Real estate investment trust (REIT) W. P. Carey Inc. has acquired three Florida self-storage facilities from Safeguard Self Storage for approximately $25 million. The purchase was made through CPA: 17 Global, one of W.P. Careys publicly held, non-traded REIT affiliates.

The properties include 2,250 self-storage unites and more than 225,000 square feet. They will be managed by Extra Space Storage Inc. The facilities include:

• 31100 U.S. Highway 19 N., Palm Harbor
• 3108 W. Bearss Ave., Tampa
• 2501 22nd Ave. N., St. Petersburg

Located in well-trafficked visible locations in the greater Tampa market, we feel [the properties] are strong long-term assets and, as such, meet our portfolio objectives and our established acquisition parameters, said Anne Coolidge Taylor, W. P. Carey Managing Director.

"We believe that these are very well-positioned and attractive assets. The quality of the assets in combination with the capabilities of the Extra Space management team and our own experience in the self-storage sector makes us confident that this will be a good and stable investment for our investors, added Liz Raun Schlesinger, W. P. Carey Executive Director. We have a strong relationship with the Extra Space team, having worked with them on other properties in our portfolio, and we look forward to working with them in order to maximize the value of these assets for our investors."

Michael A. Mele, a first vice president investments and senior director of the National Self-Storage Group for Marcus & Millichap Real Estate Investment Services, represented the seller.

W. P. Carey is an investment-management company that oversees a global investment portfolio of approximately $13.3 billion. It provides companies worldwide with long-term sale leaseback and build-to-suit financing, and engages in other types of real estate-related investment.

Headquartered in Salt Lake City, Extra Space owns or operates more than 900 self-storage properties throughout the United States and Puerto Rico. The companys properties comprise approximately 610,000 units and about 66.5 million square feet of rentable space.

Marcus & Millichap has more than 1,000 investment professionals in offices nationwide and closed more than 5,000 transactions last year.

Warm & Cool Storage Units, a manufacturer of weatherized door curtains for self-storage roll-up doors, has formed a strategic relationship with Self Storage Equipment Financing, an Atlanta-based company that finances self-storage facility renovations and improvements. The partnership will allow self-storage owners to install large quantities of door curtains at their facilities with a low down payment and affordable monthly payments. This will prevent the need for owners to make a large initial outlay of funds.

A typical drive-up self-storage unit experiences some air flow through the roll-up door and front wall. The Warm & Cool Storage Units weatherized door curtain allows self-storage operators and their tenants to retain heating or cooling within a unit and eliminate unwanted air flow. Even units with no internal heating or cooling can maintain a "cooler in summer and warmer in winter" atmosphere, according to a company press release.

Our new weatherized door-curtain product is gaining traction within the storage industry, so now having financing options to install door curtains, in addition to the existing federal and state financial incentives, is a huge benefit for self-storage," said company president James Ciaciuch. By incorporating door curtains, self-storage operators with outside-facing units can create more heated and cooled spaces, he said.

Warm & Cool Storage Units is the only manufacturer of the patent-pending weatherized door-curtain technology for roll-up doors in the self-storage industry. Headquartered in Port Angeles, Wash., the company serves the U.S. and Canadian markets.

PTI Security Systems, manufacturer of the Digitech and PTI brands of self-storage access-control systems, has released a Universal Gooseneck Stand for use with the company's self-storage keypads. The stand is compatible with the PTI Apex and VP Series as well as the Digitech LC, LX and 700 keypads.

It easily mates to three- and four-bolt keypad mounting patterns. Made of aluminum, it's covered in a no-rust, black powdercoat paint.

You never thought a gooseneck stand would get your attention, but this one features new convenience and outstanding durability, said Lance Comstock, PTI President. "Every tenant interacts with a keypad. Every prospect notices appearance, good or bad. Now is the time to review the 'front door' to your self-storage property."

Comstock, the founder and former owner of PTI Integrated Systems Inc., purchased the PTI and Digitech International Inc. brands from Chamberlain Access Solutions Inc. in late 2011. The security products are now sold through PTI Security Systems, which has more than 20,000 product installations worldwide.

LifeStorage, a self-storage operator with nearly 20 facilities in the Chicagoland area, announced Jane Bushong, manager of the companys Matteson location, has been elected Chicago Southland Chamber of Commerce Ambassador of the Month.

Bushong is featured on the Southland chamber's website, including a brief biography about her personal history and business accomplishments. Bushong has been with LifeStorage for less than a year, but is already making an impact with the company, officials said. She has more than 20 years of sales, marketing, association-management and customer-relations experience.

As a volunteer, it is wonderful to be recognized for the added efforts made on behalf of the Chicago Southland Chamber of Commerce, Bushong said. All of the chamber board members, fellow ambassadors and general members are business professionals and a pleasure to work with. It also provides the added marketing opportunity of having LifeStorage and myself mentioned on their website front page this month.

As a chamber ambassador, Bushong will serve as a volunteer liaison to new and existing chamber members. She is also an elected board member of the Matteson Business Association.

Experience as a former business owner and with previous chamber roles helps me bring new and proven ideas to both areas of responsibility, Bushong said. You know what works and have often experienced some of what does not work. I am proud to be a part of both of these professional organizations and to be a direct part of LifeStorages rapidly growing company.

The self-storage real estate market has experienced an uptick in sales over the past year, with investors once again looking for quality assets to add to their portfolios. In this article, real estate experts representing self-storage markets in the western states discuss trends in capitalization (cap) rates and sales, and areas ripe for new development. The contributors are:

• Jim Berry, CRG Utah, Salt Lake City
• Steve Boldish, Coldwell Banker Commercial NW, Medford, Ore.
• Alan Davidson, Realty One Group, Laguna Niguel, Calif.
• Tom de Jong, Colliers International, San Jose, Calif.
• Jeff Gorden, Eagle Commercial Realty Services, Phoenix
• Joan Lucas, Joan Lucas Real Estate Services, Denver
• Jason Wilcox, Gleason and Co. Commercial Real Estate, Kent, Wash.

What are the cap-rate and sales trends in the first- and second-tier markets in your state?

Berry: There has been little evidence of cap-rate compression between first- and second-tier markets in Nevada and Utah. Asking rates are, for the most part, still in the 6.5 percent range, with deals being finalized around 8 percent. However, that may be about to change. Theres one second-tier property now in the market with a listed rate of 8 percent, and it will likely sell above the asking rate.

Boldish: Oregons first-tier market areas of Portland and Salem have not seen a drop in cap rates from those statewide and continue to sell in the 8.5 percent to 9 percent-plus range. Buyers are seeking the Portland market, but good properties are difficult to find as owners are not inclined to sell. [Online real estate listing service] Loopnet has reported six sales statewide year-to-date, with all coming in second- and third-tier markets. The largest property is just under 25,000 square feet.

Davidson: As available properties are in scarce supply in the major metropolitan areas of Southern California, buyers are casting a wider net into the less populated areas such as the Santa Clarita Valley, the high desert (Victorville/Bakersfield) and the low desert (Palm Springs/Palm Desert). Some examples of recent sales include a 9.58 percent cap in the L.A.-metro area; a property in an outlying county traded at a 9.95 percent cap; and a facility in the high desert sold at a 7.5 percent cap. Cap rates in the major markets have little room to compress, and buyers are willing to pay a premium for properties in outlying areas, rather than overpaying for similar product in the coastal areas.

de Jong: Northern California has seen a compression of cap rates between facilities based on location and quality. Facilities in second-tier markets are generally seeing a lot of interest, although more from local or regional investors, not as much from the institutional or public entities.

Gorden: In 2012 we saw a reappearance of true market-rate sales of self-storage facilities in Arizonas second-tier markets. During the period from 2009 to 2012, there were less than a half a dozen trades in these areas, and all were at some point along in the foreclosure process. In Phoenix and Tucson, cap rates have fallen considerably, and theres just enough interest now in secondary markets to gauge the return premium for comparison. There has been a shortage of available product in the first-tier markets, and communities with a solid employment base will fare well in the coming year as investors look to close deals.

Lucas: Colorado is a bit of an anomaly in that we dont see properties turning as often as in other states. Packages of two to four properties that we consider B or B-plus are commanding stronger rates than in last several years. The reason is simple, the class-A sites just arent for sale at this time. So if buyers are looking in the Colorado market, theyre relegated to acquiring properties less than institutional grade but with big prices. Older, first-generation properties in outlying cities are suffering a bit because theres less demand, thus lower prices.

Wilcox: Cap rates in Washington state averaged 8.4 percent in 2012. Tertiary markets ranged 9 percent to 11 percent, while facilities close to larger metros ran between 6.25 percent to 7.7 percent. I havent seen evidence of cap-rate compression in the tertiary markets. Many investors with whom Ive spoken have expressed theyre being very careful in their site selections, which is reflected by the relative lack of recent sales activity.

What markets in your area present a good opportunity for new self-storage development?

Berry: There are still "free rent" signs in Salt Lake City, and occupancy rates are running as low as 60 percent in some properties. Im aware of occupancy rates in the Reno area as low as 65 percent and in the Reno suburban markets as low as 50 percent. Overall, Utah and Nevada will not likely see an increase of development for some time.

Boldish: Oregon continues to suffer higher unemployment rates than the national average. Other than Portland-metro, all other areas in Oregon are second- and third-tier markets. Southern Oregon is overbuilt at this time, with owners slowly increasing occupancy, but with rental rates still equal to or trailing those of four to five years ago. Portland, Salem and Eugene are still good markets for existing storage properties. Buyers have also been seeking under-performing properties and bank foreclosures rather than new construction.

Davidson: Orange County is the current job engine of Southern California, with Los Angeles a close second, followed by San Diego. San Bernardino and Riverside counties continue to lag behind. The economic bottom has been reached and a long slow climb upward is likely. Population centers are experiencing increased density, and most urban areas are fully built out. As a result, improving existing facilities or converting existing space is usually the least expensive option to meet future demand. Development sites are rare except in outlying regions, and only well-organized and -financed groups will be able to devote the financial resources and time necessary to build new product.

de Jong: Weve seen four facilities built in the past 18 months in the Silicon Valley, mostly on arterials and in-fill locations. The residential market is continuing to improve throughout most of the Bay Area and, as such, we should continue to see quality development opportunities. The biggest challenge were facing is the rising cost and lack of availability of quality sites. Prices for residential land have been reported at close to $100 per square foot in some Bay Area markets, driving the cost of industrial/commercial-zoned land to as high as $40 to $50 per square foot, a challenge for most self-storage developers.

Gorden: There are several areas that present great opportunities for self-storage in Arizona. There are growth areas in the southeast and northwest Phoenix suburbs of Gilbert and Surprise, respectively. New-home sales are brisk, and theres steady job growth. Across the state, boat and RV storage has weathered the recession well and is a strong performer in middle- to upper-income communities and those near recreation areas like Lake Havasu City and snowbird havens like Yuma.

Lucas: There are very few places in the Denver market that could really use another self-storage facility. However, we just completed a study to take a look at whats currently on the drawing boards and were amazed to learn there are 13 facilities totaling well over 1 million square feet in the development pipeline across the Front Range. This is not good news and shows we may be heading into another cycle of overbuilding in the near future.

Wilcox: Nationwide, self-storage supply is estimated at 7.3 square feet per capita. The state of Washington has an above-average supply level at 10.8 square feet per person, and while core metros are slightly overbuilt, occupancy levels are rising. With the delivery of two new facilities in 2011 (Federal Way and Issaquah) and another project in progress in Kirkland, market confidence for long-term demand remains strong.

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] .

Nearly a month after Hurricane Sandy made landfall along the eastern seaboard, self-storage companies continue relief efforts for victims of the storm. Among them is LifeStorage, an operator with nearly 20 facilities in the Chicagoland area, which is working with local writer and filmmaker Ashbey Riley to collect hygiene and household goods to send to New York.

Riley, a former New Yorker who founded Bum Bul Bee Photo and Films, recently launched an effort to collect needed personal items for victims, including tampons, blankets, deodorant, toothpaste, soap and pet supplies. LifeStorage has donated a storage unit at its Lincoln Park facility to serve as a collection point. The collection drive ends Nov. 29.

LifeStorage is one of several local businesses helping Riley coordinate her collection efforts. We're always willing to lend a helping hand, hosting a variety of charity drives and events ourselves, said Michelle Wight, LifeStorage director of operations. In this instance, Ashbey already had a the momentum and plan in place, so we wanted to help out however we could. As a storage company, donating a storage unit seemed appropriate, and we're hoping by Thursday we have a full unit. It's rewarding to be able to help out beyond the city of Chicago, and we thank Ashbey for her efforts.

In Fairfield, Conn., a Westy Self Storage facility has served as a drop-off point for donations to aid storm victims in Connecticut, New Jersey and New York. The company is collecting pillows, pillow cases, blankets, mops, brooms, buckets, batteries, work gloves, shovels, crow bars, sledge hammers, storage bins and contractor-grade trash bags.

Collected items are being distributed through Family-to-Family, a national, nonprofit hunger-relief organization.

Founded in 1990, Westy has six self-storage facilities in Connecticut, three in New Jersey and seven in New York. The company is headquartered in Stamford, Conn..

Elsewhere, Framingham Self Storage in Framingham, Mass., and PODS New England were among the companies that worked with the West Suburban Chapter Massachusetts Mothers of Twins Association to collect and send items to storm victims in New Jersey and New York.

The association, which provides support to parents and expectant parents of multiples in the Boston area, collected new or gently worn clothing, baby-care products, toiletries, nonperishable food, blankets, safety products and pet supplies, among other items.

ONeil Software, a records-management software provider that serves the self-storage industry, held its own collections drive at its headquarters in Irvine, Calif. Employees donated cleaning supplies, toiletries, blankets, towels, toys, warm clothing and other items specifically to aid storm victims in Staten Island, N.Y., an area hit particularly hard by the hurricane and the hometown of one of its employees.

We just couldnt stand by and do nothing, said Ian Thomas, executive vice president. Although this employee now resides in Long Beach, Calif., we realize that home is not necessarily where you live, but where you love. And Staten Island is her hometown and a great part of her personal history. Somewhere in the middle of all this sadness, ONeil wanted to instill a sense of relief, hope and recovery to those suffering.

The company coordinated its efforts with a Staten Island school to have donated items distributed to residents in need.

Self-storage operators around the world continue to find meaningful and creative ways to serve their communities during the Christmas season. One storage company in the United Kingdom is offering space to hide gifts, while U.S. operators partner with nonprofit groups to clothe the needy.

Dainton Self Storage, which operates eight facilities in Southwest England, is offering free elf storage for holiday gifts that are either too large to hide at home or customers just want to keep away from prying eyes. The company has reserved one unit at each of its facilities for residents to use on a first-come, first-served basis. The promotion is open to all residents, not just existing customers.

"We thought a secret Santa storage unit would be a perfect way of introducing people to the benefits of having access to self-storage, so we have set aside a special container at each of our Westcountry depots," said Shaun Duncan, Dainton's operations director.

Participants can use one bike space or fill an extra-large box with as many presents as they can fit. The box is then sealed and stored in the designated unit. Presents can be picked up on or before Dec. 24.

In the United States, Storage Post Self Storage has partnered with Jersey Cares for the groups statewide effort to collect warm winter coats for those in need. Both of Storage Posts New Jersey facilities are serving as public collection and drop-off sites for donations, and the company will use its moving trucks to deliver the coats to the Jersey Cares warehouse.

Participants are asked to bring freshly laundered and gently used coats to Storage Post's Linden or Jersey City locations. Collection boxes will be prominently displayed in the front offices throughout the coat drive. Only coats will be accepted as donations.

"This year, more than ever, we need to spread the warmth to the people of New Jersey. [Hurricane] Sandy has left people without homes, without electricity and in direct need of assistance," said Jack Chaney, Storage Post chief operating officer. "These coats can make all the difference for New Jersey families and individuals during the winter weather."

This is the 17th year Jersey Cares has operated its coat drive. The organization encourages civic involvement and also coordinates programs for park revitalization, statewide days of service, and school supply drives.

Headquartered in Atlanta, Storage Post has locations in Georgia, Louisiana, New Jersey and New York.

Storage Village, a self-storage operator in Maryland and Virginia, reported a record coat-collection drive this year, totaling 104 coats, 19 sweaters, two blankets and 107 pounds of additional clothing for residents in the communities it serves.

All five of the companys locations partnered with a local nonprofit group to make sure the coats benefit those in their community. Storage Village is grateful to work with our community to help keep our neighbors in need warm this winter, said Storage Village President L. Goldberg.

The companys annual coat drive is one of several ways it gives back to the community. During the year, all employees volunteer at least eight hours per month at a nonprofit of their choice. Storage Village is also hosting a Toys for Tots Drive at each of its locations.

A-1 Self Storage, which operates 42 facilities throughout California, has exceeded $1 million dollars in kiosk rental transactions for 2012. The company employs INSOMNIAC self-storage kiosks provided by OpenTech Alliance Inc. at 15 locations.

A-1 is on target to complete 1,000 new move-ins via its self-service kiosks this year and expects to handle more than 10,000 consumer transactions by year end. These milestones emphasize the ongoing success of modern self-service technology throughout the self-storage marketplace, according to an OpenTech press release.

"Adding the convenience of onsite self-service at our facilities has become a bona fide competitive advantage. We are making it very easy for customers to do business with uswe're always open," said Brian Caster, president and CEO of A-1 parent company The Caster Cos.

"Caster Properties has been a customer of ours for several years, and they are consistently looking for new ways to improve the level of convenience and service they offer their customers. They have been a driving force behind many of the new enhancements we have made to our products. We are very happy to see that their investment in our self-service solutions is paying handsome dividends," said Robert Chiti, president and CEO at OpenTech.

Based in San Diego, A-1 Self Storage has 17 locations in the San Diego County area and more than 40 locations statewide.

Caster Cos. is a third-generation, family-owned company headquartered in Southern California since 1959. It develops and manages A-1 Self Storage, A-1 Car Storage and other commercial properties in California. Its portfolio includes more than 4 million square feet of real estate.

 Phoenix-based OpenTech is the developer of INSOMNIAC self-storage kiosks as well as other rental solutions including the INSOMNIAC Live! Call Center, INSOMNIAC Online rental applications (Web and mobile), INSOMNIAC ILock Security System and INSOMNIAC LiveAgent! software products.

By David Blum

Its often said that when one door closes another opens. This has been the case for self-storage development. Though new development in the United States has shriveled since the peak years of 2003 to 2008, and the volatile economies of many European countries have limited expansion in that region, a bright spot of opportunity exists in Central and South America. Stronger economies; a growing middle class; major commercial, retail and residential development; and year-after-year growth in gross national product have begun to crack open that door.

Since 2004, Ive been fortunate to work with potential developers throughout Central and South America. I first traveled to Sao Paulo, Brazil, to work with an American-based investor who had the vision to bring American-style self-storage to a country where the product was virtually unknown. At the time, there were fewer than 25 facilities throughout Brazil, which had a population of close to 200 million people. Most of these operations were the equivalent of pre-first-generation U.S. stores.

Over the next six years, Guarde Aqui built three high-end projects. In 2011, 70 percent of that portfolio was sold for $56 million to Equity International, a major American development conglomerate with more than a billion dollars invested in Brazil. Equity, along with many other capital investors, saw the potential growth of this segment and wanted to own and expand the branded operation.

Challenges Remain

Each country offers unique obstacles to overcome when developing self-storage. In Brazil, though much has changed over the years in terms of product availability and resources, some things have remained the same. The challenges we faced with those first three projects still exist.

For example, the simple task of registering the corporation, which used to take 18 months, can now be completed in about six. In the United States, we're accustomed to this process being complete in a matter of hours. In the past, we had to import products like security systems, doors and hallways from the States at the additional cost of a 93 percent duty. Today local steel manufacturers produce adequate hallway systems.

The involvement of Equity International brings a whole new level of sophistication to the Brazilian self-storage market. But even with the company's resources, the task of finding suitable locations, either for conversion or new development, is hindered by the rapidly rising costs for land and buildings. The company is just now developing a project in Riberao Preto, one of the largest and wealthiest cities in the interior of the State of Sao Paulo, according to Adriano Araujo, director of operations for Guarde Aqui.

All attempts to open new facilities involve obstacles. The complicated bureaucratic government agencies have little or no knowledge of the self-storage product. The approvals continue to be slow and time-consuming," says Araujo. "We continue to be viewed as distribution centers and traffic-generators. The requirements are outrageous and nonsense. Add to this the additional barriers to entry such as land or building costs, high duties on imported supplies, limited or no local expertise, and virtually no operating software in the native Portuguese. Yet the demand keeps growing.

Expansion Despite Difficulties

Development challenges have not stopped the explosive growth of self-storage throughout Brazil, where there are now more than 100 facilities. Most are in the major capital cities such as Brasilia (which just opened its first facility in July), Belo Horizonte, Porto Alegre and Rio de Janeiro, to name a few. It is expected that there will be continued expansion in other interior capitals, says David Moura-George of StokArea, a new Sao Paolo company that plans to grow to four facilities.

There are an estimated 200 million people in Brazil. Even though only a portion of that population is potential self-storage consumers, there are still more than 40 million prospects being served by less than 6 million square feet of storage.

It's also important to keep in mind that the customer base is predominately commercialclose to 70 percent compared to 30 percent in the U.S.due to the lack of alternative logistic solutions for small businesses. However, Moura-George indicates StokArea is seeing a slow growth in consumer business, bringing the mix closer to 50/50.

There are fewer than 300 self-storage facilities in all of Latin America. With a population of more than 500 million, the region's growth potential is easy to see. Though there are still many challenges, opportunity clearly abounds. As more and more small operators surface, the common issues will ultimately be addressed. Government agencies will grasp the uniqueness of this business segment, more local resources will be developed, and sophisticated operators will bring a much needed rise to the level of operation.

David Blum owns and operates Better Management Systems LLC, a consulting practice he launched in 2003 to assist self-storage clients worldwide with issues of self-storage feasibility, development and management. He currently works in Europe, Greece, Israel, Mexico, South America and the United States. Since entering the self-storage industry in 1996, he has also worked as a district manager for Storage USA and vice president of operation for Budget Mini-Storage in South Florida. He helped co-found the Florida Self-Storage Association in 1998 and is a frequent contributor to industry trade publications. He can be reached at 954.255.9500 or [email protected].