WHEN IT COMES TO REAL estate investing, profits and losses track to market cycles.
Many residential real estate investors shy away from dealing with tenants and maintenance. As a result, they’re seeking other real estate asset classes to invest in.
After more than a decade of flipping single-family homes, licensed Realtor and general contractor Scott Mednick is looking at an alternative asset class that is less hands-on but still has high profit potential: self-storage facilities.
“I’m looking for something that in a bad economy does great, and in a good economy does great,” says the broker-owner of Marblehead Real Estate Partners in San Clemente, California.
“The bottom line is that if we go into a bad housing market, people have to put their stuff somewhere,” says Mednick, who is also president of the Orange County Real Estate Forum investors club. “When the economy is good and people buy too much stuff they have to put it in storage. You’re winning as the market goes down, and winning as the market goes up.”
By the numbers. The Self Storage Association estimates there are about 49,000 primary self-storage facilities, totaling 2.6 billion square feet of storage space and generating approximately $32 billion in revenue annually.
The association estimates the national average for units per facility is about 540 units, and that facilities nationwide are about 90 percent occupied. The percent of U.S. households accounting for that occupancy is estimated to be about 9.3 percent.
Asset class works for passive and active investors. Whether an investor wants to buy and own a facility outright, or just wants to benefit from the long-term economic benefits the asset class has demonstrated, self-storage facilities stand to serve both types of investors well.
For the investor who wants to park his or her money and let someone else handle the day-to-day operations, a number of real estate investment trusts specialize in this asset class. These may be good sources of passive income over time.
“In general, self storage has been on a great run,” says Ryan Burke, an analyst for Green Street Advisors in Newport Beach, California. “Growth has outpaced any other real estate property type for the past seven years. Self-storage properties are about 75 percent higher from the prior peak in 2007, whereas apartments, industrial and other commercial properties are only 25 percent above the prior peak.”
This means that private and mom-and-pop investors now have a good opportunity to delve into the self-storage arena.
“As an asset class, self-storage has the potential to generate more income streams than just monthly rent, such as packing materials and truck rentals,” says Rick Sharga, executive vice president at online real estate marketplace Ten-X. “Still, whether you buy and manage a facility yourself or purchase a portfolio and have managers running them for you, self-storage is very much a retail business that is very hands-on.”
Steady cash flow. For investors looking to buy and hold self-storage for the long run, Burke says they can expect a good steady cash flow to result.
Burke warns that self-storage properties are a lot more difficult to run than people typically think. Tenant turnover is high: 7 to 8 percent of customers move out every month, making it a very operationally intensive business.
A “safe” investment. For individual investors looking for an alternative to being a landlord, self-storage is considered a relatively safe real estate asset type with many positive characteristics.
Chief among them is the fact that self-storage is basically the monthly rental of various-sized interior spaces made up of steel walls and a concrete floor – nothing more. Once a renter vacates, the owner or manager can just blow out the space and rent it out again. If the lessee doesn’t pay the rent and doesn’t move out, the contents can be seized under the state’s lien laws and auctioned off, with the proceeds going to the owner of the facility.
“For the small investor, it’s a safe investment,” says Mark Helm, a self-storage investor, author and coach based in Louisville, Kentucky. “It’s the asset class with the lowest foreclosure rates.”
Long-time investor and coach Scott Meyers, who is based in Fishers, Indiana, switched from single-family homes and apartments to self-storage for several reasons: ease of financing, overall profitability potential and opportunity to increase cash flow and value.
“Self-storage does even better during a recession because people need a place to store their stuff,” Meyers says. “It’s recession-proof and inflation-proof, and you don’t have to worry about folks going bankrupt.”
It’s all about location. Helm estimates that for roughly 64 percent of all owners of U.S. self-storage facilities, it’s the only commercial property they own.
The market for self-storage facilities relies on a number of factors, and chief among them is, of course, location. Helm’s advice for small investors interested in self-storage properties is to look in areas outside the radar of the REITs: 25,000-to-30,000-square-foot properties with room for expansion. Alternatively, he suggests seeking out underutilized or vacant commercial space and repurposing it.
Meyers recommends that investors start out by looking at facilities in their own backyard.
“You’ll never know what you’ll find until you begin to look,” he says. “Also, consider places you vacation and places you’ve lived before.”
Helm has changed his investment strategy for future purchases.
“Initially we were in the larger cities,” he says. “Now we’re going into some of the second-tier markets, because that’s where the opportunities are.”
Storage Development Partners approach is grounded in our deep experience and knowledge of self-storage, real estate and financial markets.
We focus on value creation that is in line with market dynamics and the client’s risk profile. Each engagement undergoes intense scrutiny to make sure the capital needs are met in the most economically efficient way to optimizes returns. For more information, or to set up an appointment, contact Dave Fegley or Josie Hart.
This article was written by Joel Cone, writer for The Smarter Investor and contributor to many business periodicals.
While Joel initially worked as a real estate sales associate and appraiser. In 2006, he joined the marketing staff at RealtyTrac as a senior staff writer and was a member of the creative team that published the Foreclosure News Report, an online newsletter named Best Real Estate Newsletter by the National Association of Real Estate Editors in 2009.
REIT stands for Real Estate Investment Trusts.
But, what is a REIT? Simply put, a REIT is a company that owns or finances real estate which produces income. This property may exist across a range of different property sectors.
A real estate company must meet certain requirements to qualify as a REIT.
The majority of REITs trade on the stock exchange.
If you’re thinking about building a self-storage facility, you might have some preconceived notions about the process. The author busts some common misconceptions and shows you what to really expect.
Misconception 1: I’ll Fill It in 12 to 18 Months
There are always factors to consider when calculating demand for a new storage facility, and it can be challenging to predict how many months it’ll take for the property to lease up. The 12- to 18-month timeline is almost unheard of with a facility of 50,000-plus square feet. In this case, I advise you to prepare financially for it to take three or four years to reach 85 percent occupancy.
Misconception 2: I’ll Build Small, So It’ll Cost Less
It’s just not as cost-effective to build a self-storage facility of less than 40,000 square feet. This is because of items such as storm-water management, property management and other fixed operating expenses. A small facility just can’t deliver acceptable returns.
One exception is if the site will be built in phases and the total buildout will eventually exceed 40,000 square feet. Another would be if it’s a conversion of an existing building that was purchased at a reasonable cost, or if the site is in a high-rental-rate market with a low cost of acquisition.
Misconception 3: I Can Build Anywhere, Because I Can Just Market It Online
It’s a nice thought, but you still can’t hide your property at the back of an industrial park, in a residential neighborhood or on a tertiary road. If you do, lease-up will be notably slower, regardless of marketing. Remember, there’s only so much you can spend on digital marketing before it becomes wasteful.
One of the most powerful tools you can use to promote the business is visibility. Build along a main road with storage doors visible to everyone, not on a weak, flag-shaped site or one that’s obscured from the street. Large signage, no matter how catchy or attractive, won’t compensate for not having those storage doors visible when a potential customer drives by at 45 miles per hour.
Misconception 4: I Already Own the Land, So It’ll Be Cheaper
Ask yourself, “Would I buy this parcel from somebody else to develop self-storage?” Just because you own a piece of land doesn’t mean it’ll work. If there’s no demand in the market and it takes you five years to lease up, you’re losing money and could potentially go bankrupt due to costs. That may be rare, but the more important thing to realize is you might be missing out on more lucrative opportunities to sell the land for another use and purchase a site to build your self-storage facility where demand warrants.
Misconception 5: Housing Units Were Built Nearby, So It Makes Sense
Just because a new housing development is being built doesn’t mean that a self-storage facility is going to work. There are several reasons it’s best to ignore that development in demand calculations. Subdivision development is historically risky, and it can take years to fill a neighborhood with homes or home buyers. Even if that development fills up quickly, for every 250 homes, there’s only 4,000 square feet of storage demand. Considering that most storage sites start at 50,000 square feet (to be economically sustainable), you should be cautious of including demand from housing units.
Misconception 6: I’ve Developed XYZ, So Storage Will Be Easy
Commercial real estate isn’t all the same, and that’s especially true for self-storage. It’s unique because it’s also an operating business. To simplify operation, you need to consider many things, such as site design. This might include gates at the end of driveways to push out snow from the drive aisles, or large windows that showcase interior units facing the main road. Even if you’ve built offices or high-density housing, you need to invest in general contractors, architects and suppliers who specialize in self-storage and have the portfolio to back it up.
Misconception 7: Self-Storage Doesn’t Work in Rural Areas
Misconception 8: The More Temperature-Controlled Space, the Better
Temperature-controlled is great, but though it’s been a dominant trend in new development over the last few years, it isn’t always better than standard drive-up units. It can make a lot of sense in urban areas, as it’s typically the best way to maximize square footage on a small piece of land. In suburban and rural areas, it’s added because operators can charge a 25 percent to 30 percent premium.
As enticing as that might sound, I recommend you stay around 35 percent of your total square footage for temperature-controlled units. Some customers want the simplicity of drive-up access and don’t want to pay that extra. Plus, if you can’t fill those units, you end up renting them at a lower rate and your HVAC expenses eat up your profit. Any feasibility study you’ve completed for your site should include a unit-mix suggestion that addresses the demand in the market (if any) for temperature-controlled storage.
Misconception 9: I Don’t Need a Feasibility Study
It can be tempting to bypass a feasibility study if you’re developing a self-storage facility in your hometown, because you feel you know it better than anyone else—the people who’ll become your tenants, their price sensitivity and the general zoning laws in the market. However, developing without a study is risky. There can be any number of pitfalls you may not see.
Calculating demand for a storage facility is difficult and best done by a consultant who has reviewed the lease-up results for many facilities and can evaluate your market dispassionately. Beyond the risk-mitigation element, a qualified consultant can recommend modifications to your site that may expedite lease-up, increase rates per square foot and lower costs. The small price you pay for a feasibility study will certainly outweigh the expense.
While building self-storage might seem simple, it’s actually complex. Before diving in, understand all facets of the development process so you’re not caught unaware and unprepared.
This article was produced by Kevin Bledsoe , VP of brokerage for Investment Real Estate LLC
At Storage Partners LLC we believe that a successful self-storage project is a blend of innovation and experience. Take advantage of our 100+ years of combined experience. We will be with you every step of the way.
Damage to a self-storage metal roof is a matter of when, not if. Learn to look for these six common problems and why restoration may be better than a full replacement.
Metal roofs, like those installed on many self-storage buildings, wear extremely well, but they can be prone to specific issues if not properly installed or maintained. Roofs are constantly exposed to two unavoidable elements: the sun’s ultraviolet rays and water. Though the roofing industry is researching and implementing innovative ways to to combat the damage caused by these threats, they can still wreak havoc on property and disrupt operation.
As a self-storage operator, you should regularly and thoroughly inspect your metal roofs. When you do, look for these six common anomalies:
- Surface rust: Panel rusting can become a major problem if left unattended. Apply an inhibitor on infected areas to keep it from advancing.
- Deflection: Crimped or bent panels can lead to water ponding. Leaks and rusting can be direct results of this issue.
- Punctures: Punctures often occur due to heavy foot traffic on the roof and can occur during construction, regular maintenance or the installation of HVAC (heating, ventilation and air-conditioning) equipment. Sharp objects falling on the roof can also contribute to the problem.
- Incompatible metals: There are several types of metal used on roofs including copper, steel, stainless and galvanized, but not all of them play nicely together. Incompatible metals can cause cracking and rust spots and prohibit water flow.
- Fastener issues: There are two types of metal-panel attachments: clips, and fasteners with rubber washers. Clips fasten to the purlin. Fasteners are concealed once the laps on the panels are seamed or crimped together, typically with a sealant underneath. They’re self-drilled approximately every 2 square feet. Over time, the fasteners back out, leaving holes or gaps between the metal and washer, which opens the roof to water intrusion.
- Restricted movement: A metal roof should be designed to move. If a repair product is applied that doesn’t allow for proper elongation or flexibility, the panels will continue to move, but the patch won’t, causing problems beyond the original roof leak.
While regular roof management comes with its own set of expenses, ignoring small damage today can lead to major problems tomorrow. Failure to address leaks and other impairments can lead to widespread damage to units and their contents.
Restoration or Replacement?
When one or several of the above issues is discovered or recurs, it must be time for a roof replacement, right? Wrong. A restoration might be more cost-effective. With renovation work, the focus is on extending the life of the roof you already have, not jumping into an expensive and possibly unnecessary project that jettisons several years of remaining roof life.
Restoration isn’t just patchwork; it’s a permanent re-roofing solution. Keep in mind, too, that some contractors can perform the work in stages—sometimes over several years—allowing for budget flexibility. Another benefit is once a roof is repaired and restored, it can be covered under a new warranty, allowing you to reset the clock on its life expectancy.
Damage to your metal roof is a matter of when, not if. So once an area is compromised, consider a professional restoration to extend roof life and free up maintenance and operational dollars for other needs within your self-storage business.
This article about metal self storage facility roofs was written by
Anthony Vross of Simon Roofing in Youngstown, OH
See how a strategic, imaginative approach to developing self-storage can help you overcome these three common design challenges.
You might face numerous challenges when designing a self-storage facility, but no matter the hurdle, you can usually clear it with a bit of planning. In fact, when confronted strategically and with some imagination, obstacles can often be used to your advantage. Let’s examine three common design impediments and how to overcome them.
Challenge 1: Steep Slopes
I like steeply sloped sites because you can use the hill to design a multi-story building with drive-up access. This maximizes profit and even saves money, as you don’t need elevators.
For example, at a two-story facility in Auburn, Calif., we used the slope to enable drive-up access to both floors. Tenants can reach the upper level from the front of the building or drive down a ramp to the lower level on the other side. The advantage is there’s no need for an elevator or stairs, which increased the net leasable area. Plus, the lower level is somewhat insulated by the earth, making climate control much more affordable.
Challenge 2: Small Lots
Small sites can be very good for self-storage. In urban and suburban areas, there generally aren’t large lots for big, sprawling facilities anymore. Small parcels provide development options, though you do have to build up or down to get the square footage you need.
In Whittier, Calif., one developer built a three-story facility comprising 59,000 net rentable square feet on less than an acre, despite several city restrictions. Even with competitors in the area, the property leased up in just a few months.
Another facility in Newark, Calif., comprises more than 100,000 square feet of rentable space on just 1.96 acres. The three-story, 135,884-square-foot building features a 2,000-square-foot office to showcase services and amenities, including a workspace where customers can sit with a laptop, access the Internet and print documents. There’s also a conference room. This site even rents offices with attached storage space, similar to executive suites. These have proven to be very popular and are almost always full.
Challenge 3: Conversions
Large buildings that were originally designed for a different use (grocery stores, warehouses, big-box stores, etc.) can be redeveloped into very nice self-storage facilities. A primary benefit is the cost of conversion is generally a lot less than new construction.
In Pasadena, Calif., a developer converted a warehouse into self-storage. The original structure, a small office, was built in 1945; but over time, seven single-story buildings were added. Fortunately, there was enough clearance inside the buildings to create a second floor, which dramatically increased the square footage. The finished product is 134,000 gross square feet with 100,000 square feet of net leasable space, including 5,000 square feet of high-security art storage and 10,000 square feet of wine storage.
Elsewhere in Pasadena, a four-story building with a basement and parking garage was converted to 123,000 square feet of leasable space. Since the retail building already had an HVAC system, the designer made the entire facility climate-controlled.
Another option with conversions, particularly where there’s a large existing parking lot, is to add new storage buildings against the current structure to offer drive-up in addition to interior units. This was done on one project in Hawaii, where an existing metal building was converted to self-storage. The designer simply added doors to the existing exterior at very little cost, and then added two buildings, including one with a covered loading/unloading area. The result was 48,000 rentable square feet. The approach cut down on the number of openings that needed to be cut into the walls, which can be expensive.
Overcoming design challenges means thinking outside the box. While there will always be sites on which you just can’t build, with careful planning, smart strategy and some imagination, even challenging properties can produce outstanding self-storage facilities.
Article by Kenneth Carrell for www.insideselfstorage.com
Vehicle storage can be a great addition to a new or existing self-storage facility, but it isn’t right for every location. Here are some pros and cons to help you decide if it’s a good fit.
As the self-storage landscape becomes ever more competitive, site operators are exploring all options for increasing business and market share, seeking ways to produce a better return on investment. One idea is to add the lucrative option of vehicle storage, namely for boats and RVs.
More than 355,000 RVs are sold each year in the United States, including travel trailers, motorhomes and folding-tent trailers. Boat sales are also on the rise. All these vehicles need a place to park, and many of their owners don’t have the space to accommodate them at home, particularly as most homeowners’ covenants and associations don’t allow it. Often, the best and most secure option is self-storage.
Vehicle storage offers distinct advantages to self-storage owners:
- Being able to rent larger units ranging from 10-by-20 to as big as 15-by-50 can dramatically improve revenue, commanding anywhere from $120 to $500 per month.
- These renters tend to stay longer.
- Boat/RV owners often make great tenants. They have a lot invested in their vehicles and, as such, they typically take good care of the vehicle and storage unit. They can’t afford to be delinquent on their payment and risk losing the vehicle to repossession or auction.
- Your facility can serve as a “one-stop shop” for those needing both vehicle and traditional storage. Robert Johnson and Dave Tsai, managers of North Plains RV and Self Storage in North Plains, Ore., say close to 20 percent of their boat/RV-storage clients also rent a standard unit.
Let’s look at some other aspects of this add-on profit center to help you decide if this ancillary business could work at your self-storage facility.
With the addition of vehicle storage, your facility may see increased traffic. In the summer months, Safeguard Self Storage in Kent, Wash., often has 30 to 40 vehicles coming and going each day, according to facility manager Paul Pankow. This means facility staff needs to be extra vigilant for security issues and unit blocking.
Cleanliness should always be a focus at your storage site, but it’ll become even more important once you add boat/RV storage. Why? High-end vehicle owners are likely to be more scrupulous than the average tenant. Trash, oil spills, building disrepair and broken blacktop will cause them to worry about whether their vehicle is safe in their absence.
That said, it can be difficult to keep vehicle-storage spaces clean. Some renters attempt to store things like barbecue grills, bikes, coolers, etc., around their vehicles, which can get out of hand. To curb this behavior, provide specific instructions to each tenant regarding your facility policies and procedures.
It’s also paramount to keep up-to-date, accurate paperwork for each of your vehicle tenants, according to Johnson and Tsai. Having proof of ownership and insurance documentation is critical should anything happen to the vehicle while in your care.
These days, it isn’t enough to offer simple vehicle storage. Many customers want additional amenities to help care for their investment. For example, if you’re renting to RV owners, consider offering a dump station. A campground might charge $30 to $50 per dump, so this can be a really nice selling feature and make the difference between a customer storing with you or at the facility down the road.
Water access is also important. Pankow’s facility brings in fresh city water, allowing RV and boat owners to fill their on-board tanks and wash their vehicles.
Sentinel Self Storage in Sherwood, Ore., offers a propane and diesel fill-up station so customers can gas up on the spot rather than visit a gas station. The facility also features electric roll-up doors and electrical hookups in its fully enclosed spaces.
High-end customers typically expect a boat/RV-storage facility to offer 24-hour access because they often start their trips in the middle of the night or early morning. They also demand a higher level of security. Sentinel has 15-foot-high walls around the entire property in addition to its numerous video cameras and LED lighting, which give vehicle owners peace of mind.
While this profit center has many positive aspects, there can be a few cons associated with vehicle storage. If you’re trying to maintain a certain price per square foot, boat/RV storage will likely bring down your average. These are big spaces, and trying to hold to the same price per square foot as your traditional self-storage units would put these out of reach of nearly all customers.
Additionally, these customers typically expect more individual attention. They pay a lot each month to store their toy with you, and they want you to cater to their needs. This can be a challenge for facilities that have inexperienced employees or a small staff.
Taking the Leap
If you’re thinking about including vehicle storage as part of your unit mix, consider the following:
Space requirements. If you’re going to offer the service, you need enough space to do it well, say Johnson and Tsai. You should have room to install a variety of options, whether it’s pull-through spaces, angled parking or fully enclosed units, so you’ll have a solution for every type of vehicle. Plus, you want to install wide drive aisles so renters feel comfortable maneuvering.
Unit size. Pankow recommends spaces in a variety of lengths including 20, 30, 35, 40 and 45 feet, plus a few 50-foot spots. His facility contains 170 units consisting of all these sizes, and he wishes he had more. The minimum width should be 12 feet, he says, because many RV clients are older and seem to have difficulty navigating into tight spaces.
Unit type. A good vehicle-storage ratio consists of 75 percent covered units to 25 percent uncovered, Pankow says. The uncovered spaces are good for targeting the budget customer, whereas the covered spaces will cater to the average tenant. You may also want to add some fully enclosed spaces to target high-end customers who want to fully protect their vehicle. If you do this, Johnson and Tsai recommend 15-by-50 spaces for the large coaches and fifth-wheels, and 12-by-35 spaces for smaller RVs, boats and cars.
Partnerships. Consider partnering with RV dealers and offering a finder’s fee to those who refer business to your facility, Pankow advises. Word-of-mouth is also very big in the RV community, he says. By keeping your customers happy and their vehicles safe and secure, word will spread quickly.
Vehicle storage can be a great addition to a new or existing facility. By considering the pros and cons, you can determine if it’s the right solution for you.
This article was written by Derek Hines, a writer for West Coast Self-Storage, a self-storage management, acquisitions and development company with facilities in California, Oregon and Washington. He writes extensively on all subjects related to the storage industry.
GATES Construction has been awarded four 2018 Sand Dollar Awards by the Collier Building Industry Association (CBIA) in the following categories:
- Best Healthcare Facility
- Best Assembly
- Best Commercial Project
- Best Clubhouse – Interior.
The projects represented by these wins include All Seasons Senior Living Community (Best Healthcare Facility), Vanderbilt Presbyterian Church (Best Assembly), CubeSmart Self Storage (Best Commercial Project), and Pelican Isle Yacht Club (Best Clubhouse – Interior).
The new 290,000 square foot All Seasons Senior Living Community is located at 15450 Tamiami Trail and features independent living, assisted living, and memory care housing along with an abundance of amenities. The community has 189 one and two-bedroom apartments housed in a 4-story building with multiple wings attached, complemented with courtyards, balconies and high end finishes. The 10,628 square foot Vanderbilt Presbyterian project entailed renovation of the Chancel, Sanctuary, and Narthex along with an addition of a welcome center at the main entrance. The renovation resulted in increased capacity for 900 people, new energy efficient mechanical, electrical, and audio/visual components, as well as accommodating the new multi-million dollar pipe organ that was built specifically for the Church.
The 2-story, 131,234 square foot Cubesmart storage building was constructed to house approximately 1,000 climate controlled storage units made of masonry stone, structural steel, concrete and glass. At the newly redesigned 20,000 square foot Pelican Isle Yacht Club clubhouse, a contemporary design was featured throughout, with an upgraded dining room, enhanced water views, expanded indoor and outdoor casual dining areas, and banquet space.
New outdoor activity features include 2 bocce courts and fire pits. The awards were presented at the 2018 CBIA Sand Dollar Awards Banquet held at The Ritz Carlton Beach Resort.
Celebrating 25 years, GATES provides construction management, general contracting and design-build services. Their diverse portfolio of commercial, healthcare, multi-family, club and hospitality, institutional and special projects showcases numerous landmarks successfully constructed over the past quarter of a century. As Florida’s premier builder, GATES serves its clients from offices in Bonita Springs, Sarasota and Palm Beach Gardens, and operates throughout the Southeast United States and Latin America.
For more information on GATES, please call (239) 593-3777 or visit the website at www.GATESinc.com.
BONITA SPRINGS, Fl. (October 30, 2018)
Contact: Vincent Varallo
Text Messaging in Self-Storage: Exploring One of the Most Effective Tenant-Communication Channels.
Text messaging has proven to be one of the most effective communication channels for self-storage operators. Learn how you can implement this technology to better connect with your customers and prospects.
With 2019 underway, many self-storage operators are wondering, “What’s next?” We’re already meeting our customers’ needs, even in this Age of the Consumer. We’re talking their language and meeting them on all their preferred channels: e-mail, phone, live chat, social media and others. We’ve learned to adapt to how, when and where they want our products and services. So … What’s next?
Today’s consumers can hail a ride or operate their home appliances from their smartphone, order a pizza by pushing a button on their shoe, and rent a storage unit online without ever speaking a word to anyone. The future isn’t coming, folks. It. Is. Here.
The Many to the One
Multi-channel communication allows you to converse with customers through as many channels as your company supports. For most self-storage operators, this means in person at the store, via e-mail and on the phone. Some operators also use live website chat and one-way text messaging. Bonus points if you run your social media in-house and have a “responsive” badge on your profiles!
Text messaging has proven to be one of the most effective channels, with a 98 percent read rate within two minutes. Some operators think this mode of communication is too informal for business correspondence, but consumers disagree. When Twilio, a cloud-communications platform, surveyed 6,000 consumers worldwide, 89 percent said they’d like to use text messaging to communicate with companies. So, why are some storage operators still struggling with whether use text messaging?
Unfortunately, many feel a bit frazzled and disconnected in a multi-channel world, which can hinder their adoption of a new channel regardless of how effective it may be. Companies around the world have felt the same growing pains. However, operating in siloed programs is dysfunctional to a customer-service organization. When notes from calls, e-mails, in-person visits, etc., are kept separately, it creates confusion and frustration for employees and, worse, clients. One of the top complaints of customers is they must repeat themselves over and over as they’re handed from one service representative to the next.
The brightest organizations have solved issue by switching to an omnichannel platform. Omnichannel communication integrates all channels into a single program and interface. A customer can send a message through Facebook Messenger, another through text message and even an e-mail through his mail client of choice, and the facility manager can respond through the client’s preferred channel, never interrupting the conversation. All correspondence is logged, recorded and tied to that customer within the property-management software.
Headaches be gone; all channels are united! Omnichannel communication unifies every channel so as not to disrupt the customer’s journey. We have the tools. Now, let’s use them.
Texting Your Customers
Now that we’ve addressed the concern of juggling multiple channels by unifying them in an omnichannel platform, let’s identify some ways you can implement text messaging.
During the quote/interview process. During a live call or even a live chat, if the prospect isn’t yet ready to rent, ask if you can send him a text message with the information you just discussed. Now he has the unit rate, suggested size, and potentially even the directions to your facility immediately available on his phone. If he needs to consult another decision-maker, the details are on hand.
During follow-up. The prospect said she was going to move in on Thursday but was a no-show. Sending a quick text, either manually or as part of a pre-designed follow-up workflow, is an easy way to check in. Try something as simple as, “Hey, Judy, I was just checking in to see if you still need that 10-by-10? I can hold it for you if you think you can make it in today.” This is a lot better than making a phone call and stumbling through small talk.
After move-in. Think you rocked the move-in process? Pre-templated text messages can be automatically scheduled to thank your new tenant and request a review on the channel of your choice. Include a direct URL to the review portal and watch the positive feedback fly in!
When rent is past-due. One of the most effective uses of texting is sending automated rent reminders. A message that automatically goes when an account is delinquent, including a pay-bill link, will dramatically reduce your past-due rent and number of units that go into lien status. If a tenant hasn’t paid, it’s usually because he forgot or doesn’t have the money. If he forgot, a quick text is a gentle reminder. If he’s short on funds, staying top-of-mind will ensure you receive payment as soon as possible.
During move-out. When the rental has come to an end, schedule a pre-formatted text message thanking your customer for his business and providing pertinent move-out info. Does he need to sweep his unit? Turn in his lock? A reminder about these things is always welcome.
Using text messages as part of an omnichannel communication strategy allows you to efficiently and effectively communicate with your tenants all through the customer journey. Scheduling messages ahead of time relieves stress for managers and tenants while also elevating your operation.
This story was written by Holly Fiorello for www.insideselfstorage.com
Holly Fiorello is director of marketing for self-storage operator Next Door Self Storage and CallPotential, a provider of an omnichannel cloud-communication platform and customer-relationship management platform that integrates with facility-management software to automate and enhance the sales process. Its software handles lead management, automated follow-up, and call recording and monitoring. For more information, call 877.552.2557; visit www.callpotential.com.
Investors are talking a good game as they negotiate to buy self-storage properties—but on average, they are still paying high prices and accepting low investment yields.
“I have seen some re-trading… maybe 1.5 percent of the purchase price,” says R. Christian Sonne, director of specialty practices for the national self-storage valuation group at real estate services firm CBRE. “Property assessment reports are being reviewed a lot more closely than a few years ago.
But deals are still getting done at nearly record low cap rates, with multiple potential buyers bidding for most properties, says Sonne.
Self-storage properties remain extremely desirable to investors. Investors are paying high prices despite rising interest rates and reports of overbuilding. Their enthusiasm to buy may be because the percentage of occupied space in the sector is at an all-time-high. Self-storage also earned a reputation for being resistant to recessions during the last economic downturn, giving even more comfort to potential investors.
“There is a great deal of capital pursuing deals and, in some cases, we’re seeing aggressive pricing—especially in high-density urban markets,” says Wayne Johnson, chief investment officer with SmartStop Asset Management, a diversified real estate company focusing on self-storage, student housing and seniors housing.
Investors accept low yields
The yields that investors are willing to accept for self-storage properties have been very consistent over the last few years, even as interest rates have slowly begun to rise. Cap rates for self-storage properties averaged 6.5 percent in the third quarter of 2018, according to Real Capital Analytics (RCA), a New York City-based research firm. That’s up slightly from the low point of 6.3 percent in 2017, though cap rates have lingered in the mid-6.0 percent range since the end of 2015.
Other market watchers see a similar steadiness in the self-storage sector, though they may be taking data from a slightly different set of properties. Since 2015, cap rates for these properties has averaged between 5.74 percent and 5.60 percent, according to CBRE.
The yield on investments in self-storage properties has stayed low even as interest rates have risen, including the benchmark yield on 10-year Treasury bonds, which was above 3.0 percent for most of October, up more than 150 basis points from its most recent low point in the spring of 2016.
That can’t last forever, especially as Federal Reserve officials plan yet another increase to their benchmark interest rate targets before the end of 2018.
“I was concerned about cap rates rising two years ago, and it didn’t happen,” says CBRE’s Sonne. He expects cap rates to inch upwards as much as 25 basis points over the next year. That would reflect some, but not all, of the anticipated Fed increases to interest rates.
Strong demand for self-storage supports high prices
Investors continue to pay high prices for self-storage properties as customers continue to fill new properties as they open.
“New supply continues to put pressure on rent growth in many markets. However, we have not observed any widespread lack of demand for physical space and most new properties are leasing up at the anticipated physical occupancy trend,” says Ryan N. Clark, director of investment sales for SkyView Advisors, a national self-storage brokerage based in Tampa, Fla.
Even in cities where developers have opened many new properties, they tend to compete only with properties in very close proximity. “Self-storage trade areas are very small,” says Sonne.
Two-thirds of self-storage customers rent space at a facility within two or three miles of their home address. That means a self-storage property should not be hurt by competition from new properties more than three miles away. However, the local nature of the business also magnifies the damage caused by competition from properties down the street or near the same freeway exit.
Rents at self-storage properties will likely rise by an average of 3.5 percent over the next year, according to CBRE. That’s a steep drop from the double-digit rent hikes that were common earlier in the cycle. “Rent growth will be closer to the rate of inflation over the next year or two,” says Sonne.
The percentage of self-storage units that are occupied has risen to unheard-of levels, well above 90 percent, according to reports from leading self-storage REITs. “That was not believed to be possible,” Sonne notes.
However, the customers who use self-storage are becoming more consistent, as they often use their storage spaces to compensate for smaller living spaces, especially in urban areas. They are using self-storage for longer periods of time, averaging15 to 18 months, up from stays of less than a year on average in earlier decades, according to CBRE.
“It’s more a part of a lifestyle, not just in response to a life event like a divorce or leaving school,” says Sonne. “Some of the strongest rents and the most demand is in urban infill locations, where people don’t have a second or third bedroom to store their stuff.”
This story by Bendix Anderson
When you start your first job as a self-storage facility manager, you may not know what to expect. The experience may surprise you! Here are five things one employee wishes he’d known in advance.
The interview is over, and you’ve been offered a job as a self-storage facility manager. What you should expect when you first start your new role may surprise you! Following are five things I wish had known in advance.
Demand Is High
In the city where I grew up, there were only a handful of self-storage facilities. Over the last 20 years, the area has boomed to include 45 or more locations. As I drive through familiar areas now, I’m always surprised to see a new facility or construction. I probably notice them more now that I work in the industry. I’m always trying to discover what other companies are doing or creating to bring in business.
Before I got into self-storage, I never realized how much demand there is for the service. All types of people going through life-changing experiences need storage. Death, divorce and moving are some of the most popular reasons for people to visit my office and inquire about sizes and prices, climate control or drive-up storage, and even vehicle parking. The need willalways be there if people continue to accumulate things.
The Importance of Paperwork
I’m so grateful that the manager for whom I worked in the beginning was intentional in keeping good notes on accounts. I learned from her that whenever someone comes by the office or calls to inquire about his account balance, you should make a note in the tenant file.
I also learned all the paperwork we should keep on file for each customer. We save a copy of the tenant’s lease agreement and driver’s license as well as insurance paperwork. Over time, we add any returned letters, receipts, vehicle information, lock-cut information and much more.
While I never would’ve guessed how much documentation was maintained, I’m sure glad it is. So often, we’ve been able to reference it; and when it comes to information, it’s better to have too much than too little.
The Amount of Work Behind the Scenes
When I interviewed for an assistant manager position, I was told the job would likely involve more manual labor than the manager’s job. I would spend most of my time cleaning vacant units, changing out latches or weather stripping, vacuuming hallways, and handling many other maintenance tasks. But I never realized just how much there is to do behind the scenes.
I’ve had it said to me more times than I can count that some of our customers assume we spend all day in the office waiting by the phone and computer. At our company, we’ve made it a mission to provide “Easy, Clean, Service.” That’s revealed in the ways we care for our properties, including the office and bathrooms.
There’s always a list of things to accomplish at my facility. In one recent week we painted the bollards, rented a few units, cleaned vacated units, vacuumed the hallways, wiped down the unit doors and even created a couple of new units. If there’s one thing I’ve learned, it’s that there’s always something to do!
The Laws That Govern
There are laws that protect self-storage customers and those that give facility operators the right to enforce a lien and hold a public auction of delinquent units. The first time I had to witness a lock-cutting due to nonpayment, it was extremely heart-wrenching and emotional. I remember going home in tears because I felt I was ruining someone’s life. I thought we were invading his privacy, taking pictures and documenting items to place an ad in the newspaper.
Then came auction day, which was even harder. Just a few days after the sale, the customer came to the office to make a payment and get a wheelchair out of the unit for her brother. We hadn’t been able to reach her by phone, e-mail or mail, and I had to tell her the unit had been sold. I’ll never forget the shocked look on her face and her demand to speak to my supervisor, who told her that if she changed her contact info and never notified the office, there was nothing she could do. I never saw her again.
The Love for the Job
I absolutely love what I do. I work for an incredible company. It’s family-owned, and each employee is treated like family. The relationships I’ve built with customers, coworkers, supervisors and office personnel have benefited me more than any amount of pay.
I can’t wait to get up in the morning and arrive at the office! People from all walks of life come through my door to rent units, buy merchandise or make a payment. I’ve met folks from several countries who’ve rented because they’re in the military, attending the local university or moving to find a better life. My customers have ranged from age 19 to 95.
I’ve also had great mentors, and now do what I can to pass knowledge forward to new employees. I’ve had the opportunity to travel to Kansas City, Mo., and Minneapolis to help new and current managers learn about the business. I’ve even attended a corporate retreat. All in all, I wouldn’t trade a thing about my job.
No matter how long you’ve worked in self-storage, take in all the information you can. Learn from your peers, supervisors and even your competition. Build relationships. Show up every day ready to absorb something new. Not every day will be the same, and if it is, only you can change that.
Here’s my final advice: Be honest with your customers. Be fair and be consistent. As one mentor told me many years ago, “Tie your shoes every morning so you won’t get tripped up by the small things.” Results don’t always come right away. Be consistent, and they will.
Story by Kevin Lanning for Storage Mart.
Kevin Lanning has been a facility manager for StorageMart since 2014. Founded in 1999 and based in Columbia, Mo., the company operates more than 200 self-storage properties across Canada, the United Kingdom and the United States. Kevin lives in Omaha, Neb., with his wife, Krystal. His outside interests include photography and woodworking. For more information, visit www.storage-mart.com.
South Florida firms complete construction of CubeSmart in Naples, FL – Grand Opening November 3, 2017
Grand Opening of first ever self-storage project for established Florida acquisition and development firms.
CUBESMART GRAND OPENING FORT LAUDERDALE, FL, USA, November 28, 2017
On November 3, 2017, City Gate Self Storage, LLC a partnership of
Diversified Realty Development Co., Fort Lauderdale, FL, Sefira Capital LLC, Miami, FL and Dassett Ltd, Fort Lauderdale, FL celebrated the Grand Opening of its latest development project, CubeSmart Self Storage, located at 3807 White Lake Boulevard, Naples, FL. 34117.
On hand to celebrate the occasion were representatives from the Naples Chamber of Commerce, First GREEN Bank, Gates Construction, Storage Partners, LLC, CubeSmart and a host of local guests.
The 130,000 square foot facility has over 1,000 climate controlled units and was completed on time and under budget. CubeSmart, the third largest owner and operator of self-storage facilities in the United States, is providing professional management services for the owners. This store opened to renters in September.
“This is a beautiful facility and we are proud to have been selected as the management company. It is a great addition to the CubeSmart brand.” said Guy Middlebrooks, Vice President, Third Party Management at CubeSmart.
Alan Goldberg, CEO Diversified commented, “We are pleased to have our partners join us today for this celebration and we hope it will be the first of many. This is our first project in the Naples area and we are delighted to have the support of the community and government to make it a reality.”
Diversified Realty Development Co. has been in business for over 40 years and has developed over three million square feet of commercial and industrial real estate. This Naples CubeSmart is its first-ever self-storage project.
Sefira Capital was formed by Aby Galsky and Mijael Attias in 2015 and has already acquired/developed 14 properties including Hotel, Office, Multi-Family and Self-Storage in Florida, Alabama, Missouri and North Carolina. Dassett Ltd, a Daniel Hotte and Seth Gadinsky partnership, was represented by Daniel Hotte who has 40 years of development and investment experience in Florida. First GREEN Bank, a local bank headquartered in Orlando, funded the construction/acquisition loan.
Josephine Hart, Storage Partners LLC, Boca Raton, FL
provided self-storage consulting services.
For additional information on Diversified Realty Development and its self-storage and commercial projects, visit www.diversifiedcos.com
Media Contact: Alan Goldberg
Diversified Realty Development Co.
954-776-1005 Ext. 204
Veteran Self Storage Developer Integrates Facility Automation with Every Project.
January, 16 2018 – Industry veteran Dave Fegley of Park Avenue Consulting, LLC. has been developing self storage projects for over 35 years throughout Iowa and the Midwest. Having built, managed and sold multiple storage facilities over the years, he currently consults on new projects, and as you might guess, he’s learned a few lessons along the way. While there are of course numerous factors that go into building and running a successful self-storage business, Fegley specifically cites self-service kiosks from OpenTech Alliance as one of the “keys to running a profitable facility”, saying he “recommends them to everyone:”
“We installed our first OpenTech kiosk in Sioux City and the whole facility was rented out in six months. Everyone really loved that machine. They’d go to the kiosk before they go see the manager. Even the customers who were reluctant at first… once they pushed the button and saw how easy it was to use, they didn’t come into the office anymore.”
It wasn’t just how quickly the facility filled up that sold Fegley on automation: “One of the great things about the kiosks is how they really free everyone up to work on more important tasks… you’re free to do whatever you need to do.” Since then, Fegley has installed OpenTech Kiosks at every one of his facilities, and integrates them from the start into his planning. “As always”, he says: “its location, location, location: Placement of the kiosk on the property is critical, as is proper signage and communication directing customers to it.” “Building (a kiosk) into the plan from the start helps to maximize the return you get over the long run”.
Mike Connolly, OpenTechs’ COO adds: “to make the most of our products, they really should be considered as an integral part of the business. Then, with some simple, common-sense best practices, they add value in a number of ways that are helpful to both managers and customers alike. We’ve seen numerous self-storage facilities over the years transformed with the help of a little well-placed technology. Hearing this kind of feedback from repeat customers like Dave and many others just validates what we do here at OpenTech, and keeps us focused on our mission to help self-storage owners work smarter.”
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Direct Line: 602.324.8656