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See Millenials, page 8

Millennials Are Your Next CustomerThe key is understanding what they will buy and where you will find them.

By Laura Williams-Tracy

Is your self storage facility ready for 80 million new customers?If not, it’s time to get to know the generation born between 1980 and 1994. These so-called Millennials have reached maturity and are ready to have a significant impact on the economy and possibly self storage.

In numbers, they are the biggest cohort in American history, even bigger than the Baby

Boomers. But having grown up in the age of 9/11 and reached maturity in the worst recession in generations, they think differently than their parents about where to live, what to buy and how to shop. Whether they seek self storage like the generations before them depends on when and where they finally settle down and whether storage operators do a good job of being found in the digital world.Now aged 20 to 34, this generation came of age in the banking crisis and launched—or failed to launch—from home in a difficult job market.

The experience has left them with different priorities on how to spend their hard earned dollars. Many are unemployed, underpaid and weighed down with an average of $30,000 in student loans. This group is far less likely to buy a car or a home.Such a financial position might be an omen for an industry like storage that was built on Amer-icans’ propensity to buy things and store them.

“Perhaps the bigger question is why they don’t buy and collect as much,” said Jeff Norman, senior director of investor relations for Extra Space Storage. Millennials currently make up about 17 percent of Extra Space Stor-age’s customer base. “Is it due to a change in mentality about accumulating, or is it because they have not yet reached income levels where they can afford to do so? I think if we can answer that question we can better understand their usages in the future.”Collectors or not, storage may become a very necessary part of life for Millennials.

“All of the trends of my generation tend to bode well for self storage,” said John Lindsey, 25, president of brokerage and third-party

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Millenials, from page 6

management company The Lindsey Self Storage Group in Durham, North Carolina, and a member of the SSA’s Young Leaders Group. Millennials change jobs three times more often than their elders and stick with the same employer for no longer than three years on average, according to the U.S. Bureau of Labor Statistics.

“We are the generation of uncertainty,” Lindsey said. “We don’t know what job we will have in the future, whether we’ll own a house or be married or have kids. All of that comes into play for storage. The more uncertainty there is, the better it is for the industry. If I don’t know where I’m going to be, I’m more likely to put stuff in storage.”Where Millennials want to be is in cities where they can lead an urban lifestyle and walk to jobs and shops. Places such as San Antonio, Riverside-San Bernardino, Miami, Detroit, Houston and Denver have seen an explosion of new young residents. That trend closely parallels the push by self storage to expand mainly in urban areas with adap-tive-reuse buildings that generate higher rents.

“Self storage is going where the herd goes, and the herd is definitely going into urban infill areas in top-50 MSAs,” said Chris Sonne, executive managing director of the self storage industry group for Cushman & Wakefield Western, Inc., in Irvine, California. “For institutional investors and REITs, the more urban the better, and I do think it’s a reflection of the Millennials.”Millennials may be less interested in buying a house, but they remain interested in the latest electronic gadgets and active lifestyles, which often require the need for gear. It’s hard to keep a surfboard in a micro-apartment. As Millen-nials give up living space for an urban setting, they’ll still need storage.

Catering to the CustomerStorage operators have long relied on business from Baby Boomers with disposable income to rent a unit for years to store inherited possessions and other things they can’t part with. So far, Millennials aren’t doing that. At Self Storage Madison in Wisconsin, owner Kurt Jacobsen has seen an influx of new business from young professionals coming to work for Epic Systems Corp., a dominant medical records software company that has tripled its workforce to 7,000 people since 2005. As Epic’s young and growing workforce arrives, Jacobsen said they are renting storage units, but briefly.

“My experience with Epic customers is that they are really good customers. They make arrangements via email and they pay online,” Jacobsen said. The only problem is they tend to be short-term renters. “As soon as they get an apartment, they are done. I haven’t seen long-term tenants with this generation yet.”

As the appeal of the big city wears off, some Millennials return to their hometowns. Some will buy homes.Jay Wallace, 32, president of Management Blueprints—a self storage management, development and acquisitions firm—and president of the South Carolina Self Storage Association, said as his friends have begun having families the need for self storage grows.

“With real estate more expensive relative to income, Millen-nials are living in smaller homes without much storage,” Wallace said. He thinks storage will become a necessary part of owning or renting smaller homes.Storage facilities that haven’t focused on a digital strategy will be at a disadvantage to attract this group, Wallace said. “The key is being in front of them online,” Wallace said. “If you’ve been in business for 20 years and haven’t marketed for 15, and then occupancy starts to drop, it’s because of your competition. If you are not online, for the Millennials you don’t exist.”

Winning Them with TechnologyMillennials are perhaps the most connected generation in history, constantly texting and engaging in social media to hear what their friends and families are doing. Their cell phones are almost another appendage.

“We’re all over social media, which is where Millennials are,” said Garret Stembridge, content and social marketing manager for Extra Space. “We have added functionality to our website and mobile website to make it easier to find Extra Space Storage on phones and tablets and to take reservations from mobile devices.”Large, publicly traded storage operators know this, and their sleek online presence makes it easy for them to be found by those searching online, Sonne said.

“It’s part of the reason larger operators continue to move away from the rest of the pack in operating performance, because they can do the cooler websites and mobile apps.” Smaller operators can do it too, said Dave Wolf, managing partner of Linkmedia360, a digital marketing agency near Cleveland that works with self storage companies. A key element for targeting the Millennial demographic is to invest in a responsive website that renders key elements—such as unit sizes, reservations and the facil-ity’s phone number—in an enlarged fashion for easier viewing on smaller screens. Millennials are looking for the information they need quickly and efficiently. Respon-sive websites will also receive better play from search engines, which means a business shows up early when being searched online.

“If your site doesn’t work well, that can be a turn-off,” Wolf said. “Millennials are a lot less patient than older customers who might call to connect with someone. Millennials are a lot less voice-commerce oriented.” v