The real estate industry is taking a big hit from the coronavirus outbreak. Although the effects of the pandemic vary across asset types, no sector will be spared from increased risk and challenges.
Commercial Property Executive reached out to Beyond Self Storage for insights on how the self storage segment is coping with the current crisis. Lara Anderson, the company’s marketing director, shares some of the measures storage operators can take to minimize the impact of the pandemic.
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How do you expect the outbreak to affect the self storage business?
Not only are we an operator, but also a developer. We are only experiencing minimal delays with a few construction projects shut down, but if shelter-in-place mandates become more extreme, we could have more construction delays. With the sourcing side of our business in finding new deals and closing current deals, we are fortunate to be built to withstand economic issues. We are seeing sellers that had been hesitant to close deals in the past come to us and put their foot on the gas to speed up otherwise stalled sales. We have a good capital base and are prepared to continue growing our pipeline.
What makes the industry more vulnerable or resistant to the crisis we are currently experiencing?
Self storage has a bit of recession-proof built in. People store due to a life change. Currently, we are seeing this with customers suffering losses of income and stability, which is resulting in them being proactive in moving in with a friend or family member to save, or they are forced into a situation where they can’t keep up with their current arrangements. People always have prized possessions and, even in hard times, try to find a way to hold on to those important items. We also have a large portion of business customers that will need to maintain their units because it is their livelihood.
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Would you compare this situation to past challenges the industry has experienced? Is the sector better prepared to overcome a setback?
We started operating Beyond Self Storage in 2016, so we haven’t operated in a declining economy. However, our team is comprised of individuals that are seasoned veterans in property management and have structured our deals to weather the storm. Moving forward, successful operators will be the ones that can be proactive and innovative in finding ways to acclimate and shift to changing customer demands. A great example of this was our quick shift to contact-free leasing.
What are some of your biggest concerns regarding the effects of the coronavirus outbreak?
Our biggest concerns are keeping our team members and customers as safe and as protected as possible. We started providing extra cleaning supplies at the very front of the outbreak. We set up stations throughout the facility, so the customers could stay protected as well. Our employees are also working from home, with one person on-site for a couple of hours each day.
The other concern would be nationwide anxiety. As humans, when things become irregular, many of us panic. This causes people to limit spending and put ancillary life decisions on hold. We are hopeful that government programming, including stimulus checks, combined with adherence to social distancing, will get us back up and running sooner rather than later.
What measures can self storage businesses take to minimize the impact of the pandemic?
With the tools that technology affords us, there is really no reason to be making face-to-face contact until we slow down the spread of COVID-19. Our customers are appreciative and have found the process to be easy and convenient. When we come out on the other side of this, we will have better tools and technology in place for the storage industry.
How is Beyond Self Storage handling the crisis caused by COVID-19?
We are finding ways to tighten up expenses. We are also communicating with our teams daily to evaluate any global issues. The beauty of the new, daily all-company calls is that we have become even closer as a team and morale is high. We are all learning from each other and growing. We also have implemented daily webinars for our team members that have more free time now than usual, so they can work on their professional development. We are setting ourselves up to come out of this crisis stronger and ready to succeed.
Tell us more about the “COVID-19 Conscious” option Beyond Self Storage is offering to customers. How can this help reduce the impact of the disease?
From the beginning, we made the decision to protect our team members and our customers as much as possible. It made sense to take advantage of technology and limit interactions. This quickly evolved to fully conducting business virtually.
We do the entire reservation process online or over the phone, and we are also performing daily checks on our store and customer units, cleaning and refilling sanitizer stations and preparing for move-ins. Customers can prepurchase packing and moving supplies, and we will put them in the unit for the customer. We also provide Beyond Bundles, which are preportioned moving kits. We have technology-based solutions for access to the building, so this eliminates touching keypads and doors, and we also offer online rent payments.
Beyond Self Storage operates in several states across the country. Where do you see the most demand for self storage during the outbreak? What drives demand?
The initial demand that we saw was related to student housing. This is a huge part of our business in some markets. With the abrupt closing of colleges and universities, many were left to scramble to find a place last minute, and this is still happening, as schools navigate rounds of move outs.
What is the company’s long-term strategy for crisis management?
Most organizations have a crisis management plan. With COVID-19, it’s been proven that you can’t 100 percent prepare for everything, but what we can do is have some processes in place to be ready for action. Where I think we have come out of this in such a positive light is turning to our core values as a beacon to help direct us on what our decisions should be. Are we “putting people first”? Having our teams work from home when applicable and finding ways to limit interactions was the answer. Were we “doing the right thing”? Setting up processes to protect our customers and communicate with them was the answer. Did we “take ownership”? Acting quickly and implementing these procedures at the very beginning was the answer. So, I would say, for the long term we are set up with a team that is ready to approach any crisis with these same values in mind.
When do you expect the economy and the business to fully recover?
Many storage companies are holding off on implementing rent increases. This is really where we see the biggest financial impact occurring. We retracted April increases and will be evaluating monthly, but I don’t anticipate rent increases for a couple of months. This will impact this year’s financial performance.
No one can predict what is to come, but if we can maintain solid leasing month-over-month, we don’t anticipate any catastrophic losses. We always have ebbs and flows in our economy. Anytime the bottom falls out, you are hopeful for a quick rebound. We have been able to retain and pay full salaries for all employees and have no intentions to cut staffing.