purposeful about identifying the problems and implementing a turnaround plan.

The first step is to simply recognize doing “something new” requires you to stop doing “something old.” It can be difficult to organize.

Your priorities as an owner or manager after years of “we have always done this way” procedures.  The primary goal is to always increase NOI. A troubled facility is always failing in that goal, and as a result, alternative ideas, strategies, and processes are necessary to achieve the desired outcome. Any owner or manager, regardless of the size of their facility, can, and should provide a safe, clean, pleasant environment for tenants and employees. Doing so will almost always add value to the storage experience, generate additional income, and prolong the life of your asset.  Over time, some owners get these priorities out of order or take shortcuts causing poor customer satisfaction, declining staff morale, deferred maintenance, and underperforming financial results.

Consider Your Facility’s Appearance

“Curb appeal” is a frequently used term to describe the aesthetic appeal of your property when first seen by a drive-by customer. We know that term refers to a fresh-looking image including neat landscaping, quality signage, and exterior lighting.   However, imagine what prospective tenants are sensing when they enter the office, and they see dirty windows or flooring, stained ceiling tiles, faded painting, and a messy desk. And, if you show them a unit, what if they see litter around the property, filthy hallways, or rodent droppings in the unit? The solution is to roll up your sleeves or hire a cleaning team and clean up your property. Your property may not be fancy but it can be clean. Once done, you can proudly proclaim, “We are the cleanest facility in our market.” Customers will love and appreciate your hard work and commitment.

Assess Your Facility’s Security

Customers want to know you care about their safety and their stored property. That does not mean you assume responsibility, either real or implied.  Rather, in this area, the level of trust with your customers is proportionate to your maintenance of access and surveillance equipment.  A customer will quickly lose faith in you if half of the video cameras are not working or the manager has no training in operating the DVR. While modern systems for access, surveillance, alarms are recognized added value features for most customers, it is essential to maintain the functionality of the security systems in your facility, regardless of the sophistication of the equipment. Doing so will create peace of mind and goodwill with your customers.

Analyze Your Marketing Program

Troubled facilities are not keeping pace with the market.  The reason is generally due to complacency.  Getting out and visiting the competition provides immediate feedback as to your level of curb appeal, cleanliness, professionalism, and customer service compared to your competitors. Prospective customers already know the differences from their comparison shops. It would seem obvious managers would be knowledgeable and proactive to these differences, but generally, you will find they do not. Even if prospective customers drive by your facility, most of them seek additional information online. Having an informative website is important, of course, but having free listings on local search directories is one of the quickest, effective strategies for generating more inquiries from prospective tenants. Registering the facility on internet directory or aggregator sites (including TSSA’s Facility Locator) can also produce significant new traffic but recognize most of these prospective tenants are price oriented in their decision-making process. They are using an aggregator site to easily compare deals or prices.  If this strategy is used, be prepared to offer a rent discount to the new customer while paying a commission to the internet site.

Employ Revenue Management

Underperforming facilities generally do not change their asking rates on vacant inventory because of fear of losing a new rental or lack of knowledge of market rates.  If a unit category has not leased up over a period of time, it clearly indicates potential tenants don’t believe that unit type has value at the existing rent rate.   Correspondingly, if a unit category has a high occupancy for a period of time, it indicates potential tenants not only find the rent rate attractive but they might also pay a bit more due to the general demand.  Many companies use their management software to analyze these trends to decrease rent to stimulate sales or to increase rent to maximize income.  Similarly, satisfied existing tenants recognize moderate increases in rent from time to time. For the customer, the acceptance of the increase is tied to their perception of fairness.  If an owner or manager is providing a high level of service and maintenance of the facility, the customer is more tolerant and accepting. To be successful, it is advisable for owners to correct facility or personnel problems prior to implementing an aggressive rate increase program.

Review Processes and Procedures Commonly, troubled facilities have inadequate daily, weekly, and monthly operations.  As a result, management control is inconsistent.   Site related duties for the manager, including daily security checks or bank deposits, are often not defined. Importantly, many poor facilities have no defined procedures for collecting delinquent rent or conducting lien sales.  With their lease, TSSA has provided members with the most complete lien sale procedure in the nation, and there is no excuse for not using this statutory tool to collect past due rent and free non-productive inventory for new rentals.

Evaluate Your Property Manager

How “good” is that person for your property?   Even though there are a variety of assessment resources, it is rare for owners to make minimal investment in personality and skill profiles when hiring their employees. As a result, many facilities do not perform because the wrong hiring decision was made.  The majority of these managers did not receive adequate training when they were hired nor were they afforded training on an ongoing basis.  If the facility has deferred maintenance or a lack of organizational structure, it should not be a surprise that the manager has lost motivation and instead copes with just maintaining a job.  Often, these situations are not salvageable.  How- ever, high expectations of the owner carry the responsibility of providing a supportive atmosphere for the manager to succeed. A defined job description regarding duties, competitive compensation, benefits, working environment, and training are essential to developing great managers. In a relatively short period of time, a bad manager can ruin a good property, but conversely, a good manager can improve a bad property.

Turning around a troubled property requires a commitment to create a new atmosphere and experience for the customers and employees. It also requires capital and organization to implement a defined plan for improvement. It normally takes six months to complete the plan, but the improvement and pay-off can be inspiring.

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