Offer Mini-storage to Your Tenants

If there’s anything people have a lot of, it’s “stuff.” The property manager who takes note of this fact offers both current and potential tenants a tremendous value by supplying them with much needed extra room—a value-add that does not go unnoticed.

People Need It
David Lindahl, president of the Lindahl Group LLC in Rockland, Mass., says it is an industry standard to provide tenants with a small area for storage, but this is always reliant on how much space is available at a property. Of the 3,200 units he owns, he says approximately 60 percent of the buildings offer storage space for tenants.

“[Storage] space is always an incentive for people to move in,” Lindahl says. “The more the space, the easier it is to lease up. It affects the bottom line when you can charge for it. We charge for it in only 20 percent of our properties. The increased income is divided by the cap rate and increases the value of the property and the monthly operating cash flow.”

“It is very welcome,” according the CEO of an Engelwood Cliffs, N.J.-based residential real estate firm, which operates investment properties in four states throughout the Northeast. “There’s a definite need for storage today, absolutely. I wish we had more of it, to be candid. People need storage; there is no question about it. You move into an apartment, and people have accumulated a lot of things through the years and there’s a lot of things they don’t want to get rid of.”

Use What You’ve Got
The real estate executive says his company has some storage in each building, but not every building. Since the company didn’t build the complexes it now owns, he says it has tried to make the best of each location’s facilities by subdividing basement space or a similar location, where and when available, for storage.

That used to be common practice in the industry. From the 1940s through the ’70s, apartment buildings sectioned off spaces, usually with chicken wire and 2-by-4s, to provide storage space for each unit in the building, the executive says. But, especially in the last 15 to 20 years, the space is more sophisticated and much more storage space is given to tenants, he adds.

“It’s more secure; it’s more professional looking,” he says. “There’s more space. Sometimes they may charge for it, sometimes they may not. It depends on how aggressive the landlord wants to be.”

The real estate executive calls it a leg up for property managers to offer storage space to tenants. It’s a positive thing, depending on the prospective tenant, he says. Someone in his or her 20s may not care about it, because they haven’t accumulated as much. However, a couple that has sold their home—which, he says, is a large percentage of apartment renters throughout the country—doesn’t want to deal with all the upkeep of homeownership: landscaping, repairs, snow removal, leaking roofs, calling in the painter, the plumber or electrician. People in their mid-50s or 60s often sell their homes to simplify their lives, he says. They have a huge amount of equity, so it becomes very advantageous for them, he says. These kinds of tenants have a load of additional items.

“They raised two kids, three kids, one kid, four kids—they need storage,” he says. “I think many people wind up taking storage space [at a storage facility] just to store their items. It becomes very personal, they don’t want to let it go and rightfully so.”

Always Accommodate
Many apartment complexes may not have the luxury to offer this kind of space, whether it was not part of the original building design or it has been utilized in another way. Some property managers also may not see the advantage.

John P. Lee, principal of JPL Group Inc. and a member of the Institute of Real Estate Management’s (IREM) Multifamily Sector Advisory Group, says he doesn’t see common storage areas as commonplace or standard anymore. Many property managers figure that tenants can go to public storage centers for their storage needs. This kind of storage is kind of an afterthought, he adds, because you can’t make a lot of money offering storage. “I don’t think it’s a big selling point,” he says. He does concede, however, that a lot of apartment residents have the need, especially “family” units, like three- and four-bedroom apartments.

If your property doesn’t have the physical means to offer space for storage, it might be sound business strategy to get to know your local storage space providers.

Any decent management company should be able to put a tenant in touch with a storage provider, if storage issues can’t be resolved at the complex, the New Jersey-based real estate executive says.

“I would say most of my on-site managers can recommend storage areas and we’ll try to accommodate them in the building if we possibly can,” he says. “Maybe there are some people who didn’t take storage. If we have an extra bin, two bins, three bins, we’re going to try and accommodate a tenant. This makes the difference of being a successful landlord.”