Over the past 30 years, gas stations have changed quite a bit. There was once a pump attendant who'd fill your car up with gas, which slowly transitioned to paying inside and pumping your own. Today, we pay at the pump, everything is self-service and we even have video monitors to keep us entertained while pumping our gas. The gas station itself has evolved into more of a convenience store, where you can find almost anything from food and beverages to home decor and even apparel. Take a look at the Buc-ee's chain for example. You see their beaver icon out in public on all kinds of items like can coolers and T-shirts. Gas stations are so successful today because they realized the growing need of their customers and evolved their offerings to better serve that market. Those gas stations are now the RaceTracs and Quick Trips of the world. Luckily, the self-storage industry can learn from this progressive approach.
How many times have you driven past an old hole-in-the-wall gas station to find a new and more inviting one? These class A facilities are easily accessible, clean and give the customer the perception of safety. This in and of itself shows us that investing in the customer experience and making your property more user-friendly will help attract customers and bring in more revenue per foot, increasing your NOI.
Items that attract customers:
Let's take a look at an Example of the potential benefits your property could achieve through a full door replacement project.
We have a 500 unit facility, class B property with an occupancy rate of 90%. They decided to replace all of their unit doors. After one full year post-installation, their rental rate increased by 10% taking their income from $540,000.00 to $549,000.00.
With newer, safer doors, the facility was also able to save 10% on insurance and 3% on repairs and maintenance costs, which lowered their operating expenses from $189,000.00 to $184,000.00.
The increase in their income combined with savings took their NOI from $351,000.00 to $410,000.00. Their value at a 6.5% Cap Rate escalated from $5,400,000.00 to $6,301,692,31 which grew their Net Increase of Value to $907,692.31. After capital costs and door replacements, their net increase of value was $657,692.31.
