Construction Corner is a Q&A column committed to answering reader-submitted questions regarding construction and development. Inquiries may be sent to [email protected].

Jack in Gilbert, Ariz.

A: Seeing that I dont know what has been tried, I will give your local security vendors the benefit of the doubt on the more obvious solutions. Taking the obvious out of the equation, this sounds like a grounding differential between the two buildings. This occurrence is rare, but can cause the exact problem you are describing.

The most common reason for this is when two buildings are being powered by separate power-pole transformers (for example, two buildings being across the street). A few companies make devices specifically to fix this problem. One such company is Jensen Transformers in Southern California (www.jensen-transformers.com/iso_vid.html). Good luck!

Fred in Monroe, La.

A: Your perimeter walls will depend on the type of facility you will be building. A good strategy to use when designing perimeter security is to try and use your buildings as much as possible. For example, a common design is a U-shaped site with the buildings themselves acting as the perimeter walls. With this design, you will usually only need to have a sliding gate for controlled access. Other options including wroughtiron, cinder-block or chain-link fencing. Be sure to check with your local Building and Safety Department for restrictions on height and materials allowed in your zoning district.

Tony Gardner is a licensed contractor and installation manager for QuikStor, a provider of self-storage security and software since 1987. For more information, visit www.quikstor.com.

Without a doubt, there are fantastic opportunities for self-storage in Europe. The comparisons with the United States are often touted as a justification for this conclusion. The most well-known of those comparative figures is the United States has about 4 square feet to 5 square feet of self-storage per capita vs. 0.1 or fewer square feet per capita across Europe. The figure in the Australian market is about 1 square foot per person.

The other encouraging statistic for the European opportunity is the U.K. market reportedly grew at about 35 percent per year for the four or five years up to 2001. However, it should be recognized this growth was achieved from a small base, so it is hard to conclude a great deal from this alone.

Growth in the U.K. selfstorage market has slowed to only 10 percent over the last year. The French market appears to be even less buoyant, with little new activity over the last 12 months. No doubt, there are several macroeconomic factors contributing to this phenomenon. All other national markets in Europe are too early in their development to form reliable statistics.

Nonetheless, we are starting to hear less sanguine theories concerning the European self-storage opportunity. This is encouraging a healthy and more interesting debate about the future for the industry here. Those involved in self-storage are through the “blind euphoria” stage and are thinking more maturely about the industry’s future. But we all have a long way to go. Growth will involve a process of developing our fact base, along with views and theories. In other words, it’s all new ground, and nobody has a monopoly on the answers.

Executives’ Opinions

Executives in publicly quoted European self-storage companies feel pressure from investors more than most. These executives are talking about “slowing growth” and “periods of consolidation.” Jonathan Duck, chief executive of Access Storage Solutions, one of the United Kingdom’s largest self-storage providers, raised the question of whether the public markets would ever value self-storage businesses at greater-than-net asset value.

There is a real lack of understanding about the self-storage business in the investment community—and more particularly the public capital markets. The tendency is to look at self-storage as predominantly a property play, which leads to valuations approaching net-asset value.

This raises another interesting point of whether the self-storage business is more suited to private or public investment. In the United States, the industry is highly fragmented, being dominated by the smaller private investors, with only 12 percent of facilities (20 percent of rentable space) controlled by the top 10 players. The market started here in a different fashion, with the top seven European companies controlling 44 percent of the facilities. The more conservative industry pundits are asking a number of probing questions about the future of the industry in Europe. These are important issues for debate:

• Why has the European self-storage market been so slow to develop, given the product has been available for more than 30 years in the United States?
• Does the U.S. self-storage business model work the same in Europe, or do higher property prices impact development opportunities? Are property prices, in fact, different than those in the United States?

The Pace of the Market

Self-storage facilities have existed in the United Kingdom since the 1980s. Over the last seven or eight years, the market has grown substantially, going from 100 to 350 facilities in a five-year period.

But then there is still the question of why the European market in general has not grown faster. There are various theories about this, usually culturally based. For example, Italians are used to living in small spaces, do not accumulate goods and are too parsimonious to spend money on self-storage. German houses are usually built with large cellars, eliminating the need for extra storage. However, there is clearly growing interest in self-storage in those markets, as demonstrated by the construction of facilities in both countries. But it is true the terrific potential of these markets is yet to be proven.

The Impact of Property Prices

Is there anything different about the European market that explains a conservative growth rate? Duck points to the relatively high European property prices as being a significant factor. His observations on the U.S. market are that self-storage has done best in areas where space is ample and property is cheap. For example, Montana has the highest penetration level at 10.8 square feet per capita, while Rhode Island and Connecticut are among the lowest, at 1.6 and 1.9 square feet per capita respectively. The argument goes that if European property prices are relatively more expensive than in the United States, self-storage saturation will be reached much earlier in Europe.

What Drives Demand?

The argument about high property prices is a compelling one. It seems to apply particularly well to large European cities. However, ironically, that is where we see the vast majority of the operators’ interest in developing facilities.

In the United Kingdom, the industry is dramatically skewed toward the London area. For example, while the greater London area might account for only about 20 percent of the country’s population, 72 percent of Access’ U.K. stores, 55 percent of Big Yellow’s U.K. stores (including three opening soon) and 53 percent of Spaces’ U.K. stores are in London. In Italy, the vast majority of inquiries we receive relate to Rome or Milan. In Spain, customers inquire about facilities in Barcelona or Madrid.

The conventional wisdom of almost all operators is self-storage works best in densely populated areas where space is constrained and is, therefore, at a premium. The implication is demand is driven by the need for room, which is highest where people are living in small quarters.

But is that the real driver of self-storage demand, and is that what U.S. figures are telling us? How small are the houses in Montana? The population of Europe is spread out geographically, and the provincial areas have not had the attention they deserve from self-storage operators. The property price argument is valid, but there is untapped potential for self-storage operators in the provincial areas of Europe. There are many different drivers of self-storage, and the topic is too complex to do it justice in this article.

A Statistical View on Growth

Many industry executives predict a rosy outlook for the European market. However, realism about the industry’s future would help the industry develop in a more orderly, predictable and better fashion. We all have the opportunity to contribute to the shape of the industry in Europe and to learn from the U.S. and Australian markets.

Although we need to keep focus on the here and now, it is still interesting to think about how far the European self-storage market will grow. Just to daydream on the numbers for a moment—if the U.K. market were to grow at 20 percent per year for the next 10 years, there would be more than 2,500 facilities by 2012. By my calculations, the U.S. market grew by 6 percent to 7 percent in 2002, even in its relatively mature state.

At an average facility size of about 30,000 square feet of rentable space, this growth would imply a penetration level of 1.2 to 1.3 square feet of self-storage per head of U.K. population. That would be only 25 percent of the current U.S. penetration level and about equal to the current Australian penetration level.

The Australian market is about 15 years old, and so it is probably not a bad analogue to the position of the European market in 2012. Extrapolating those U.K. figures to the rest of Europe would imply there could be as many as 10,000 facilities in Europe by 2012. Is that realistic? You decide.

Michael Homan is general manager of the Steel Storage Group Europe, which specializes in self-storage construction. The company manufactures door and partitioning systems and provides full turnkey services in developing self-storage facilities. The Steel Storage Group has more than 10 years of experience building self-storage facilities in Asia, Australia and Europe. PTI Europe and PTI Australia are group companies and are the exclusive distributors of PTI access control systems in Asia, Australia and Europe. For more information, visit www.steelstorage.co.uk.

Construction Loans

The first step to take when preparing to apply for a construction loan is to do your homework. This involves hiring a company to perform a feasibility study, hiring an appraiser to perform an appraisal, or doing the feasibility work yourself. Simply stated, a feasibility study is relevant data in a report or outline format necessary for a lender to make a decision that would lead him to decide investing his money in the project is a good risk and profitable venture for his institution.

Always keep in mind a lender does not want to be your partner or co-investor. He wants to loan money out, earn a reasonable return on that money for the risk assumed, and be paid back in full without having to make additional capital investment or fundcost overruns. He makes that decision, in large part, based on the feasibility study or similar information provided. While there will always be exceptions to this norm, this is the prevalent banking practice. A feasibility study should contain the following information:

• A description of your loan request (amount of loan, amount of debt to be paid off, construction time needed, lease-up time needed)
• Location description (proximity to freeways, major arteries, housing developments)
• Photos of the subject site and surrounding properties (aerials, if available)
• Cost breakdown for the project (land, hard costs, soft costs, financing costs)
• Description of improvements (address, construction type, number of units, unit mix, etc.)
• Description of amenities (security, climate control, elevators, hours of access, etc.)
• Traffic count (cars per day traveling in front of the project)
• Road frontage (fronting the main road vs. a flag lot)
• Visibility of project (visible from the street, freeway, etc.)
• Ease of ingress and egress (left-hand turn access, signalized intersection, etc.)
• Site plan (parcel map)
• Floor plan (layout of the units, blueprints)
• Marketing plan (Yellow Pages, signage, other advertising)
• Management plan (professional management vs. self-managed)
• Demographics (ages, income and occupations of residents in a 1-, 3- and 5-mile radius)
• Time line (how long to construct, to stabilize, and to phase, if applicable)
• Five-year pro forma operating statement/ budget (lease up to stabilization)
• Personal financial statement for borrower (assets and liabilities)
• Two years of federal tax returns for the borrower (include K-1s for partnerships/S-corps)
• Résumé for general contractor
• Résumé for borrower
• Competitor properties in the area and info on their occupancy and rental rates (locate properties in a 1-, 3- and 5-mile radius)
• If known, any projects in the works, planned and available land to build near your project

The above information, when professionally presented in a binder with tab separators and an index, can go a long way to impressing your banker. This is not to say you couldnít obtain a good loan without providing all the above. Every lender is different, and their level of information required will most likely vary. Of course, it goes without saying to maintain personal hygiene and dress appropriately when meeting with your banker. That does not necessarily mean a coat and tie proper judgment should reign.

Permanent Loans

Permanent financing has many of the same basic information requirements to be presented to a lender; but the process is obviously more focused on the historical operations of the property and its historical occupancy when trying to peak a lenderís interest. The following is a list of items typically requested by lenders when going in for permanent financing:

• Description of loan request (loan amount, existing debt to be paid off, term, amortization)
• Photographs of the property including exterior, interior, office, street scenes
• Current rent-roll summary by unit size showing gross potential rent, actual rents, square foot of each unit size and vacant units
• Two to three years of historical operating information and a year-to-date P&L
• Two to three years of historical occupancy figures
• Location description (proximity to freeways, major arteries, housing developments, visibility)
• Description of improvements (address, construction type, number of units, unit mix, etc.)
• Description of amenities (security, climate control, elevators, hours of access, etc.)
• Traffic count (cars per day traveling in front of the project)
• Site plan (parcel map)
• Personal financial statement for borrower (assets and liabilities)
• Two years of federal tax returns for borrower (include K-1s for partnerships/S-corps)
• Résumé for borrower
• Competitor properties in the area and info on their occupancy and rental rates (locate properties in a 1-, 3- and 5-mile radius)
• If known, any projects in the works, planned and available land to build near your project
• Any old appraisals, soils reports and environmental reports

When meeting with your loan agent or officer, have some specifics in mind about what you are looking for in your request. Do you require recourse, nonrecourse, prepayment flexibility, a long-term fixed rate, a long amortization, etc.? If you are not flexible in your loan terms, you will need to weed out lenders who may not be able to offer what you want. Then again, your request may not be available as presented. Be prepared to modify parts of your request if, after talking with several lenders or mortgage professionals, your requested terms are not realistic or available.

Permanent-financing requests are not necessarily as formal a process as construction requests, since the project is most likely stabilized and operating efficiently. The lender has less risk to deal with, since the project usually carries itself and, in many cases, the borrowerís financial position is not as critical. In fact, you may never meet your lender face to face if using an insurance company or conduit lending source.

Many permanent loans can be originated by phone, fax, mail and e-mail. Permanent loans may be nonrecourse, meaning the lender is only looking to the property for repayment of debt. Construction loans are almost always recourse, with borrower financial strength and experience being equal, if not more important, as the property.

In summation, keep good records, be detailed, and use outside professionals when necessary or appropriate to gather information and prepare the reports to be used in applying for a loan. Be clear about your financing goals and requests, and be likable. Remember first impressions!

David Smyle is president of Benchmark Financial, a commercial mortgage banker in La Mesa, Calif. For more information, call 619.465.6200 or visit www.benchmarkfin.com.

Expertise in the industry. Your lender must understand your industry thats a given. Look for a lender with experience in self-storage. How? Ask for references. Ask your peersand your competitors, if you are comfortable.

What if you have to educate the lender? If that becomes your role because the relationshipor the lenderis new, its an excellent investment of your time. Many business owners say that just as they get their financial representative up to speed on the business, he gets promoted, and someone new comes onto the scene. That happens, and it can be frustrating; but its necessary. Ultimately, you will be helping educate a corps of financial experts whose involvement you may need in the future.

Time to invest in you. Even if your lender is well-informed about your industry as a whole, he must be willing to invest the time in getting to know your specific business, goals, markets, competition and challengesnot to mention your cash flow and physical plant. It is also important for you to understand what the lender needs. How often does he want you to communicate your requirements? Does he want you to initiate all contact, or does he plan to be proactive in making frequent contact with you? What lending policies and measures of risk determine how the lender does business?

Minds that think alike. In determining whats important to you in a lender, its helpful to have the mind set that its not the rate that matters, its the relationship. A basis point saved here and there may not be worth the difficulty of working with a lender whose business practices or financial products dont meet your needs. A lender-partner who understands you dont always make decisions based on price, but instead on service and the relationship, will provide the most effective support for your business.

An inquiring mind. A luxury is the lender who continues to learn. Does the lender subscribe to (and read) trade publications in your industry, attend industry tradeshows, scan the financial press for trends, and scan the local newspaper for tips? Effective lenders are lifelong learners. Though you may occasionally have to tutor someone who is new, the lender intent on building a relationship and a career will be the one whos constantly asking questions and gathering information.

An innovative sharer of ideas. Thats what the lifelong learner should be. What has he gained from learning that you could put to work in your business? How many ideas does he suggest for improving your operation?

An analytical mind. Youll want a lender who puts pen to paper or clicks on a calculator to help you do the what ifs of your business, who can analyze the impact of your decisions and the forces beyond your control. Sometimes, this may mean a lender whos willing to say no when something doesnt make economic sense.

Know your options. For every business, establishing good credit is an important and ongoing financial priority. At some point in their business cycles, owners may require financing for a number of different needs, such as construction and expansion, receivables, capital-equipment investments, working capital, etc.

Once youve done your homework and selected the right lender or partners, its time to look at the different products they offer. Its important to understand not only the products, but how they affect your business as it grows. According to R.K. Kliebenstein, president of Coast-To-Coast Storage in Boca Raton, Fla., todays self-storage owners can tap into a variety of financing options:

As your business evolves, you will likely find your financing needs change. The product that provides a good solution for today may not suit tomorrows issue. Initially, cash flow may be your biggest concern, as you need time to lease up to breakeven targets. In this stage, youll likely consider an acquisition and development or a construction loan.

Later, as you experience different stages of expansion, equity or other loan ratios may limit the plan. You may need to explore refinancing or lease financing to fully execute your growth plan. Or you may have a good problem, such as figuring out how to expand while managing profits to reduce your tax bill.

These are just a few of the different changes a successful business owner will face, yet all can be handled through a balanced approach to the different financial products and partners available to your business. Victor Behorim of Best Land Use Corp. in Kingston, N.Y., is an example of an owner who chooses differing capital sources to manage his self-storage business.

My first mini-warehouse is being paid off through the bank, Behorim says. For the second one, I was approved with the bank, but they wanted more of a down payment; so I went with a lease because I could borrow everything 100 percent. Behorims lease enabled him to continue with his expansion plan by working with his lease representative while continuing to work with his banker a good business move, and a good example of taking advantage of products and expertise from all your lending partners.

Scott Weissmann is a business-development manager for Wells Fargo Financial Leasing Inc., a national leasing company headquartered in Syracuse, N.Y. The company offers lease financing for building, equipment and vehicle assets. For more information, call 800.451.3322 or e-mail [email protected].

A customer comes into your office complaining about water leaking into his storage space and leaving him with damaged property. How do you respond? Do you say something like, We sure hope you have insurance on your stored property, because the rental agreement makes it clear that damage to property is not our responsibility?

Lets call this response reject and deflect. You are using the defense of the nonliability provision in your rental agreement to reject your customers complaint. At the same time, youre using the fact that insurance may have been purchased by your customer to deflect the grievance.

Could there be a better approach to this situation? Perhaps an alternative that would permit you to provide a superior level of service to your customers when problems arise? One that earns you higher rents? Deans & Homer has developed just such a solution.

The Storage Operators Protection Plan is a new approach to customer property problems. This is not an insurance plan that is sold to the customer. You offer customers property damage protection for additional rent. You assume liability for specified types of losses for a limited dollar amount in an addendum to the rental agreement. The customer agrees to pay you additional monthly rent for the service.

Waityou are concerned about accepting this additional risk. But this risk can be transferred in whole or in part to an insurance company. What could this do for you? It can increase your facilitys revenue. When you buy insurance to transfer your entire assumed risk, you will probably keep 40 percent of the revenue generated by the program. You can earn an average of $5 to $10 per month per participating space in additional rental revenue. Operators who elect to retain some of the risk can earn even more.

Because this is your product and not a third-party vendors, you have more control. You set your rent. You write the terms of your rental agreement. It is not an insurance agreement subject to regulatory control over licensing. How you offer it to your customers or pricing is in your control. Flexibility in pricing can bring an important competitive edge in an overbuilt market or substantially increase profit margins in a less competitive marketyour choice, your control.

What could this do for your customer? Lets go back to our opening scenario. Your customer was offered the Storage Operators Protection Plan option in your rental agreement and he accepted, paying you additional rent each month. He is upset because a leak in the roof allowed water to damage his stored property. Instead of rejecting and deflecting his claim, you can help. Instead of saying Its not my responsibility or concern, you can stand behind your new agreement and provide a real service to your customer.

What if he had not participated in the Customer Storage Protection Plan? Your response is firm and direct: We offered you the opportunity to participate in our protection plan, and you declined. We would have paid you for your loss had you accepted. We are very sorry you did not take advantage of this service.

Would this type of program reduce or eliminate the protections provided by the nonliability provision of your lease agreement or separate insurance purchased by your customer? No. This program would work to reinforce your nonliability provision and would not restrict the availability of separate insurance. Each customer has an opportunity to mitigate the impact of the rental agreement nonliability provision by participating in the protection plan. Those who choose not to participate make a clear election to be bound by the provision.

So imagine...

• ...the competitive edge of offering an additional service built in to your rental agreement.
• ...the elimination of the barriers and, for operators in some states, the concerns about involvement in an insurance transaction. (Remember, this is a function of a rental agreement, not an insurance transaction between you and the customer.)
•  ...the impact of an enhanced rent revenue stream on your facilitys value. Property values are often established through rental income, while auxiliary income sources are discounted in property valuation.

Deans & Homer hopes you will not have to imagine for long. The company is currently working with insurance departments across the country to make this option a reality for the self-storage industry. There is something new coming to insurance.

For more information, contact a Deans & Homer Storage Operators Liability division underwriter. Call 800.345.2054; fax 800.789.0464; e-mail [email protected]. 

Business? Its quite simple. Its other peoples money.
ALEXANDRE DUMAS THE YOUNGER

Money is the seed of money, and the first guinea is sometimes more difficult to acquire than the second million.
JEAN JACQUES ROUSSEAU

We like to believe we have appreciation for the greater things in life, that we dont take things for grantedlike a good home, a successful business, loyal employees or a supportive partnerthat we take time to stop and smell the roses, that we arein essencemore enlightened and less vacuous, more human than not. But T.S. Eliot once reminded us: Between the idea / And the reality / Between the motion / And the act / Falls the Shadow (The Hollow Men, 1925).

It is all too easy for the trappings of what we like to call real life to interfere in our ability to see the proverbial Big Picture and follow through on good intentions. We often fail to relish the true wonder of...well, everything. And time passes us like a firefly through a warm summer sky, spilling its way through the indigo night. Sometimes we dont even notice it.

Why all this pontificating and poesy? This issue focuses on finance: Where to get money, what its worth, how to convince people to give you more. And when it comes to real estate, finance takes on a vaguely surreal quality, as people deal in what I like to call virtual cash. Having just come down off the purchase of a new home, I am keenly aware of the effect excessive attention to money matters has on the psyche. Its made me a bit melancholyperhaps even averse to such topics.

But, alas, the world spins on. Business deals are in the making even as I type (and you, dear reader, read). So, as much as I might prefer to encourage you to dust off your copy of Leaves of Grass and curl up safe from the brisk fall chill that must surely linger outside your door, I must instead arm you with what fiscal knowledge I can. I give you this, our annual finance issue. Perhaps, between talk of Treasury, Prime and LIBOR rates, amid words of advice and mind-boggling calculations, there is some poetry after all.

The financial environment of this country is changing as the economy achieves recovery. Business owners of all industries, including self-storage, watch tentatively as rates begin to climb. What will the New Year do for development? Will buyers continue to buy? Will sellers continue to sell? And what sort of capital will be available? These are the questions that trouble the (business)mans soul.

In the upcoming year, as you contemplate your refinance, purchase or sale, as you sit with furrowed brow, wading through loan documentsdont be so quick to swat the first insect that buzzes by. It might be a firefly, harking back, not to the Shadow that falls between reality and good intent, but to that cerulean summer night. It is good to be prosperous; but it is never too late to be grateful.

Best intentions,

Teri L. Lanza
Editorial Director
[email protected]

Low interest rates have been the best friend a self-storage owner could have over the last couple of years. It now appears the long, downward trend in interest rates has turned and is beginning to head upward. It was a great ride on the way down, and the relative value of todays low rates remainsby almost any historic standardextraordinary.

In the late spring and early summer, rates for real estate loans, including self-storage, were at 45-year lows. Many real estate investors have gone through very long careers and never experienced these kinds of rates. While predicting the future of interest rates is not a high-percentage game, it is safe to say that in the intermediate to long term, it would be reasonable for interest rates to trend upward.

Neal Gussis, our friend from Beacon Realty Capital Inc., has provided some interesting statistics to confirm a change in the rates has a high probability. For example, he has found the least interest rates have changed in any given year over the last 20 is 1 percent. He also allows that the recent change in the 10-Year Treasury Note was the fastest change of that magnitude in 60 yearsthe last was during the Second World War.

I recently heard the Federal Reserve Committee say it wasnt dropping rates, but it expected low rates into the future. Unfortunately, this was met in the real estate marketplace by rates going up, with long-term rates leading the way. So, you might ask, What do these actual and potential changes in interest rates mean for the average owner, buyer or seller?

Impact on Owners

If you were fortunate enough to lock in a low fixed-rate loan while interest rates were at their recent lows, you are pretty smarttake a bow! If, on the other hand, you have a variable-rate loan, you have some difficult thinking ahead of you.

The question is when, or if, you should switch to a fixed-rate loan at a now higher rate. Several owners I have talked to say they dont have to worry about fixing the rate because short-term rates will always be lower than the long-term ones. Having lived through the Carter Administration with the Prime Rate at 18 percent, I would just add that while it may not occur often, it really is devastating when it does.

There arent many real estate projects that work at those rates. There is a variety of solutions to the problem, including the purchase of interest-rate swaps, hedging in the commodities market or getting a new loan. Each has its own pitfalls and benefits, but none will work unless you take the action to initiate them. Two things are very important: 1) you need the best advice you possibly can find, and 2) make sure you really understand what your objectives are.

Impact on Buyers

Clearly, higher interest rates make any new deal less attractive than lower ones. Lets take out the old calculator and see how much difference a change in the rates can make on an investments return. To save you the effort, I have computed the cash-on-cash returns on a deal that cost $2 million at a 10 cap rate, financed at 75 percent.

The return with a 5.25 percent interest rate was a whopping 20 percent, and with an 8.5 percent loan, the cash-on-cash return fell to 12.6 percent. It is the difference between getting rich overnight and getting rich in the long term. However, on the positive side, we may see more properties for sale as sellers recognize buyers take advantage of the remaining low rates. The smart sellers and buyers know low interest rates subsidize higher prices for the seller and higher returns for the buyer.

Impact on Sellers

Let me begin by saying you should not sell just because interest rates are going up; but if you are thinking about selling in the next year or two, your sale could be more profitable and easier to execute before interest rates go any higher. Combined with local areas of overbuilding that are occurring more frequently, this could be the right time to exit.

What change can a potential seller expect for trends in the selling market as interest rates trend up? First, cap rates that have been trending down will now trend up. When cap rates go up, the value of the property goes down in relation to its income. This is the result of buyers trying to achieve higher cash-on-cash returns. A one-point change in the cap rate roughly equals 10 percent of the value of the property.

Second, buyers become more critical of a property because they are less forgiving when the rate of return is 12.6 percent than at 20 percent, and they will likely have more options to choose from in the marketplace. The low interest rates have created a sellers market that has lasted at least two years and continues today, albeit with some cracks beginning to appear.

Real estate values tend to be very cyclical, and it will be no different in the future; the only uncertainties are the volatility and the duration of the cycle. Some cycles are mild and some very difficult, but few last less than three years and some many more. Thus, if you have personal reasons to sell, please dont wait for the trends to make your task harder. The axiom to remember is: Higher interest rates never increase values!

Michael L. McCune has been actively involved in commercial real estate throughout the United States for more than 20 years. Since 1984, he has been owner and president of Argus Real Estate Inc., a real estate consulting, brokerage and development company based in Denver. In January 1994, he created the Argus Self Storage Real Estate Network, now the nations largest network of independent commercial real estate brokers dedicated to the buying and selling of self-storage facilities. For more information, call 800.55.STORE or visit www.selfstorage.com.

Airline Ambassadors, a nonprofit organization that provides humanitarian aid around the world, has always relied on the generosity of others to provide free storage to warehouse and track its many donations. When they learned they would lose precious storage space last summer, they scrambled to find new accommodations.

We had to start putting the displaced aid in the trunks of our cars, homes, and outside our balconies under tarps, says Patriece Robinson, vice president of development for the Dallas based company. It was chaotic, especially because it becomes difficult to track where all the aid is when you need it for a particular mission.

The nonprofit turned to Seattle-based industry leader Shurgard Storage Centers, which offered the group two free 10-by-20 units. Shurgard launched a charity program in January 2002 to help nonprofits like Airline Ambassadors. Storing for Hope provides free storage for up to six months to qualified nonprofits in domestic markets served by Shurgard. As of August, the company had donated more than 300,000 square feet of storage to 240 nonprofit organizations.

Nonprofits across the country need our help, and Shurgards Storing for Hope enables them to devote more of their scarce resources to programs and not overhead, says Charles K. Barbo, Shurgards CEO and chairman. Storing for Hope is the perfect way for Shurgard to help our communities become better places to do business and raise families. To qualify, a nonprofit must meet the following criteria:

• Hold 501(c)(3) status
• Have recently audited financial statements
• Have a history of contribution to the community
• Serve a market where Shurgard operates
• Does not discriminate on the basis of race, religion, creed, age, sex, national origin or disability
• Practice a mission and values that are consistent with the mission and values of Shurgard

Nonprofits of all sizes can apply to the program. The groups that have benefited include large, nationally recognized organizations, such as the Boys and Girls Clubs and Habitat for Humanity, as well as smaller, local programs. The strong response to Storing for Hope since the program was launched shows nonprofits have a serious need for Shurgards assistance, Barbo says.

That is certainly true for Airline Ambassadors, says Founder Nancy Rivard. Its absolutely invaluable support to us. We collect aid frequently from humanitarian aid organizations and our volunteers to support our monthly mission to help children in need, she says. We need a place to put that. We need a central location. Airline Ambassadors has a free storage unit in San Francisco, and Shurgard is donating two more storage units to facilitate their humanitarian efforts.

The items stored through Shurgards program range from handmade baby blankets to donated furniture. Nonprofits also store clothes, medicine and even nonperishable foods. Airline Ambassadors recently stored socks and shoes for children in Afghanistan and medicine for children in Ecuador and El Salvador at its San Francisco storage unit. We have a lot of aid consistently donated, and we needed a place to keep it, Rivard says. The amazing partnership with Shurgard has enabled us to further our humanitarian work.

Nonprofits can apply for participation in the Storing for Hope program by visiting www.shurgard.com and clicking on Storing for Hope at the bottom of the home page. The application can be completed online. For more information, call 800.947.8673. To find out more about Airline Ambassadors, visit www.airlineamb.org.

Each and every day, self-storage manager résumés cross my desk. As a director of manager placement, one of my duties is to oversee the staff that places managers at storage facilities nationwide. I receive about 20 to 30 résumés a week from managers looking to make a change from their current positions. Most of the time, these managers are seeking employment prior to leaving their current company; therefore, they prepare a résumé and begin the confidential journey to secure a new job.

Some of the résumés impress me at first glance. Others, I am afraid to say, look as if my 12-year-old son had written them. I realize not everyone knows how to prepare a professional-looking résumé. For those who dont, I suggest contacting a service that prepares résumés for a small fee. Remember, you only have about 15 or 20 seconds to make that first impression. And like the old saying goes, you never get a second chance!

Most software programs have templates to help you make a professional résumé. These include Microsoft Office, Works and Publisher, just to name a few. You can also purchase an inexpensive résumé program for around $10 from any office-supply or software store. It is money well spent. Please, dont forget to use your spellchecker. If you dont have a computer, any Kinkos or similar place has computers to rent for about $10 per half-hour. You can write your résumé there, put it on CD or disk, and take it with you for future updating.

The details

There are two ways you can create your résumé: chronological style or functional style. The first is the most commonly used. It lists your job titles and places of employment, along with dates of employment, beginning with the current or last position. These are usually listed on the left side of the page. The typical job duties/descriptions are listed to the right.

The functional-style résumé is used when a person has either an abundance of similar experience or a lack of it. It can better the chance of a candidate whose experience may look weaker on a chronological résumé. It can also be useful for those in the midst of a career change, such as those applying for a district-manager position from a facility-manager position.

Whichever type of résumé you choose, the most important information to include is your name, address and telephone number including area code. It should be at the top of the page, centered, in large type (at least 14- or 16- point) and an easy-to-read font. Dont use a Roman or script-style font. You are trying to be professional, and if you fax your résumé, some fonts dont fax well. You might try faxing your résumé to yourself from another location so you can see how well it prints. For résumés you mail, use a nice-quality paper. Dont use a paper that looks like marble or has a heavy texture. Your text will get lost in the busyness of the paper.

Know your audience, use the vocabulary and speak the language of the selfstorage industry. Describe your experiences from an accomplishment point of view. Use strong, active words, for example: achieved, expedited, managed, ability, capacity, leader, actively, substantially and effectively. All information should be in a positive perspective. Again, use the spell-checker and proofread your résumé!

When submitting a résumé, also include a list of references. I suggest having a separate sheet, as references may change from time to time. And make sure your list is current and up to date. I dont know how many times I have wasted time and money calling references with wrong or disconnected numbers. First get permission from your references to use them, and make them aware someone might be calling them for a recommendation on you.

When I speak of references, I mean business references, such as past employers or supervisors. I dont care about past tenants who say how great their experience was storing with youI need to know what kind of employee you were. Family, friends and other storage managers dont count as references either.

If you can obtain letters of reference from employers prior to leaving their employ, get them. They should be submitted with your résumé to prospective owners along with a cover letter. This cover letter should be an introduction of sorts, outlining a little information about you that is not reflected in your résumé.

You might want to take a sentence or two to explain the reason you are seeking a change. Be honest about why you want to change positions, especially if you have only been at your current position for a short period of time, say less than six months. Were you a start-up manager and moved on after five or six months? Was it a new facility that didnt open on time, so you had to leave?

If you desire to leave a position due to a clash in personalities, attribute it to personal reasons and be prepared to explain during the personal interview. But remember what your mother always told you: If you cant say anything nice, dont say anything at all. Dont dwell on a negative reasonbe positive and just say it would be better to find a position more suited to you, and your old company can find someone more suited to its needs.

Besides your professional-looking résumé, cover letter, letters of reference and reference list, include any certificates you have received from attending seminars or training classes. Once you have submitted your materials, be prepared for a phone interview, which is probably more important than a personal interview. Just as with the résumé, you never get a second chance to make that first impression. If you come off as disinterested, distracted or unprofessional over the telephone, you will never get to the next step of the personal interview.

Be prepared to ask questions during the phone interview, such as: Is rent due on the first or anniversary date? What are the hours of operation, gate and office? What are the facilitys occupancy and delinquency levels? What software program is used? What security is at the site? What about housing arrangements (if any), base wages, bonus programs, other employees? What is the background of the company? How many sites does it have? What is the company philosophy and reasons for needing a new manager?

Explain your achievements and objective in seeking a change of employment. If it is a position you are interested in, tell your interviewer that. Ask for a personal interview when the company begins that process. Then be prepared.

At the interview, show up a little early, dress professionally and have a copy of your résumé, letters of reference, certificates, cover letter, etc. Put your best foot forward and be positive. Remember, you will not always get the job, even though you thought the interview went well. Dont get discouraged. Keep trying, and when the job that is right for you comes along, you will get hired.

Larry Truitt is the director of manager placement for Mini-Management Services, a Santa Barbara, Calif.-based consulting, management and manager-placement service. For more information, call 805.898.3753.

IN THIS DOG-EAT-DOG WORLD, Ive discovered the sale of ancillary storage services and products has been appreciated by my customers and profitable for my self-storage center. One successful niche has been the storage and management of hardcopy business recordsrecords managementwhich we started offering at my facility 10 years ago.

At the time, my father and I saw it as a way to maximize our return on upstairs storage space that just wasnt selling. Like most mini-storage places, we had our share of small- to medium-sized businesses that were storing their boxes in 10-by-10s and 10-by- 20s. We would see the muttering secretaries, harried managers and sweating executives lugging and going through boxes with varying degrees of urgency.

I began to research the feasibility of converting the upstairs units into warehouse space with 12-foot shelves, and creating a system to store and retrieve boxes for business customers. It was also about the time supermarket scanners and barcoded inventory labels became the norm technology that could easily be used to locate and track boxes.

No Bones About It

Thats how what Ive come to call the Cocker Spaniel approach to records management began. Spaniels are expert hunting, retrieving and tracking dogs. That became the focus of our records-management servicesfinding the boxes on our shelves, retrieving them for customers when needed, and tracking their delivery and return to our facility.

To accomplish this, we hired an independent software developer to write a basic records-management program that was tied into our billing system. We created a separate name for the records-management side of the business, and contracted with a telemarketing service to spread the word to companies in our growing city.

We took 24 boxes here and 500 boxes there. We established a system for checking out, delivering, picking up and returning boxes to storage. Soon, we offered file-pulling services, too; and later, we began selling high-quality records-storage boxes. Like the Spaniel, we were bold, keen to work for our customers, cheerful in handling their needs, and excellent watchdogs for their confidential and critical business information.

Another Breed

All that working like a dog paid off. In 10 years, weve only had three accounts leave our care, and these were due to an out-of-town move, a business merger and a bankruptcy. Our theory: Success breeds more success. So this year we launched into our Golden Retriever approach to records management, the one we recommend to self-storage colleagues who might consider barking up the records-management tree.

The Golden Retriever is a cross-breed that combines the best characteristics of Spaniels, Retrievers and Bloodhounds. This means they are good-natured and extremely obedient, but also superior watchdogs with sharp hunting, tracking and retrieving abilities. And they can swim and do tricks!

Matching and melding all of these top qualities and transitioning our facility into a state-of-the-art, full-service commercial records center was no accident, and it didnt occur overnight. We spent three years planning and nearly a year building a new warehouse, specifically to hold business records. This phase included careful research on everything from appropriate racking and a specially designed fire suppression system to meeting earthquake and other building-safety codes.

Next, we completed a thorough review of the industrys most sophisticated commercial records-tracking and inventory-control software, and we engaged a consultant for our entire start-up and implementation of the new system. We also made the commitment to hire a professional operations manager and salesperson whose training includes understanding the emotional and intellectual reasons businesses choose to outsource recordsmanagement storage and services.

Now, like the Retriever, we can excel in efficiently and profitably providing baseline- controlled, managed storage services. And we can do tricks: We are positioned to handle records destruction and certification, index records, offer scan-on-demand services and moreall tied into our tracking and billing system. Its a golden opportunity for us and our customers.

Theyre not muttering or sweating anymore. They e-mail us, and we fetch. It just goes to show, old dogs can learn new tricks.

This months guest columnist, Jay Sundher, is owner/general manager of Fortress Records Management, a division of Hollywood Storage Center, in Newbury Park, Calif. He is a client of regular columnist Cary F. McGovern, principal of FileMan LLC. Hollywood Storage Center has been in continuous operation under the same family ownership since 1982. For more information, visit www.hollywoodstoragecenter.com.  For more information on records-storage consulting, visit www.fileman.com.