Food For Thought – May 2017

Posted by Malcolm in Articles with No Comments

A typical going concern self storage enterprise comprises the freehold property worth including its real assets (land, buildings, site improvements, infrastructure, fittings and fixtures) and its notional leasehold or business value element which includes its “digital real estate”.  This has been defined as website names, social media accounts and other markers that stake out a digital space on the internet as being yours.

Value creation and its continuity is now taking place in a rapidly changing world where all service and retail-based industries are under threat from traditional concerns plus digital-based start-ups and  marketers, big data providers, the now ubiquitous disruptors, and whatever “unknowns” are coming.

This includes you!

People and service are intertwined in digital self storage – so far!  The industry now faces new challenges to stay relevant, front-of-mind, and profitable.  Astute owners and operators need to recognise this earlier rather than later or risk seeing their value(s) erode as others win market share.

In our disruptive economy where change is relentless, current and future value relies upon management innovation and proactivity including your digital real estate presence.  This is a fundamental as the world gets ever smaller and the choice(s) gets ever wider.

If you aren’t maximising your business and its digital real estate assets as part of your everyday operations, rest assured someone else is!

From a going concern valuation perspective, a contemporary question should now include how your digital real estate value is recognised (if you have one) and more particularly how it is:

  • quantified in dollar terms
  • measured as a contribution to overall value and
  • blended in to a valuation description and given a quantified value .

Answers to the above valuation questions require you as owner to possess and use cutting-edge operational systems to provide reliable, measureable, real-time data as a necessary first step in giving your digital real estate a value.

The impact of digital real estate on current and future value requires the valuation profession to be thinking about this now.

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