I grew up walking properties, visiting jobsites, networking at conventions, and working during college as a part-time assistant manager for my parent’s management company. I have seen the market thrive and I have seen it fall. In fact, I was born during a national economic downturn. My father, Mike Parham, started his first company at this time-National Development Services Inc., a general contracting company providing development and construction services for the self storage industry.
With a bad economy, a new baby at home, and another baby on the way, people considered my father crazy for taking such a great risk on a new company. However, my father lived by a simple principle that would help him succeed in any market: “Never build something that will not work.” This concept, which my father has passed on to me, has helped us build several successful companies and is one of the main reasons our companies survive during economic slumps.
It’s easy to understand why most people see the last four to five years as a recession. New development growth has been stagnant; the economy plummeted; REITS stopped buying properties; banks stopped loaning money; and what once seemed like a profitable industry had nothing to show but signs of extinction. Good people who had been in business for years were closing their doors and loyal, hardworking employees were being laid off. So how did some properties survive?
Throughout my life I have learned that as time progresses and changes, so must I. I must adapt to the world around me in order to live within the means of the new normal. Change is constant and the self storage industry is no exception. As time moves forward, the use of technology will increase and the market will change. In order to “keep up with the times” we have to adjust or be left behind. Operators will adjust their rents based on the market and tenants needs; cut costs and prioritize spending; continue to look toward the future; and constantly train employees on new advances in technology that will help keep their stores competitive. These constant adjustments will help restore gains and better prepare us for the future.
Adjusting with the market and being a good operator are the key elements to a facility’s success; however, if a property is built within a market that has little or no demand, not even the best operator can make it profitable. Remember, we “never build something that will not work,” so we have do our homework. By practicing the fundamental principles of development, we can build businesses that will survive in any economic environment.
For a property to succeed, finding the right location is vital. This requires identifying your market through studies that offer trade area demographics based on most recent postal counts. These studies will inform you of your target market and will access the demand based on the population and existing competitors. Your property’s success relies on matching the demographics and the demand of your trade area. Secondly, your location must be visible and accessible.
Advancements in technology and social media have given us better tools to reach new customers, but drive-by traffic still is the one impetus for leasing. Over 85 percent of customers are the result of the store’s visibility and drive-by traffic. So, make sure your store and its signage can be easily seen and your facility is easily accessible.
My father has taught me many lessons throughout my life. We cannot predict the future, even though we so often try. We cannot change the past, but we can learn from our experiences and failures. We can choose to adjust our operations as markets change and we can choose to do our homework using fundamental principles to develop and operate successful properties. We may not be able to predict the coming days, but we can prepare for them.