For the next two months, every magazine you put in your hot little hands will have something trite to say about the holidays, the impending New Year, resolutions and all that jazz. But what is so new about the New Year? The older you get, the faster the years go bytheres no news here. I want fill you in on some things that really are novel and fresh. After all, theres a lot more to the passing of time than writing a new date in your checkbook.

In 2004, Inside Self-Storage will offer two innovative services to this industry, both pertaining to key information that will assist developers in project planning. The first is a comprehensive, full-day developers seminar, which will be conveniently packaged with our annual Las Vegas Expo. On Feb. 8, immediately prior to the show, interested parties can participate in this eight-hour tutorial, which will cover all aspects of the development process, including site selection, zoning, feasibility, due diligence, site design and unit mix, and a whole lot more. Attendees will be guided by eight of this industrys top development experts, and ISS hopes to expand this event to all of its future expos. For more details, see the ad on page 92.

We are also pleased to announce we will be partnering with Charles Ray Wilson of Self Storage Data Services Inc. to publish a brand new series of Self Storage Market Performance Reports unlike anything seen before in the industry. These periodic reports give account of how self-storage is performing in the nations top 50 MSAs (Metropolitan Statistical Areas). Security analysts helped design the report format to meet the needs of investors, owners and other third parties. ISS will be the exclusive publisher of the national summary data, while detailed regional information will be available via subscription. If youre interested in learning more, you can contact Ray at [email protected].

With all this great information coming online for those on the development side of the field, what about those in operations? Facility managers and their support staff are the lynchpin for any thriving storage site. Who you hire and how you train can veritably make or break a business, especially for those owners who are remote.

This issue focuses on quality management: what makes a first-rate manager, how to interview and hire right, training and evaluating performance. Employees are every business greatest asset. Owners should be proactive in educating and communicating with their staff. You managers out there can take your future in your hands by learning as much as possible, asking questions and recognizing the pivotal role you play in a facilitys success. No, this isnt anything new; but its tried and true.

Best wishes,

Teri L. Lanza
Editorial Director
[email protected]

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

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Q: My retail office has large glass windows, and I am very concerned about vandalism. What do you feel would be the best way to secure my office?

MICHAEL IN FONTANA, CALIF.

A: Large plate windows in an office are difficult to protect because you need to have the office on the outside of the perimeter fencing and gate. Rarely do huge bars on the windows entice prospective tenants to rent at your facility. Since there isnt much you can do on the prevention side, lets talk about securing your office if a break-in does occur.

The most popular options are glass-break detectors and motion sensors. Glass-break detectors use the acoustics of the breaking glass to signal an alarm. Motion detectors use infrared to detect motion and heat in the office. Both can be used to signal a local siren, klaxon and/or an offsite monitoring station. Also make sure to install a good video-surveillance system with cameras in and outside of the office. Cameras have the added benefit of creating a visual deterrent too.

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Q: Building codes required us to install stairwells in our three-story building, but we would prefer tenants not use them unless there is an actual emergency. What do you recommend?

SHELLY IN PLANO, TEXAS

A: Sometimes, all it takes is a simple sign stating an alarm will sound if the door is opened; other times, the actual alarm is required. There are a couple of ways to go about this. One is to install a panic bar on each floor with an integrated alarm siren. This is an effective, but costly way to do it.

Another way depends on your existing site security. High-tech security systems that offer individual door security can often tie-in stairwell doors to their systems. All that is required is a door contact and a wire run to the office or, if you have a wireless system, it is as simple as installing a sensor on the stairwell door. This way also allows for logging of all stairwell activity.

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.

Since 2000, Spain has been experiencing a tide of immigrants leaving Northern Europe and the United Kingdom like no other time in its history. Nicknamed EUmigres, they are drawn by the warm climate and easy lifestyle of Spain. But finding housing has become a concise science, and new arrivals hunt living accommodation in an ever-decreasing precious commodity—urban land.

The average living space for any family of four is 100 square meters, all modern appliances included. Any remaining ancillary and recreational items are packed on terraces to be retrieved when needed. The vast majority of people are in dire need for additional space, and it’s easy to see self-storage is a beneficial service.

The entrepreneurial spirit and pioneering vision of a few companies have been working hard at creating, promoting and providing awareness of a valuable resource—storage space. There are close to a dozen facilities throughout the Spanish peninsula in Barcelona, Madrid and Malaga. These numbers are not insignificant. The industry first began to take shape less than a decade ago, and the speed at which additional sites are expanding is commendable. Being late bloomers in the industry provides certain advantages in knowledge and offerings, but also a number of challenges to overcome.

Self-storage is considered an industrial business; therefore, zoning restrictions are an issue. To accommodate the increasing need for housing developments in recent years, industrial zones have been reclassified for residential and commercial use. This pushes industrial zones to the outskirts of the cities.

Nikolas Soskin, general manager, and Serge Kaouane, country manager for Spain of Easybox Self Storage; and Eduardo García Bardón, manager of Greinnsa Mini-Almacenes, agree a site must be no more than a 20-minute drive from any point in the city limits. This has the industry in a race to obtain the right building or location in the current industrial areas.

Planning, Developing and Constructing

Generally, a facility is developed and completed in phases, using the revenue obtained from current rentals to complete the remaining floors or units. The lack of knowledge the municipalities have for this industry can make the process more difficult.

Kaouane believes it’s a matter of addressing the business plan in terms the authorities can understand. Construction regulations and codes may have to be reevaluated to comply with local municipal laws. Understanding the laws and regulations and working with people familiar with self-storage projects leads to a timely inauguration.

Financing is a make or break deal. Spanish banking institutions do not understand the nuances of the industry or the potential profitability storage can provide. Banks are cautious about lending the funds needed to complete a facility. However, due to a common currency and the United Kingdom breaking ground in this arena, it is possible to obtain financing from British banking institutions.

Soskin has been able to obtain financing for sites in Spain and Italy via this method. This, however, is not the only source of funding—personal, other equities and investors may be needed to finance this type of venture. Bardon states if there is some type of collateral, such as a structure for conversion, financing construction is easier. Typically, though, personal equity and other investors may be needed to finance this type of venture.

Getting the Word Out

Although the Spanish public has little knowledge of the benefits of self-storage, the new immigrants, particularly those from the United Kingdom, bring awareness of it from their own countries. Marketing efforts can take up the majority of budgets. Some people who need storage will shop around for the typical container- storage system. While researching, they run across self-storage facilities and discover the advantages, location and cost.

Word-of-mouth tends to be the most typical way people learn about self-storage. The Yellow Pages, local phone guides, web pages, direct mail pieces, building signage and location are other methods employed to promote and educate the public.

Who’s Here Now

There are a number of facilities currently operating in Spain—Easybox and Greinnsa are just two. Each has been successful in introducing this new concept to the public and business community. Via climbing occupancy and increasing exposure, these organizations are the innovators of what will become a household word in the coming years. Although they have taken a different approach in providing self-storage, they share the basic concepts of providing additional usable space.

Easybox is a group with more than 20 years of European self-storage experience. It owns and operates two sites in Spain—Barcelona and Madrid—and three in Italy. The site in Madrid is a conversion. The location in Barcelona is a new, third-generation building with high visibility from the highways leading into the city from the airport and beach resorts. This location can be reached by a 15-minute drive from any point of the city. Although developing third-generation buildings can be more costly, Soskin believes they are the best structures, as they are built according to an organization’s plans. At the same time, adapting an existing structure can be more challenging.

The Barcelona facility is a four-story, 2,000- square-meter building. It offers round-the-clock access, video surveillance and security-code access, an on-site property manager, insurance, ancillary supplies, and plenty of parking space for loading and unloading. Easybox is renting space while phasing and completing the remaining levels. Within six months, the company has filled approximately 140 of the 250 available units—60 percent individual and 40 percent bulk occupancy.

A significant amount of time and money has been spent to educate the public and promote self-storage. The company uses its site as the primary marketing vehicle. Kaouane uses the building’s top-floor window to display mannequins moving into a unit. The Yellow Pages, a website, the local phone guide and an intensive, customer-training program are the company’s other promotional methods. Right on track to deem its project a complete success, Easybox believes it will take up to three years fill its 550-unit center.

While researching a use for a portion of a warehouse, Bardón stumbled across self-storage about six years ago. Having grasped the concept and understanding the need for self-storage, his company quickly converted the warehouse into storage units. The success of these units prompted the company to turn the rest of the warehouse into a formal self-storage site.

The facility, located in a 30-year-old industrial park and off the major freeway circumventing Madrid, can be accessed from any point of the city in 10 minutes. The site’s established entity in the metropolis means locating the building is easy, despite the industrial park forbidding signage on the exterior of the building.

The 3,000-square-meter facility offers tenants a variety of unit sizes, forklifts for easy transport to individual units, 24-hour security— an after-hours alarm system is activated when the center closes—and personal keys to access units during business hours. Boxes, bubblewrap, packing tape and shelving are available for purchase.

Educating the public on self-storage is also the facility’s largest expense. The Yellow Pages, direct mail and a local magazine are used to promote availability. Greinnsa boasts 100 percent occupancy, which has led to the opening of another site in Alcobendas, the northeast corridor of the city.

Greinnsa plans additional facilities, concentrating its efforts on the cities with the highest population. According to Soskin, Easybox has plans to open an additional 10 sites this year.

Conclusion

Self-storage entrepreneurs have invested a great deal into developing this industry in Spain and are reinventing a service that, in the past, has been difficult, timely and expensive. Some conventional storage companies place containers in open lots. As Easybox’s slogan states, what better place to store items than in a “clean, dry and secure” area? Bardón hopes one day anyone needing his storage will know all they have to do is call Greinssa to “alquilar una habitación,” rent a room, as people acquaint themselves with self-storage.

For more information, contact Nikolas Soskin at [email protected]; Serge Kaouane at [email protected]; or Eduardo García Bardón at [email protected].

Hire, train, motivate and retain great employeesit seems simple, but is it? How many times has this happened to you? You cant believe your good fortune. You find the perfect candidate for the job. He looks the part and gives all the right answers during the interview. You hire him, and a short time later, you find he doesnt really deal well with your customers, isnt big on cleaning and takes no initiative in handling problems on his own. Within a few weeks, you are wondering, How could I have been fooled so easily?

You have to ask yourself: Are you really looking for the right person or just a warm body to fill a position? How you interview and who you hire will greatly affect the outcome of the training and retention of your employees.

The Interview

During the interview process, remember you can train anyone to answer phones and rent units, but you cannot teach them to be warm and friendly. It is easy to be misled by prospective employees, as they are usually on their best behavior during the interview. Take time to determine if the candidate has the knowledge, skills, temperament and competency required to perform in the position for which you are hiring. By focusing your questions on these areas, you may avoid hiring a square peg to fit into your round-hole organization.

Training

Having a well-organized training program in place is essential. Your employees are your biggest asset and one of your largest liabilities. Hiring and training are a costly venture, so this process should not be taken lightly. A well-trained employee provides a safe and profitable environment.

Several areas should be considered when training new staff. What will their responsibilities be? How can you train them in these areas? How can you measure their retention? How can you review their performance? How can you motivate them to maintain your high standards now and in the future?

Help employees understand their responsibilities by letting them know how their job ties in with those of others in the company. In doing this, they will realize how their actions affect the operation of the facility as a whole, and that their performance is vital to the success of your business.

One of the most effective methods of training is not to show but let the employee do the task at hand. For example, if he is learning to input a new rental to the computer, let him sit at the terminal and enter the information while you sit nearby and walk him through the transaction. Be sure to allow him to study and review the procedures you have taught him, then test him on the results before moving on to the next step.

Once he has been adequately trained in all areas, you should have an observation period during which the employee can feel comfortable doing his job with someone patient and personable nearby to assist if he needs help. At the end of this period, the employee should be tested to find his areas of strength as well as weakness. This will allow you to focus any further training in the proper areas.

Motivation

There are numerous ways to motivate your employees. Pay a fair wage and then get them to forget about the money by treating every employee with respect. Show them you care about them. Praise them for jobs well donesmall and largeand never criticize them in public. Solicit their opinions and ideas, be willing to listen, and always be upfront and honest.

One of the best ways to motivate employees is to conduct regular employee reviews. Since most of our storage facilities have managers that are supervised from a remote location, we are at a disadvantage in that we do not see what goes on in our offices on a day-to-day basis. Using tools such as mystery-shopping is an option available to you. These services either call your employees over the phone or make in-store visits and provide an evaluation of performance. By reviewing these evaluations with your employees each month, you can encourage them to improve their customer service in a positive manner.

Let employees see and review the evaluation form prior to discussing it with you. Encourage feedback and provide open lines of communication. If they disagree with the assessment of their performance, listen to their views and discuss your findings with them. If you cannot come to an agreement on the issue, try taking the employees side unless it is a serious violation. Identify specific goals you would like them to work toward for the upcoming month and reach an agreement satisfactory to both sides that will accomplish them. Be certain to clarify any areas if necessary.

Reward those who have performed at or above your set standards, as failure to do so will be counterproductive to your organization. These rewards can come in many shapes and sizes and do not always need to be monetary. Try to find out what is important to the manager and use this to your advantage. Is it time off with their children? Are they interested in the theatre or sports? Is there a special restaurant they like? By making the effort to determine what is important to them and designing their reward system around those things, employees feel they are an important part of your organization. In other words, The pays not bad and they treat their employees great!

End on a positive note by summarizing the employees strengths, remembering the review is a motivational tool and, used correctly, can have a great impact on performance. By creating opportunities through which employees have the ability to learn and grow, you are building a foundation for a successful and profitable business.

Tammy Ross and her husband, Stephan, own Cutting Edge Self Storage Management & Consulting, which provides third-party management, feasibility studies and consulting. They have been involved in the selfstorage industry for more than 18 years, working for many of the top management companies in the business. They are frequent speakers at industry tradeshows. For more information, call 801.273.1267.

Sooner or later, you're going to have to deal with meno matter how new your facility, no matter how clean you keep it, no matter where you are located. You can use bug spray by the case. You can close your eyes and hope they just go away: but in the end, we'll meet. I am the destroyer of bugs.

Dealing with pests around the house is different than dealing with them at your place of business. The homeowner has the luxury of deciding his particular comfort level when it comes to multi legged invaders. Some people see a couple of ants in the kitchen and shrug them off as a fact of life. Others see an ant crossing the driveway 100 feet from the house and call the National Guard. Business owners dont share the same luxury. An inch-long cockroach standing guard at your lobby entrance isnt the best way to start a relationship with a potential tenant.

Of course, you have the option of dealing with our little friends personally; but there are a few things you should understand. Rule No. 1 (for those of you who missed last months column on rodent control): Potential liability, not personal knowledge, is the first consideration in deciding whether you are going to solve the problem on your own.

In many states, it is illegal to use pesticides labeled for residential use in a commercial setting. In counties and states with less stringent statutes on such matters, the Occupational Safety & Health Administration and the Environmental Protection Agency have a stack of regulations that cost the lives of thousands of innocent trees to print.

Im not telling you to toss the Raid and Black Flag into the dumpster, but if you dont already have a pest-control company on your rolodex, its time to look at the big picture. A pest-control service means one less thing for you to handle. Once you find the right company for the job, the problems become the companys, not yours.

Equally important, much of the liability resulting from pest-control measures becomes the companys as well. Of course, there is the new entry in the accounts-payable column, but the benefits almost always outweigh the costs. The revenue you lost from those two renters who saw the rodent droppings in their units would have covered the cost of a regular pest-control service.

How to Find a Pest-Control Company

For most people searching for a service, the first impulse is to go to the good old Yellow Pages (or whatever they call those big books with all the phone numbers and information on what to do in case of your most prevalent disaster). Resist the urge. Your first inquiry should be to other businesspeople. This is a good time to put those networking skills into action.

Your best bet is to contact the local Chamber of Commerce or similar network of local business interests. If you choose the phone book, check out the Better Business Bureau issue. If you end up using other phone books or advertising sources, ignore any company that goes by AAAAAAA Pest or AAAAaron Exterminators. Actually, they may be totally competent pest-control providers, but we should all do our part to discourage this lame marketing strategy. (Please God, dont let there be any AAAAAAA Self Storage Centers out there).

If nothing else, look for companies that use the same basic advertising tools you do. If you share similar marketing strategies, chances are you share similar business philosophies, creating a greater likelihood of a mutually beneficial working relationship.

What to Look for in a Pest-Control Company

Bigger isnt necessarily better. A smaller company is more likely able to tailor a program to your specific needs. Larger companies tend to have a one size fits all philosophy, particularly when it comes to commercial accounts. Do, however, keep in mind that some of the big pest-control brand names have independently owned and operated franchises that are worth a look.

Older isnt necessarily wiser. Newer companies tend to emphasize customer service as a major selling point. Wordof- mouth is everything to newer businesses, and they want your mouth to say nice things about them. When dealing with a company with a shorter track record, checking references is a must. When considering any pest-control company, check insurance and licensing documentation diligently.

Is the person selling you the work the same person who will be performing it? Thats a big plus. Too many pest services use salespeople who have never spent a day in the field doing actual pest control. If you are inquiring about a regular service and have to go through a sales rep, insist on meeting the person who will actually perform the work before making any deals.

Price isnt everything. In the pest-control business, the adage, You get what you pay for rings true. If a companys main selling point is its low rates, it is probably just thata low-rate company.

Any service agreement you are offered should be in plain English, short and to the point, and should contain no tiny letters or Latin words. Lack of a written service agreement is no deal-breaker. Personally, when I offer a potential customer an agreement, it is in the form of a handshake.

Does the company emphasize Integrated Pest Management (IPM)? IPM is the use of a broad variety of techniques and strategies to control pests, as opposed to plain old chemical warfare. IPM might consist of such measures as trapping, baiting, exclusion, landscape modification and the use of moderated amounts of pesticides. IPM is the weapon of choice for todays pest-control professional.

Last but not least, trust your instincts. Gut feelings are almost always a parameter in a good business decision.

Ken Berquist is a field representative at R&D Pest Services in San Diego. For more information, e-mail [email protected].

A Resent association press story in the Wall Street Journal reported 262.4 million people, five years or older, move to a new address in the last five years of the 20th century." Twenty-five percent of those people moved within the same county.

The same article quotes sociologist John Logan from the State University of New York at Albany, who explained the type of move a person makes depends on his age. According to Logan, long-distance moves are most common among people in their late teens to early 30s. People in their mid-30s through their 50s, many with children, tend to make shorter moves. Those in their 60s and older move to warm-weather climates or closer to family members after retirement. Are you tracking these demographic trends in the micro-market your store serves?

For years, we have all talked about expanding our commercial/ business base of customers. Merchants, contractors and professionals are all being targeted. But in the end, the vast majority of our business comes from individuals. The latest Self Storage Almanac, published by MiniCo Inc., cites the combination of residential, military and student sectors as representing almost 80 percent of all self-storage customers.

I mention these statistics for two reasons. The first is the unshakeable reality that self-storage is still primarily about individual customers. As I travel across the country, I talk with owners who are spending money to target business people through various means. But few if any funds are spent on residential prospectsexcept, of course, the standard Yellow Pages.

Do you have a working relationship with the major realtors in your community? The best local and national moving companies? The primary home-remodeling contractors? Does your annual marketing campaign include targeted direct mail to all new home buyers and sellers? Does every apartment complex in your target market have your stores literature? Do you have a preferred rental rate in place with every new homebuilder to attract direct referrals from their customers?

Yes, business customers tend to stay longer and pay better. But if they represent only 20 percent to 25 percent of your business, can you really afford to assume the Yellow Pages is the only marketing answer for the other 75 percent to 80 percent? I dont think so. Owners with aggressive marketing campaigns that target individual customers and a strong customer-service discipline will be rewarded higher occupancies and improved rental rates in the years ahead.

What Can You Learn From Breakfast at Cracker Barrel?

Twenty years ago, when management guru Tom Peters talked about the concept of Management By Wandering Around (MBWA) in the first of his 10 best-selling business books, In Search of Excellence, I dont think he realized his advice would impact a traveling self-storage consultant during breakfast at a Cracker Barrel in Rock Hill, S.C. Yet there I was, eating scrambled eggs and hash-brown casserole, watching assistant manager Mike Clinton execute the perfect MBWA technique.

Carefully, so as not to interrupt customers with their mouths full (the practice used by many servers so you cannot tell them your food is cold or not prepared to your liking), Mike would seize the right opportunity to quickly say hello and query diners about their food order and service. His inquiry was not canned, but came across as a sincere effort to enhance your experience at his restaurant.

It was only after watching Mike for several minutes and asking to speak to him that I learned he was the assistant shift manager. Based on our discussions, not only did he learn how the restaurants current operations were meeting customers expectations, he also knew how quickly and accurately orders were being processed. His brief interruption at the table also granted him the additional opportunity to thank customers before they left.

Watching Mike work his flawless MBWA technique made me wonder if there are any self-storage owners and managers across the country working to enhance their business by simply wandering around? When was the last time you took a Saturday afternoon or Wednesday morning to walk around your property and talk to customers? To ask if your store and your staff are meeting their expectations? To ask if the gate and their door were operating properly, or if the size of their unit is sufficient for their needs? And, oh, yesthis is also a chance to say thank you for being a loyal customer.

I think I already know the answer to this question. As a percentage, the number of owners who have ever tried MBWA is probably smaller than the chance for the Buffalo Bills to ever win the Super Bowl. But why is that? The technique works and can provide you excellent firsthand information you can then feed back to your employees. Unfortunately, while slightly higher, the percentage of managers employing MBWA is also significantly low.

You dont have to be at Cracker Barrel to use Tom Peters described procedure to your benefit. I urge owners and managers to get out of their offices, out from behind the counter, and onto the property. MBWA works for Mike and it can work for you, too. Give it a try.

Congratulations Tom Litton

I want to take a moment to thank Tom Litton, president of Litton Property Management, on behalf of the entire self-storage industry, for the outstanding job he did on the National Public Radio program The Connection. The show, hosted by Dick Gordon, examined some of the psychological reasons people store what they do. Tom was joined on the program by Eugene Halton, co-author of The Meaning of Things: Domestic Symbols and the Self and professor of Sociology and American Studies at the University of Notre Dame.

During several of the exchanges between the participants, the potentially negative suggestions about customers spending considerable money on storage were handled by Tom with stories of personal experience and humor from years in this industry. If you did not have a chance to hear the program when it originally aired, you can go to the channels archives and replay the entire program. As of this writing, the following URL will link you directly: www.theconnection.org/shows/2003 /08/20030825_b_main.asp. Again, congratulations to Tom for a job well donefor all of us.

Jim Chiswell is the owner of Chiswell & Associates LLC. Since 1990, his firm has provided feasibility studies, acquisition due diligence and customized manager training for the self-storage industry. In addition to being a member of the Inside Self-Storage Editorial Advisory Board, he contributes regularly to the magazine and is a frequent speaker at ISS Expos and various national and state association meetings. He recently introduced the new LockCheckTM inventory data-collection system to the selfstorage industry (www.lockcheck.com). He can be reached at 434.589.4446; visit www.selfstorageconsulting.com.

Planning your  records-storage facility is the first issue to address after making the decision to enter the business. What size should the facility be? What shape? How big is too big? Where should it be located? What about security? How do you avoid fires? How does racking relate to building dimensions? What are your work-area and office requirements? This article addresses these important issues.

What Size and Shape Should the Facility Be?

Records-storage facilities range from small self-storage units to gigantic warehouses. There are many factors that affect the shape and layout of a facility, so lets briefly discuss each of these issues. In forthcoming articles, I will discuss them each in more detail.

There are three general models for commercial records-management facilities: nontraditional, traditional startup and acquisition. Each involves quite a different footprint and a unique set of circumstances.

Nontraditional records management exists within the walls of another existing business, such as self-storage, moving and storage, courier services, document destruction or warehousing. It presumes several components of operation are already available, with storage space being the first and most important.

What size is best for nontraditional records management? You can begin with whatever available units you already have. The smallest size in self-storage that makes any sense is a 10-by-10-by-8. This configuration is always best designed with contiguous storage units and the highest ceiling height available. Movers and ware housers generally already have an underused facility of varying height. Courier services and document-destruction businesses may need to acquire a small facility to begin. (I will attend to optimum size in the section relating to a traditional startup operation.)

Ceiling height is the prime ingredient. However, be aware there are some ceiling heights that make operations more difficult than others. My experience is ceiling heights between 11 and 15 feet are the least favorable because they require ladders and wide aisles. Once above 16 feet, it is possible to use catwalks or order-pickers more effectively.

Traditional records storage is a stand-alone business or one that grows out of a nontraditional one. I am going to get into a heap of trouble and many an argument from traditionalists here. This is solely my opinion, and there can arguably be many exceptions to it. But let me take my best shot at optimum size in a traditional startup mode.

Everything is relative to your capital structure and ability to carry your business over the initial startup phase up to the breakeven point. I base my recommendations on the ability to sell records management using a consultative approach that yields 100,000 billable cubic feet of storage in 30 months from opening day. When this model is applied, breakeven can occur be between 12 and 18 months, depending on the services you sell. I have seen breakeven occur in the first month of operation when the right services are sold. This is certainly the exception to the rule.

Make no mistakethis is a sales-driven business where value-based services are the key to a fast track toward profitability. That being said, optimum building size is based on sales goals. I recommend a building of a minimum of 10,000 square feet with a 24- to 30-foot ceiling height and the ability to build or lease a second facility of the same size adjacent to or very close to the first. The dimensions of 10,000 square feet by 30 feet of ceiling height yield an average effective billable volume of 135,000 cubic feet, or 112,500 standard box positions. This equals approximately three years until full.

Acquisition has become the favored method of entering the business by those with high levels of capital at their discretion. In this scenario, the purchaser buys the client contracts and may have the option to buy or lease the facility. This, of course, requires a much more careful financial analysis than the first two methods. The major players in the acquisition market review several key issues in making this decision. In some instances, the decision is based on new-client sales-growth expectations, market-share estimates and internal growth rate of the existing client base.

Where Should the Facility Be Located?

In commercial records management, location has more to do with access to trade routes and the client market than anything else. Since clients generally do not come to you, it is best to have a facility not in a highvisibility area, since the real estate cost is usually lower. There is very little advantage to having your facility in a high-traffic area.

Many, if not most, traditional record centers are in office parks or warehouse districts. I usually recommend a startup client begin with a market represented by a 25-mile radius. Sometimes this takes the shape of the interstate highway or local freeway system in your community. Access to your primary client base is the most essential component of the location decisionit should be within one hour of your facility.

What About Security and How Do You Avoid Fires?

We live a world filled with peril. Security, confidentiality and protection from disasters such as terrorism, fire, flood and storm are on the top of everyones mind. The first issue in the development of protection is to secure it as owners and operators. This is done through use of a standard industry contract that provides limitation of liability in regard to loss of client records.

As good stewards of clients records, it is normal and customary to protect your facility with standard intrusion alarms and monitoring services along with fire detection, prevention and protection systems. Of course, the most common and least expensive is a well designed, zoned sprinkler system. You will need to check your own local code enforcement regulations and experts in the design of systems that are suited for densely stored records in boxes.

How Does Racking Relate to Building Dimensions?

Self-storage racking has been designed to optimize standard-size storage units and is available from various shelving resources familiar with the records-storage industry. Believe it or not, traditional records centers sometimes design the racking before they complete the design of the building, since as little as 6 inches in one direction may mean an additional row of racks. Design, density, aisle spacing and bin arrangement are important to maximizing revenue. Always use an expert familiar with commercial records management rack design for this important planning process.

What Are Your Work-Area and Office Requirements?

You will always require some amount of staging and work-processing areas. The space is relative to the number of services you provide. I recommend a minimum work area that will hold eight pallets. Of course, records centers offering professional records-management services may require quite a bit more work space to stage and process boxes. Office space may be adjacent to the facility and may add up to an additional 1,000 square feet to your space-planning requirement.

Regular columnist Cary McGovern, CRM, is the principal of FileMan Records Management, which offers full-service records-management assistance for commercial records storage startups, marketing assistance, and sales training in commercial records-management operations. For assistance in feasibility determination, operational implementation or marketing support, call 877.FILEMAN; e-mail [email protected]; www.fileman.com.

Last September, in the wake of Hurricane Isabel, five states were declared federal disaster areas. Hundreds of businesses were damaged, and more than 30 deaths were blamed on the powerful storm. Hurricane Isabel started traditional rounds of severe fall and winter weather.

As we continue through this winter, its essential to understand your role and responsibility if a severe storm hits your area and damages your storage facility. For example, after a storm, steps and floors are often slippery with mud and covered with debris, including nails and broken glass. There are several steps you should take to make temporary repairs and aid in the filing of an insurance claim.

Assess the Damage

When entering your storage facility for the first time after a severe storm, first check for structural damage. Follow any safety instructions issued by public authorities. Do not touch any downed or loose wires, branches or trees that have fallen on your facility. Do not enter if there is any chance of the building collapsing.

Upon entering, do not use matches, cigarette lighters or any other open flames, since gas may be trapped inside. Instead, use a flashlight to light your way. If you smell gas, exit the premises immediately; do not attempt to find or fix the problem. Do not turn on the power until an electrician has inspected your system for safety. Flood waters pick up sewage and chemicals from roads and other buildings, so be careful while walking around.

Once you have entered the facility and determined its safety, make any necessary temporary repairs to prevent further weather-related damage and injuries. Cover holes in the roof, walls, doors and windows with plastic or boards. Take the proper precautions, and use the appropriate materials to ensure your own safety while making the repairs.

Save receipts for any materials you buy. Depending on your policy, your insurance company may reimburse you for the cost. Beware of building contractors who encourage you to spend a lot of money on temporary repairs. If you pay a contractor a large sum for a temporary job, you may not have enough for permanent repairs. Dont make extensive permanent repairs until after the claims adjuster has been to your facility and evaluated the damage.

Working With Your Insurance Company

Call your insurance agent or company to report any damages to your facility. Ask questions such as: Am I covered? Does my claim exceed my deductible? How long will it take to process my claim? Will I need to obtain estimates for repairs to building damage?

Your insurance company may send you a claim form, known as a proof of loss form, to complete; or an adjuster may visit your facility before youre asked to fill out any forms. (An adjuster is a person professionally trained to evaluate and assess damage.) Your insurance company will most likely provide an adjuster at no charge to you. You also may be contacted by adjusters who have no relationship with your insurance company and charge a fee for their services. These are known as public adjusters.

You may use a public adjuster to help you in settling your claim, but he may charge you a percentage of your settlement for his services, and the fee usually isnt covered by your insurance policy. If you decide to use a public adjuster, check his qualifications by calling your state insurance department. Ask your agent, a lawyer, or friends and associates for the name of a professional adjuster they can recommend. Avoid those who go from door to door after a major disaster unless you are sure they are qualified.

Usually, the more information you have about your damages, the faster your claim can be settled. Be sure to keep copies of lists and other documents you submit to your insurance company. Also, keep copies of whatever paperwork your insurance company gives you. Make lists of the damaged items. Include the brand names and model numbers of electronic equipment. If possible, take photographs of the damage. Dont forget to list items such as office furniture, computer systems, retail items and anything else that might have been damaged inside the office.

Put together a set of records, including old receipts, bills and photographs. This could help establish the price and age of everything that needs to be replaced or repaired. If your facility was destroyed or you no longer have any records, you will have to work from memory. Try to picture the contents of every area and write a description of what was there. Also try to remember where and when you bought equipment and other business-related items and about how much you paid.

Do not throw out damaged office furniture and other items. The adjuster may want to see them. Make a list of everything you would like to show him when he arrives. This should include cracks in the walls, damage to the floor, or ceiling and roof damage.

If damage is likely even though you cant see any signs, discuss this with your adjuster. In some cases, hiring a licensed engineer or architect to inspect the property is essential. If you do have to hire a contractor or engineer, get written bids from reliable, licensed and bonded contractors on the repair work. The bids should include details of the materials to be used and prices on a line-by-line basis.

After a storm, anxieties may run high and headaches abound. But by maintaining calm and communicating with your insurance company and/or agent, recovery can be quick and trouble-free.

Universal Insurance Facilities Ltd. offers a comprehensive package of coverages specifically designed to meet the needs of the self-storage industry. For more information, or to get a quick, no-obligation quote, write P.O. Box 40079, Phoenix, AZ 85067-0079; call 800.844.2101; fax 480.970.6240; e-mail [email protected]; visit www.vpico.com/universal.

Self-storage developers who want to build in the best possible locations are increasingly limited by a shortage of sites in the most desirable populated areas. Available land parcels are usually small, often irregular in shape and always very expensive. These obstacles to development must be overcome to successfully complete a self-storage project in an upscale urban environment. To meet the huge demand for storage space in these areas, developers are turning to architects to design bigger, attractive projects on smaller sites.

So what do these projects look like? How do they work? How do they comply with stringent zoning codes and technically demanding building codes? Why are they successful?

Before taking a look at specific sites, its helpful to summarize the common physical characteristics of these types of projects:

• Small sitesUsually 1 to 1.5 acres, but sometimes as small as one-half acre.
• Multilevel designUsually three or four levels above ground, often with basements and, in rare cases, two basement levels.
• Large floor areas60,000- to 90,000-square-foot buildings are common.
• Large site coverage by buildingsBuilding coverage of 40 percent to 60 percent is common.
• Large floor-area ratiosThe relationship between the size of a buildings area and the size of the site is known as the floor-area ratio. The higher the floor-area ratio, the denser the development. Common floor ratios are 1.0 to 2.0 or more on these types of projects.
• Building heightThree- and four-story structures are 35 to 45 feet high and often contain decorative design towers that reach heights of 50 feet or more.
• Limited parking/loading areaThe large building coverage leaves less than half the site available for driveways, parking, loading zones and landscaping. Maximum efficiency of on-site vehicular circulation is an absolute necessity.
• AestheticsQuality aesthetic design is of prime importance in oversized buildings in highly visible retail/commercial areas. Static box-like design is not acceptable in any sophisticated urban community.

Conclusion

Each project has been successfully guided through the process of:

• Design drawings
• Governmental land-use approval
• Construction drawings
• Governmental-building permit approval
• Construction

This process often takes up to two years due to complexities of obtaining approvals and building in dense urban environments.

These projects have reached ar are reaching occupancies well ahead of projections at lease rates that are the highest in the industry. The bottom line is these facilities provide the customer what he wants: convenient location, easy access, security and quality appearance inside and out. For those developers and operaters who have the patience and knowledge, the returns are worth the effort. For more information, call 949.349.1777.

This month, I gathered a roundtable of experts to discuss the state of self-storage in the Eastern United States. Lets hear what our local experts have to say about their respective cities and regions. Our panel of brokers includes: John Lisowski, Grubb & Ellis, Pittsburgh; Kathleen OBrien, Wexford/OBrien Associates, Arlington, Va.; and Chuck Shields, Beacon Commercial Real Estate, Conshohocken, Pa. Because of the unique economic times, I will also make comments on the national market in contrast to the Eastern market.

Are you seeing a lot of new construction in your area? Are there more large facilities being built or smaller projects?

Lisowski: Special permits make it much more difficult to get zoning for self-storage. Even though the land is zoned for industrial, it is difficult to get zoned for storage. In my area, smaller facilities are being built due to the topographic nature of the land, visibility and lack of zoned sites. The majority of large self-storage facilities being built are conversions.

OBrien: If theres even the slightest possibility for self-storage, the land is grabbed up and developed. There is a high demand for land zoned for self-storage. There are few small facilities being built here at all.

Shields: It is more difficult to get zoning for self-storage. There are many more hoops to jump through and hurdles to get over than with other property types. Im seeing only large projects going up. Once they have the zoning, developers build as many units as they can.

While self-storage is generally strong across the country, this area is unusually blessed in favor of the current owner.

Are you seeing a decline in conversions? If not, briefly describe what is occurring in your area.

Lisowski: One thing I know is when people are considering a conversion, they look for visibility, high traffic counts and good demographics. These are great selling points because they are an opportunity for free advertising.

OBrien: There are beautiful conversions in the downtown Washington, D.C., area. One recent conversion is basically in the shadow of the Capitol Building. Its an old warehouse with excellent location and great visibility.

Shields: Not many conversions are being done in my area. However, there was one recently built in the outskirts of Philadelphia in an industrial area. The building conversion is complete, but the owners are simply building the interior partitions as needed, and the facility is filling up quickly. Ive also seen apartment buildings and office space converted.

These work well because they are usually well-located, highly visible and skirt the high-rent commercial retail districts.

As in other metro areas, many of the good conversions have been picked over. Who would have ever thought self-storage would have to compete with loft developers for deals? Has there been any major shift in occupancy and rental rates in the eastern states? What are the rates like?

Lisowski: In the Pittsburgh area, most of the climate-control units you see are within the city limits. Those facilities who offer climate control usually have narrow target markets.

OBrien: Everyone keeps a close eye on the competition. Theyre always rate shopping. Climate-control units dont bring as great a premium as in Chucks market (see below), maybe 10 percent to 20 percent.

Shields: Occupancy rates are up. I havent found a lot of overbuilding in this area. Rental rates might be creeping up, but not significantly. Climate control is becoming more popular. I see a premium of 25 percent to 40 percent for climate control in this area.

With limits on the supply like they have here, it makes a great market!

Are banks still lending for self-storage? Do you see any obstacles to obtaining a loan?

Lisowski: I think banks are still lending. They are valuing the properties based on lower occupancies for loan purposes, which will increase the down payment and the loan amount.

OBrien: I have a lender that has a 5.75 percent rate, down from 6.25 percent in January. He requires 25 percent down instead of the traditional 20 percent for other real estate types such as multifamily, but he is lending.

Shields: Lenders are becoming more educated about self-storage. They are beginning to understand this business and are able to see these projects for the cash cows they can be.

If you need to finance, dont delay, as the volatility in rates you are seeing may be a sign they are about to change. And you dont want to guess wrong.

In terms of the real estate market and operations, how will 2004 compare to 2003?Howwill it differ?

Lisowski: I see a very stable market. Its been constant, and I dont see it will change much in the upcoming year. This area isnt overbuiltIm seeing people looking to buildor convert, if possible, given the constraint of zoned land.

OBrien: Everything is the same in the nations capital and surrounding environs. The demand continues, and the limited supply of land will continue to hold rates and values for existing properties. It is a good time to buy and to sell, if you are so inclined.

Shields: I think John is right on. Sellers are thinking about the possibility of rates rising and wonder if this might be the right time to sell. Rates are down, prices are up.

There couldnt be a better time to sell, if youre ready. For the most part, I think the market is fairly stable and will be for the next couple years.

I think our group in this part of the world is looking forward to a good 2004.

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.