Tom Boyle: No, we didn’t. The way I’d characterize move-in rents, and I think this is the first question on move-in rents on the call, which maybe a record in terms of depth before we get that question, but move-in rates across the sector have been lower. And I think that’s been pretty well documented. Move-in rents in the first half of the year, we anticipate to be down more significantly than maybe the back half of the year given the comp scenario that we’ve been discussing with the first half, really tough comps versus last year in the second half, easier comps. And so as we move into the second quarter, we anticipate moving rents, and we’re seeing that in April to be down in that kind of upper single digits to low double-digit type ZIP code.
Ki Bin Kim: Okay. Great. And how many stores do you have right now that are managed fully remotely without people? And are those – any kind of shared characteristics are those usually just smaller stores in tertiary markets or in different places as well?
Joseph Russell: Yes, Ki Bin. I would tell you there’s a broader context of the way we’re approaching the whole concept of “remote.” One of the things I mentioned in my opening comments, is we’ve now got 400 properties on what we call customer-driven technological platforms, which includes a piece of what you might consider a property to be remotely managed. A misnomer on remote is remote also requires and every property still requires some level of on-site personnel. What we have done in a broader context is continue to test and now deploy pretty effective technological, predictive and data sources that we have to put people in the right places based on property activity, the amount of demand that’s likely to come through the patterns both on a weekly, daily and monthly and even quarterly basis.
So with that, we can really take even that baseline concept of remote to a far different level, which can work in suburban or remote areas. It can work in more dense areas. It can help us optimize the amount of necessary on-site labor. And this is all built around something that’s first and foremost, which is actually maintaining or improving customer service. So there’s a whole range of different components to that platform, some of which include kiosks for instance, some of which include the way that we interact with customers through our customer care center. And then another leg of that whole puzzle is a very effective time and presence from a face-to-face Public Storage employee. So all of those things are being optimized piece-by-piece, and we’ve done some very interesting things, and we have a lot more to come.
Very excited about that part of the business.
Ki Bin Kim: And so you said 400 properties, you have about 2,900. I guess, can you apply to all? And if you do, like does the FTE go from 2 to 1? Or I am just trying to understand the impact overall?
Joseph Russell: Yes, yes. It’s the roadmap we’re on. I wouldn’t say it’s pure enough to say each and every one of the 2,900 properties have the same impact from the platform, but the great part about our overall strategy as there are components to this. So you can optimize FTE based on, again, what size of property you’re dealing with, what historic level of either staffing or presence you’d have from an employee standpoint. And then Tom, you can talk a little bit about some of the economic benefits that we’re likely to continue to see. But the great thing about this, like I said, far deeper than just remote because it can apply to many different types of assets, and we’re excited about deploying in that many more parts of the business.
Tom Boyle: Yes. The only thing I’d add to that Ki Bin is in our Investor Day presentation, we did highlight our objective to reduce labor hours and get more efficient with labor hours through the specialization and centralization that Joe is speaking to in reacting to customer demand. And the target we set is for a reduction in labor hours of 25%. We’ll achieve that this year. In fact, we think that there is more upside from here. So just another component of how we’re seeking to get more efficient and drive our industry-leading margins higher.
Ki Bin Kim: Thank you.
Joseph Russell: Great. Thank you.
Operator: We’ll take our next question from Mike Mueller with J.P. Morgan. Your line is open.
Michael Mueller: Yes, hi. I was wondering, are you seeing any signs of like the degradation of length of stay for your lower-term customers that have been there over a year or two?
Joseph Russell: Yes. I mean, we characterize the length of stay is sitting at records in our prepared remarks earlier. And so generally speaking, while we have seen move-outs increase in trend back towards 2019 levels, the length of stay of the overall platform continues to be really strong. The portfolio now – the average length of stay of the tenant base today is over 36 months and has been sitting around that sort of ZIP Code for the last several quarters. In terms of the longer length of stay customers themselves and how they’re behaving, they continue to behave quite well. And on a year-over-year basis, the percentage of customers greater than two years is actually higher than where it was last year. So continuing to demonstrate the strength of that component of tenant base.
Michael Mueller: Got it. Okay. Thank you.
Operator: We will take our next question from Spenser Allaway with Green Street. Your line is open.
Spenser Allaway: Thank you. Maybe just another one similar to the development topic. But can you just remind us what percent of the portfolio would you say has true expansion opportunity?
Joseph Russell: Yes, Spenser, I don’t think we’ve ever characterized that as a specific number. What leads to those kinds of expansion opportunities are several factors. We have hundreds of properties that have been developed, say, 30, 40 or 50 years ago that in those periods of time, a traditional properties you might have a much larger amount of acreage and would typically have what we would call our Gen 1 product simple, single-story drive-up product. There are many opportunities within the portfolio to potentially acquire different and higher levels of FAR to magnify the size of those properties. And frankly, many of them are in great locations, some of which we get far better customer demand once we actually even make the property that much bigger.
So there’s a sizable set of those types of assets. Time and the effort that goes into that to be quite complex. Many cities won’t allow us to do certain expansions of that magnitude. Some that may open the door to that, actually, they will put you through a multiyear process. That, again, you’ve got to work through very diligently. So we’ve got a number of those efforts in play as we speak. Another thing that we have at hand in many assets, for instance, is either some additional excess land or parking area that, too, can be developed or expanded into, again, a more modern facility as an extension of what’s already on the property. So there’s a whole range of things that we’re continuing to evaluate on that front, but the good news is by virtue of our very consistent investment processes now for several decades.
We’ve got amazing sites. And with that, in many areas, properties that have far different demand and better demand dynamics when they’re originally built that could fit very well to, again, the opportunity going forward. Today, the $1 billion development pipeline, plus or minus about 50% of that is actually tied to the kinds of sites I’m speaking to. And the team is going to continue to work, to monetize and unlock those opportunities as we go forward. One of the great things about our development team is they can wear both hats. They can work on ground-up development as well as expansion development. We’re doing that like-for-like, clearly in many of the markets that we’re looking for expansion.
Spenser Allaway: Okay. That was really helpful color. And I was also just wondering, just given the fact that there has been a lack of larger portfolios in the market, has there been any increase to the personnel dedicated to sourcing or underwriting acquisitions just as I would imagine, the deals are a little bit more granular, excuse me, than normal. But it sounds like from what you just said, your personnel are very dynamic and perhaps can wear multiple hats.
Joseph Russell: Yes. To that point, maybe just to give you a little context. 2021, to your point, it was an unusual year where we did a couple of very large unusual transactions. And again, the flip side of that, though, is that was only half of our volume of the $5.1 billion that we did. The other half was dedicated to what’s very traditional, either single asset acquisitions or much smaller portfolios. We’ve got a deep-seated team, very knowledgeable, very well placed relative to knowledge of markets, knowledge of owners and the kind of dialogue that comes with that from a relationship standpoint, has been and will continue to be very important for our efforts to grow the portfolio. As Tom mentioned, about half – or more than half, excuse me, a lion share of the acquisition volume that we’ve done in 2023 has come from off-market transactions.
So part of that is just, again, as I think you’re alluding to, we’ve got the right team in place to go out and engage. We’ve got a great reputation as a preferred buyer, and we’re going to continue to leverage that.
Spenser Allaway: Thank you.
Joseph Russell: Great. Thank you.
Operator: It appears we have no further questions on the line at this time. I will turn the program back over to Ryan Burke for any additional or closing remarks.
Ryan Burke: Thanks, Britney, and thanks to all of you for joining us. Have a great day.
Operator: This does conclude today’s program. Thank you for your participation. You may disconnect at any time.
