Shurgard Celebrates Silver AnniversaryA Tribute

Shurgard Celebrates Silver Anniversary

A Tribute

By Melanie Wilhoite

When World War II came to an end, thousands of American GIs returned to a country that was ready to grow. And grow. And grow. New homes went up almost overnight, and manufacturing plants churned out countless cars, appliances, furniture and innumerable doo-dads and knick-knacks designed for comfort and convenience in the modern age.

As America's post-war economy boomed, so did America's propensity for accumulation. Families grew. Muscle cars took over the roads, highways expanded over every horizon, and Americans were more on the move than ever--changing jobs, having children, divorcing, retiring, all of which called for temporary storage of goods. Growing businesses, too, found themselves with an abundance of inventory and documentation files. And business owners soon realized that, in terms of dollars-per-square-foot, renting temporary storage made more sense than using expensive offices for storage space. Indeed, by the time NASA was putting a man on the moon, America was running out of space.

In the early 1970s, observant businessmen hit upon a solution: mini-storage. Many self-storage operations began as land-banking operations, companies that wanted to get cash flow from parcels they owned until the market was right for other development. But they soon found that, with extremely high returns, self-storage businesses could be more lucrative than office buildings. So they began developing self-storage businesses outright.

At the forefront of this emerging scene were two enterprising real-estate sales and investment partners, Chuck Barbo and Don Daniels. Based in Olympia, Wash., Barbo and Daniels recognized the potential for this new type of real-estate development and spent the next two years trying to convince lenders it was a bankable proposition.

In 1973, putting their business and their personal security on the line, Barbo and Daniels raised the money needed to open their first storage facility, B-D Mini Storage, in Tumwater, Wash., approximately 60 miles south of Seattle. The men had no idea that the nondescript warehouse facility alongside Interstate 5 was the first of what would, 25 years later, be one of the largest self-storage companies in the world.

Growth of the Industry

The growth of the self-storage industry can be correlated to the growth of the country. After World War II, despite a 100-year period of steady decline, the American birthrate boomed. Family living and the dream of the model home were foremost in consumers' minds. The postwar years witnessed a huge increase in discretionary spending power, and between 1947 and 1961, the number of families in America rose 28 percent, national income increased more than 60 percent, and the group with discretionary income doubled. And rather than save the extra money, they spent it. What did consumers buy? Household furnishings and appliances. In the years after the war, spending on these items increased by a whopping 240 percent.

Following the war, Americans moved into a million new housing units every year. Cars, stoves, refrigerators and television sets sold by the millions. But 25 years later, the kids were moving out and their parents were retiring and moving into smaller homes. Add to that a surging divorce rate, and the case for the rise of self-storage is readily made.

Shurgard Steps In

The return on Barbo and Daniels' investment in 1973 pleased even their most dour lenders. The success of the Tumwater facility, which is still used by its very first customer, spurred the duo to build another facility in Tacoma, Wash., in 1974. By this time, competition began appearing in the area. Nevertheless, Daniels and Barbo had struck upon a key ingredient for success: the right facility manager.

The personal attention and helpful demeanor of their first manager, Charlie Climber, was such a big hit with customers that Barbo and Daniels immediately emphasized it as a Shurgard point-of-difference among all employees, and to customers.

Their recipe of sound, clean, secure storage facilities and helpful service propelled the company--which changed its name to Shurgard in the mid-'70s--to rapid growth throughout the decade. By 1979 the industry boasted 3,500 self-storage facilities nationwide. Riding the wave, Shurgard experimented with color schemes, unit sizes and building materials to achieve the right mix of profitability and consumer attractiveness.

Tongue-in-Cheek: A Revised History of Storage
From a Shurgard Point of View

By I.M. Krampt

10,000 BC Primitive man takes refuge from the elements in cave dwelling. His few possessions--weapons (rocks), cooking tools (rocks) and bedding (small rocks) travel with him as he moves from region to region in search of food.

1360 BC In ancient Egypt, possessions become a sign of status and prestige. A crisis develops when Pharaoh Tutankhamen, at the tender age of 16, discovers that there is a shortage of space for storing his stuff. To deal with the issue, Pharaoh orders the construction of the first large-scale storage facility. The Great Pyramids open for business several years later.

400 BC To serve the growing population in the Americas, the Incas and Aztecs build their own pyramids, the first franchised storage centers in the world.

1100 AD Accumulating a vast amount of wealth, the Romans create the first modern locks to protect it.

1850 AD "Westward Ho!" is the cry of many Americans seeking to make their fame and fortune in the wild West. Immigrants and city slickers alike load up all their worldly possessions onto Conistoga wagons, the first moving vans. What doesn't fit in the wagons is left with relatives.

1890 AD The advent of the steam-powered locomotive allows Americans to travel from New York to San Francisco in just 14 short days. The ability to take one's prized possessions along on a trip is made easier with the invention of the steamer trunk. The trunk allows travelers to pack nearly everything they own into a single container.

1940 AD Fibber Magee and Molly become popular icons of the Golden Age of Radio as Fibber's closet overflows with stuff in weekly episodes. A highlight of every show occurs when Fibber inevitably opens the closet and everything comes crashing down on him. The lack of storage space in homes becomes pop culture.

1960 AD America experiences an era of unbridled prosperity. As families spread out to the suburbs, consumerism loads the average house down with every appliance imaginable. To hold all the stuff, carports become single-car garages, then double-car. Houses get bigger, as do families.

1973 AD America is simply full of it by now. To contain rampant consumerism, Shurgard Storage Centers opens the first modern storage facility in Olympia, Wash. At the time, many people thought Shurgard's founder Chuck Barbo was out of his mind--after all, who would want to rent empty space?

1983 AD The Flower Children of the '60s become the Yuppies of the '80s. In contrast to the deferred gratification of past generations, the Yuppies want it now, even if they have to charge it. Only problem is there is not enough room for all the stuff they buy. Two-car garages become three-car garages, and bonus rooms become "necessary rooms"--bulging with unused exercise gear, camping equipment and expensive mountain bikes. Storage centers suddenly take on a new importance in American society, and the industry begins to boom.

1997 AD With more than 300 locations in 153 cities across the United States and Europe, Shurgard Storage Centers develops the "Shurgard To Go" containerized storage system (a modern version of the steamer trunk). Delivered to the customer's home or office, the 320-square-foot, self-contained storage units are an immediate hit, allowing those with too much stuff to "clean up their act" without ever having to leave home.

1998 AD To meet growing demand, Shurgard Storage Centers finalizes plans to open several new upscale storage facilities in the United States and Europe.

By the '80s, Shurgard began to expand beyond the Northwest. Daniels left the company in the mid-'80s, leaving Barbo at the helm. Barbo placed great emphasis on customer feedback and employee ideas in continuing to improve the business. Innovations such as motion-detector lighting, heated units, loading docks and personal-security features were all inspired by customers.

Industry-wide, there are now an estimated 26,000 storage facilities and 18.7 million storage units, generating total gross revenues of about $10 billion annually. In this heated environment, Shurgard knew that to maintain its leadership position it had to build critical mass in key markets. It began to place greater emphasis on marketing. Shurgard developed its trademark lighthouse architecture to emphasize its positioning in the marketplace. The company also completely redesigned its identity with new graphics and signage to reinforce its image as a secure, convenient network of storage facilities.

Present Day

Today, Shurgard Storage Centers Inc. is a publicly traded company that boasts a total market capitalization of more than $1 billion. Listed on the New York Stock Exchange under the ticker symbol "SHU," the company is traded as a real estate investment trust (REIT). It operates a network of 300 storage centers located throughout the United States and Europe, making it one of the largest storage operators today.

Melanie Wilhoite is a Seattle-based freelancer who writes frequently on national business topics.

A History of His Own

It was springtime in the late 1960s when Chuck Barbo graduated from the University of Washington's history department. He envisioned a lifetime of study, delving into the finer points of Latin-American history, living on the beaches of South America, writing scholarly papers, becoming an authority on all things cultural and societal throughout Southwestern-hemisphere antiquity.

How did that young scholar come to be heralded as visionary chairman of a revered billion-dollar self-storage corporation? Furthermore, how did he develop the aggressive, yet congenial management style that enabled him to win the respect of an entire industry?

Today, Barbo makes it sound simple: Take risks, delegate authority, let people make their own decisions, let people make their own mistakes.

"I love it when people make mistakes," says Barbo. "That's how they learn." But while Barbo's easygoing manner may come naturally, his management style was developed through teaching, parenting and a good dose of risk taking.

Risky Business

After a two-year stint as a history teacher at Nathan Eckstein Junior High in Seattle, Barbo was back at the University of Washington, pursuing his master's degree in Latin-American history.

"Then one summer after the teaching year ended, a friend convinced me to help him sell real estate on Whidbey Island," recalls Barbo. "I made more money in one summer than I made in two years teaching." That, coupled with the reality that he might spend his life in a windowless room writing history papers, was enough for Barbo to give up the classroom for the boardroom.

Barbo earned his first stripes selling real estate north of Seattle during the big Boeing boom of the mid-'60s. By 1969, he and his wife, Linda, moved to Olympia, Wash., to establish a real-estate-investment firm.

In 1971, Barbo teamed up with associate Don Daniels to form the Barbo-Daniels Company. They achieved success by buying and syndicating properties, and were intent on developing apartment houses. "We couldn't figure out how to make a good profit on apartments," recalls Barbo. Then Daniels visited Texas.

"Mini-storage warehouses were appearing alongside freeways, and it occurred to us that they were cheaper to build than apartments," says Barbo. Back in Olympia, though, bankers weren't as enthusiastic about the new concept of do-it-yourself, personal-storage warehouses. "It took two years to convince them that this thing would fly."

In 1973, after finally securing a loan, they opened their first facility along Interstate 5 in Tumwater, just outside Olympia. Property prices were good, and signage alongside the freeway provided free advertising. But business didn't boom at first. "Every night, I'd come home and my daughter would ask me how many units we rented that day," Barbo says.

Fortunately for Barbo, his family was not just understanding, but supportive and encouraging. Linda was used to Chuck's affinity for risk-taking, and she trusted his entrepreneurial instincts. "I knew the first one would work," says Barbo.

Competition quickly appeared on the scene, but Barbo remained undaunted. "To build a great business, you must have an astronomical tolerance for instability and risk," says Barbo. The company built its second store in Tacoma in 1974, and grew quickly through the mid-'70s. The company's name was changed from B-D Storage to Shurgard. Needing money to sustain rapid growth, the company began offering stock in real-estate limited partnerships in the early '80s.

The company grew every year, and competition exploded across the country. Shurgard began to see the need for a consistent brand identity that would unite the company's dozens of storage centers in service, conveniences and design. The lighthouse architectural feature was established in the late '80s, and customer feedback was actively solicited and incorporated into facility design.

"Customers told us they wanted security lighting, heat, loading docks and many other things we didn't realize were so important," says Barbo. "We decided it would be a good idea to give them what they asked for, and guess what? It worked." It worked so well that in its first 20 years the company raised more than $600 million in equity from more than 80,000 individual investors invested in 24 separate real-estate limited partnerships sponsored by Shurgard. In March 1994, a consolidation of 17 of these limited partnerships was completed, and a single, publicly traded REIT (real estate investment trust) was formed.

Shurgard has already established a presence in Europe and has plans for future expansion there. With all this industry growth, does Barbo fear market saturation will slow him down? To the contrary, his outlook is stronger than ever. "We know it's a great business, and we know how to do it," he says. "As long as people keep moving, we'll keep growing. I'm constantly surprised by how strong the demand continues to be. People have an amazing appetite for storage."

Through all of it, Barbo maintains that his involvement with his family--Linda and their three daughters--has provided him with interpersonal skills he applies daily at Shurgard. He is renowned for treating people with dignity and respect as employees and investors positively respond to his genuineness, warmth and inspiring leadership.