High Desert Test Sites (HDTS), an expansive art project that extended between Joshua Tree, Calif., and Albuquerque, N.M., Oct. 12-19, featured several eclectic works, including Self Storage by artist Lars Fisk. The display, featuring a depiction of a generic self-storage building hiding a real Volkswagen camper inside, was a commentary on rampant consumerism and the proliferation of self-storage facilities across the nation, according to the shows organizers.

As a direct result of our maxed-out consumerism, row after row of identical storage units with their prefabricated, roll-up doors have been cropping up all across the country, and a great new industry is booming, organizers said in the HDTS description of the exhibit. Self Storage is a pop-up architectural folly that, when deployed in any empty lot, masks an ordinary Volkswagen camper as just another self-storage building; discrete minimalist housing for otherwise private property.

Art displays were set up in remote sites, using the stark desert Southwest as a backdrop. Many of the 60 exhibits were commentaries on modern-day issues, according to the source. This was the 10th year organizers have held the event, which drew visitors from around the world.

The end of 2013 is looming, and I'm confident the run-up in real estate values is not over yet. We've seen a 100-basis-point uptick in interest rates over the last six months, and shockingly, cap rates seem to still be coming in.

Please forgive my optimism, but I think real estate fundamentals are strongespecially self-storage fundamentalsand the increase in facility value owners have enjoyed seems to be strengthening. While many elements of the economy appear to be stabilizing, self-storage investor confidence also seems to be gaining momentum. This sounds like good news; and it is, for now.

Never before have prices been higher for self-storage properties, either in absolute dollars or in relation to the income they produce. This is all being driven by the lack of quality product on the market (simple supply and demand), newly found public awareness and continued low interest rates. However, it's worth noting that not every market is experiencing the same uptick in value or sales velocity.

This is largely due to the increased intelligence of the self-storage investment community. Today's investors are more focused on market-specific demand drivers such as the migration of population, population growth, barriers to entry, income growth levels and market-specific employment basis, just to name a few. They're more focused on where the market is going and not where it has been.

It would also be fair to say we have two distinct markets within the self-storage investment worldand I'm not talking about the top 50 metropolitan statistical areas and the rest of the country. I 'm talking about growth markets and non-growth markets. We've learned that small to mid-sized markets can be very productive investments if the demand drivers are present. This has been the case in markets like Aurora, Colo.; Austin, Texas; Greeley, Colo.; Raleigh, N.C.; and Williston, N.D. These markets have enjoyed strong rental velocity, rental-rate growth, population growth, income growth and, most important, growing self-storage demand.

Get While the Gettin's Good

But before you get too complacent with your new-found prosperity, there are a few dark clouds on the horizon. The first is interest rates may go up in a meaningful way. The Federal Reserve has certainly been trying to justify getting them up for close to a year now.

The second issue is overbuilding. You guessed it ... Development is back! The great returns have drawn a crowd. We're only in the beginning stages of the development cycle, but in the strong growth markets, we're seeing as much as 15 percent to 20 percent additional supply getting ready to come online. As we all know, development and potential overbuilding can have a drastic effect on a market.

An owners ability to properly evaluate future demand and the current market is the single most important thing in making the right investment decision. These are absolutely the best times in real estate for careful buyers and sellers. The prize will go to those who analyze their competitive situation and take action during this very unique time in the real estate cycle.

I really dont know how this real estate run is going to turn out, but every one of my colleagues in commercial real estate has the same question: How long will this last? Remember, a meaningful rise in interest rates or overbuilding could eliminate your options moving forward, so now may be the time to act. Timing is everything in real estate, so talk with a self-storage specialist to help you determine if the time is right for you.

Ben Vestal is president of the Argus Self Storage Sales Network, a national network of real estate brokers who specialize in self-storage. Argus provides brokerage, consulting and marketing services to self-storage buyers and sellers and operates SelfStorage.com, a marketing medium and information resource for facility owners. For more information, call 800.55.STORE; e-mail [email protected]; visit www.argus-selfstorage.com .

AAA Self Storage in Longmont, Colo., is open again after more than a month of clean-up from flood damage that swept through the facility and parts of the state in September. Although the property is not in the flood plain, the 17-building, 465-unit facility was flooded with as little as an inch and up to a foot of water, depending on the building.

"We had a geologist who stored his stuff here, and he said, 'I specifically checked the maps before I put my stuff in here, and you guys weren't even in the 500-year flood plain," said Bill Harper, who owns the facility with his wife, Elizabeth.

In addition to the facility damage, the flood forced the evacuation of manager Michelle White, who lives on site. "I barely made it out of here [on Sept. 12] when they called me for a mandatory evacuation," White said. "The water was about up to my wheel wells on my SUV." Her facility residence did not sustain damage.

Self-storage customers were not so lucky. Harper said tenants who could get to Longmont salvaged what they could, but several renters lived outside the state, including some internationally. Although the business requires tenants to check a box on their rental agreement indicating they either have or will obtain insurance, Harper said he knew of only a couple of customers who had sufficient insurance.

The business also was not insured for flooding, since it was not technically in the flood plain. "If it would have been a tornado or a fire or anything else, we would have been covered," Harper said.

To clean up the facility and get it back to rentable shape, Harper said he was advised by the national Self Storage Association to remove all contents from units so spaces could be cleaned and sanitized. It was a health and safety deal, he said.

Although AAA was nearly 100 percent occupied at the time of the flood, Harper said only a few dozen tenants have returned since re-opening last week. Storage West Self Storage located next door to AAA sustained worse damage and remains closed, according to the source.

US Storage Centers, a self-storage operator that owns or manages more than 70 facilities in 12 states, has implemented PayNearMe, an electronic cash-transaction network, as a convenient and secure cash-payment option for its customers. Through the network, tenants can pay their monthly rent with cash at nearly 10,000 retail locations nationwide, including more than 7,600 7-Eleven stores.

To make a payment, tenants will need to use their US Storage Center mobile or printed PayNearMe PaySlip, which includes a barcode, at any PayNearMe location. The cashier can then scan the barcode and accept the cash payment. When payments are made, US Storage Centers is notified automatically, and the tenants account is credited, company officials said. The operator is the first in the storage industry to offer the service to tenants.

Most of our tenants want the convenience of paying remotely and the assurance of an instant payment confirmation, said Jason Lopez, vice president of marketing at US Storage Centers. With PayNearMe, we can offer a compelling payment option to our cash-paying customers. While many of our customers pay online with credit cards or ACH [Automated Clearing House], some still prefer to pay with cash, and we want to make it as easy as possible for them to pay their rent.

People shouldnt be penalized if they dont have a bank account or credit card, added Christopher Volgenau, vice president of business development for PayNearMe. In an industry that services a high volume of cash-paying consumers and [is] prone to perpetual churn, we are pleased to make it easier and more convenient for US Storage Centers cash-preferred customers to make payments with cash.

Through the PayNearMe system, US Storage Centers can reconcile cash payments automatically into its property-management software and authorize only payments that represent the full amount owed. This is enabled through PayNearMes partnership with OpenTech Alliance Inc., a Phoenix-based provider of self-serve kiosks, call-center services and other technology solutions for the self-storage industry. By integrating with OpenTechs INSOMNIAC Self Storage Network, PayNearMe can authorize the acceptance of cash payments in real time based on data in the property-management software system.

We were excited to start offering PayNearMes electronic cash payment options to our renters, but had no idea how fast and easy the integration would be, said Mike Brady, vice president of operations at US Storage Centers. In addition to providing an amazingly elegant cash-payment option to our tenants, we did next to nothing on our end technically.

The PayNearMe cash-transaction network enables consumers to pay rent, transfer money, repay loans, buy tickets and make online purchases with cash. Consumers can access the system through nearly 10,000 participating 7-Eleven and ACE Cash Express stores across the United States.

US Storage Centers owns or manages more than 70 self-storage facilities in 12 states, including Arizona, California, Colorado, Connecticut, Florida, Georgia, Maryland, Massachusetts, Nevada, New Jersey, Tennessee and Texas.

Self-storage operator Dinwiddie Enterprise Inc. recently purchased Springview Self Storage in DeBary, Fla., for $2.1 million. The 435-unit facility has been renamed South DeBary Self Storage. It was previously owned by Winter Garden, Fla.-based Grant/Louetta Self Storage LP, a subsidiary of Obladt Investments LLC in Waller, Texas.

Dinwiddie runs its self-storage operation through Veritage Management Inc., its property-acquisition and management division. The family-owned company currently operates 21 self-storage facilities in Florida, Maryland, New Jersey, North Carolina and Virginia. Its portfolio encompasses more than 1.6 million square feet. Headquartered in Columbia, Md., it also has an office in Melbourne, Fla.

Westy Self Storage in Wilton, Conn., recently donated the use of its grand lobby for the Housatonic Habitat for Humanity volunteer-recognition dinner during which 45 volunteers were honored for their hours of service. Based in Danbury, Conn., and serving 16 local towns, Habitat provides home-ownership opportunities to families with limited incomes.

Although it has two full-time and two part-time employees, the nonprofit organization relies on a core of more than 140 volunteers who assist with construction and office work and help run the groups ReStore thrift-type home-improvement outlet. Some volunteers also serve on committees and the board of directors. Together, the volunteers have built 22 homes in the greater Danbury area this year and will complete an additional five homes by early 2014.

We are so grateful to Westy Self Storage for hosting our event, said Fran Normann, affiliate director of Housatonic Habitat for Humanity. Without their generosity, we would not have been able to acknowledge our volunteers with such a special evening. We are thankful for the team at Westy, as their attention to detail and dedication helped make this event a huge success. Westy Self Storage has been a supporter of our mission for three years and is an important partner.

It is our pleasure to lend a helping hand to Housatonic Habitat for Humanity, said Joe Schweyer, district director of Westy Self Storage's Wilton location. They provide such a compassionate service to others. It was our privilege to extent our lobby to a group that benefits so many in need.

Founded in 1990, Westy Self Storage is headquartered in Stamford, Conn. The company's portfolio of facilities spans the tri-state area of Connecticut, New Jersey and New York.

Storage Post Self Storage made its third property acquisition in 60 days with the purchase a facility in Rockville Centre, N.Y., from a private operator. The facility at 250 Maple Ave. comprises 32,064 square feet including 800 climate-controlled units, motion-sensor lighting, individual door alarms and interior loading bays.

The facility is near Sunrise Highway off N. Long Island Beach Road and the Maple Avenue intersection. Rockville Centre is a village on Long Island, south of Hempstead, characterized by relatively high household incomes and a strong growth market, Storage Post officials said.

"This was a superb transaction. The property is in a great neighborhood with attractive demographics, and we're familiar with the owner, which made the entire process go smoothly," said Dylan Delaune, chief investments officer. "The asset's high quality and good location will help develop our New York portfolio, and we are pleased to bring the property into our brand. This is another tremendous deal initiated by our director of acquisitions, Jack Giannola."

Since 2012, Storage Post has expanded its portfolio with nearly 20 acquisitions and is expected to add more properties in the next year through acquisitions, ground-up development and select management contracts. The company also launched a full-scale renovation plan for its New Jersey and New York self-storage facilities, with several stores already updated. Storage Post is headquartered in Atlanta and has a total of 22 locations in Georgia, Louisiana, New Jersey and New York.

BOS (Best Of Steel) GmbH, a Germany-based producer of portable steel storage containers, is introducing its product line to the U.S. market, launching its effort next week at a regional self-storage conference and tradeshow.

The company's quick-build containers travel flat-packed and can be assembled easily without tools in just minutes, according to a press release. The containers come in six sizes and can be accompanied with numerous accessories, including an electric package that includes an electric outlet and light, an access ramp, shelving systems, and racks to support tools, clothing, etc. They also come in a variety of colors.

For the past two years, BOS has partnered with TK Markets Inc., a New York-based management company with a subsidiary in Finland, to introduce its product to the Danish, Finnish, Norwegian and Swedish markets. Now the partnership is expanding to the United States.

Our mission is to expand our existing client base for BOS containers. TK Markets targets repeat clients and aims to serve them to their fullest satisfaction, making us the perfect extension to the BOS in-house sales team, said Kari Honkaniemi and Tom Craycroft of TK Markets.

The U.S. product launch will take place Oct. 28-29 at the Texas Self Storage Association conference and tradeshow in The Woodlands, Texas. The company will also exhibit Nov. 10-12 at the National Portable Storage Association conference and tradeshow in Las Vegas and the Inside Self-Storage World Expo, March 31-April 2, also in Las Vegas.

By Amy Fuhlman, Jack Guttman and Stephen Schwartz

Gotham Mini Storage is a state-of-the-art, multi-story self-storage facility at the corner of 39^th Street and 10th Avenue in Manhattan, right in the heart of New York City. Developed by seasoned industry professionals Jack Guttman and Stephen Schwartz of Broadway Storage, the class-A facility opened in January with 2,000 units and 140,000 square feet of space. The "New York Times" even did a feature story on the project to demonstrate a new generation of self-storage properties.

Those who have ever attempted a conversion in a major metro area know its no easy task. Here are the details of this impressive development, including demographics, economics, features and performance.

Location

Gotham Mini Storage is just a few blocks north of the Hudson Yards redevelopment, the largest development project currently under way in the United States. It encompasses tens of thousands of new apartments and more than 20 million square feet of commercial development including office, retail and hotels.

The facility is on 10th Avenue, a major north/south land arterial, at the entrance to the Lincoln Tunnel. Its visibility is staggering, as it occupies the entire block between 38th and 39th Streets. It's only one block from the Jacob Javits Convention Center and is surrounded by high-rise towers. Daily visibility reaches hundreds of thousands of people.

The Demographics

The Manhattan self-storage market has incredibly high barriers to entry. A severe lack of appropriately zoned land combined with intense competition from other uses makes self-storage development extremely difficult. Except for Gotham Mini Storage, there have been no new industry developments south of 96th Street in 10 years.

In the immediate half mile surrounding the facility, thousands of apartments in high-rise buildings have been built in just the last few years. The tenants have no basements, attics or garages, and they are largely affluentall factors that drive storage demand. The average square feet of storage per capita in the United States is approximately seven. In Manhattan, its less than one. With odds like those, how could a storage facility miss?

Economics

New York has the most competitive real estate market in the country. With land and building prices hitting new highs, there's been a mad dash to acquire buildable land, which soars above $800 per square foot in prime areas. In fact, upscale apartments are recorded as high as $10,000 per square foot. One acre in the vicinity of Gotham Mini Storage is for sale at $58 million.

In that light, Gotham's developers had to strike a creative deal to make the numbers work. Luckily, Guttman and Schwartz have been in the self-storage business for many years and had a strong idea of how to create an economic structure that would lead to profitability. The icing on the cake: The deal was devised to enable a breakeven after only six months of operation.

Whats Old is New Again

Gotham Mini Storage was converted from an existing industrial building built in the 1920s as a parking garage. Both the interior and exterior underwent a major gut renovation to meet modern standards.

The columns and beams had been haphazardly repaired over the decades, and various shades of concrete patching scattered around the structural members of the building gave it a splotchy appearance. As a remedy, the developers wrapped the building in mesh with a mortar compound and coated it with several layers of weatherproof primer and paint to give it a smooth, uniform finish. Old windows were replaced with large, energy-efficient glazing, which allows people to see the storage doors inside. No one would ever know the building is more than 90 years old.

While installing the doors and hallways, building-components manufacturer Janus International encountered some out-of-the-ordinary procedures. Gotham Mini Storage is in the same building with express and logistics company DHL, which has a contract with the U.S. Department of Homeland Security. "Our entire crew had to achieve security clearance," says Pat Nesbitt technical sales manager for Janus.

We quickly adapted to our surroundings, including retrofitting an older building and maneuvering the busy Manhattan traffic," Nesbitt adds. The installation crew got to the job site before traffic kicked in each morning to unload product. A lot of custom design was used to adapt to the various ceiling heights and nuances of each floor. We created an eye-catching door display, which is visible from the many windows at Gotham and really aesthetically presents storage in Manhattan in an appealing light.

The Office and Other Features

Daniel Goldner Architects was hired to create a stunning management office that defied traditional storage standards. An angular, metal-panel-based exterior siding was used to produce eye-catching curb appeal, and brick walls were replaced with large pane windows around the management office and loading area. Custom cabinetry, terrazzo flooring, high ceilings and sleek styling provide for a visually stunning experience. Along with the upscale office surroundings, customers are treated to a coffee bar and Wi-Fi capabilities.

Customers can drive directly into the building itself and load/unload, all while being protected from the elements. Unlike other urban facilities, Gotham has dedicated parking spaces inside the building so customers can take their time and not worry about parking fees or tickets.

The facility features two 10-by-40-foot freight elevators for customer convenience. These carpeted elevators are large enough to accommodate a truck, and they are fully automatic to work like normal passenger elevators.

Customer storage areas are top-notch, with renovated floors and brand new units and roll-up doors. Units range from four-by-four to 20-by-80 feet. Each floor is temperature-controlled, carpeted, well-lit and equipped with Wi-Fi.

A high-tech, natural-gas-fed, mini-turbine system was installed for heating and air. The buildings own internal cogeneration plan uses excess heat from the production of electricity through the mini turbines to heat water, which warms the buildings in the winter. The same hot water runs through absorption chillers to produce chilled water in the summer to cool the building. This system is not only less expensive than using power from traditional methods, it produces far less greenhouse gas.

For economic reasons, it was imperative to use every inch of available vertical space, so double-stacked lockers can be found throughout the facility. On floors where ceilings are low, the developers engineered the project to extremely close tolerances. The unit partitions were engineered to be less than one inch from the ceiling beams, and the HVAC system had to be specially designed to squeeze in the available openings while delivering adequate heat and air. Even the sprinkler system was designed with the use of side-wall heads to minimize any obstructions.

Performance

The initial operating performance of the property has been nothing short of spectacular. A pro forma showing unit rentals of 100 per month would be considered aggressive in most markets, but the developers believed in the buildings ability to draw based on location. To their extreme delight, the facility has recently been renting nearly 150 units per month. It has approached 50 percent occupancy in about nine months and is cash-flow positive.

Enjoy the View

Remember the HBO series "Sex and the City"? The leading actress once gave tribute to New York City as a supporting cast member of the show. I think the same holds true for Gotham Mini Storage. Ample windows on several of the storage hallways allow tenants a breathtaking view of the city. In fact, a few customers have offered to pay more for a unit with a view!

Gotham has achieved the goal at hand: to provide a storage alternative to a highly populated area known for its lack of space. Yet it's done so much more in creating a user-friendly environment that exceeds customer expectations at every turn. While NYC may be a supporting cast member, the facility's leading performance has earned top billing without a doubt.

Jack Guttman and Stephen Schwartz are co-founders of Broadway Storage, a firm that specializes in the development and acquisition of industrial properties including Gotham Mini Storage. Amy Fuhlman manages the marketing communications programs for Janus International, a manufacturer of self-storage roll-up doors and components. For more information, visit www.gothamministorage.com  or www.janusintl.com .