Is it a mistake to let a facility get full?

Sue_C

You've been at 100% capacity for 7 months, and things are looking good through next year. Business is booming, and that's a good thing, right? Or is it? Share your thoughts on the dark side of a full facility--if there is one

Climateguard

While it sure is nice to see those occupancy numbers high its even better to have an economical occupancy to match it. It also gives us time to focus on ancillary income like trucks rentals and merchandise sales.

Drew

I would consider it a mistake if you are not utilizing tenant and unit rate management.

CarrieLacy

I don't believe it is a mistake & the focus should be on retaining 100% capacity by still focusing on marketing & creating a "Wait List" for potential new tenants!

Nikki_GuavaStStorage

90% occupancy is normally the best business approach.

Sue_C

Nikki, your profile picture is awesome, very funny!
Thanks for posting

Drew

Nikki_GuavaStStorage said:

90% occupancy is normally the best business approach.

Everyone's ideal occupancy number varies but I am with you on the 90% mark.

If you are 100% occupied and have a wait list of customers an opportunity is being missed out on.

AZStorageGuy

100% occupancy is a NON-desirable goal!  If you've been sitting there for 7 months, that's not good. 

Full house means you're leaving money on the table.  You're not getting new business and you're not getting the most bang for your buck. "Almost full" is a better goal.

And unless you've got a friendly alliance with your neighbors, you are an aquarium waiting to spring a leak!

opss

What I have seen is the surrounding rates rise faster than the facility rates which makes a differential between physical and economic occupancy.  Only a rate leader at 100% physical occupancy would actually have 100% economic occupancy and then this would only show they have not been raising there asking rate fast enough. An optimal condition would include 1) higher rates than anyone in the area ( implying high advertising ) 2) A 95% physical occupancy rate ( implying maximum income at those rates.    

opss

Your occupancy rates needs to include advertising and employee costs associated with any goal over 95%. Very soon you will be expensing more money than you are oncoming as the last 5% is the most costly. At the very least it is a diminishing return that is why 95% is the accepted maximum in the return function.

DerekBrett

I don't get it. how is less better? how is collecting rent from %100 of my units not as good as collecting from only %90-%95. I want to get as close to my gross potential rate as I can and make as much money as I can.

someone help my out here cuz im not understanding what you all are saying.

Orkocean

The thought process behind not being full as better is that if you are full then you are probably leaving money on the table by not charging enough for the units. I've seen it first hand time and time again when taking over stores where we could have a site at 98-100% full and feeling proud about it making lets see $60k, $70k on a good month drop occupancy yet make more money. My first site went from 70k on a good month where the old owners would be jumping for joy and happy they had a 6 month waiting list for units to making over $100k a month in a years time with new owners and 8-10% less occupancy due to proper revenue management. I know quite a few owners/investors who's golden # is 92% for their sites. If they get over it you better believe rate increases are going out twice as often and prices are getting drastically raised. 

ThriftyStorage

I have several facilities near mine that are offering 10x10 Drive-Up for $40.00.

ThriftyStorage

We raise our rates every 9 months. Orkocean: how many units does your facility have?

Orkocean

My current one is 1,002 units. The one I was referencing above was 960 units. Typical rate increase schedule for us has always been your first one around 8 months and 1 every year after unless the place is at capacity then you might get your first one 3-4 months in and every 3-4 months after. As far as vacant unit prices my previous company we were in the habit of updating them every 2 weeks. My current company we do about once a month.