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.

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.

 

Web-based reporting. Digitally recorded phone calls. Digital photos. Online reports burned onto CDs. Palm Pilots and laptop computers. Certified professionals. Same-day report turnaround. Instantaneous summary updates for true, real-time reporting. These are just some of the latest advances in the valuable business tool known as mystery-shopping services.

Here is a summary of mystery-shopping for those who may be unfamiliar with the concept: A mystery-shopping company works with your business, learning about a typical customer or typical prospect scenario, which will ultimately be developed into a mystery-shopping program. The shoppers are then screened and coached on following these scenarios to call or visit your properties and evaluate your employees performance. Most companies attach rewards and incentives to these programs to reward employees for outstanding accomplishments. What happens during these moments of truth can be the difference between success and failure for your business.

In the last few years, advances in mystery-shopping services have been truly astounding. The difference between todays services and those of the recent past is like that between e-mail and smoke signals. Some of you may recall the old days (actually just a few years ago) when paper-based reports were sent via the mail or faxed, sometimes more than two weeks after the onsite visit. Cassette recordings of mystery-shopper phone calls (if any recording was even made) arrived two to three weeks after the call was placed. Some of you are probably still using companies that do this.

Todays leaders in the field of mystery shopping have made substantial investments in technology as well as highly skilled people trained in its use. This has not only improved the speed of reporting turnaround, but has added verification capabilities and tremendous value for clients. These advancements keep the cost of mystery shopping relatively steady, while the costs for other business-support services have risen, in some cases dramatically. And no other service can tell you exactly what happens to a prospect or current customer when he calls or visits one of your properties.

Digital Recordings

One of the coolest, newest developments for self-storage operators in the realm of mystery shopping is digital recordings of calls made to locations by mystery-shoppers, as well as digital photos of properties taken during in-person visits. The days of relying on latearriving paper reports and/or cassette tapes are overyesterdays news.

While some companies have been making recordings and supplying such tapes to their clients, there are usually delays in the time between the call and receipt of the tapeup to two weeks, if not more. If they send them quicker, overnight-mail charges are usually applied. By then, more than 100 other prospective customers have phoned your location. How many were actually converted to customers? How many could have been handled better and signed with your competition instead?

Todays leading mystery-shopping companies record calls digitally, adding links to a web-based call report for their clients, who can actually listen to the recording while viewing the report! The best part is the reports are usually sent the same day the calls were made. If an employee is caught taking great care of and appropriately handling a caller, he can be instantly rewarded to encourage and reinforce the positive behavior. If he did not handle the call appropriately, youve got an immediate opportunity to review it with him, and retrain him how to perform better and be successful in your organization. It is valuable to do so before he handles any more callers in the same unwanted manner.

With the advent of digitally-recorded calls comes another major benefit of equal or even greater importance to speedy turnaround: Recordings of the calls give you the ability to hear the tone and emotion in your employees voice in addition to exactly what was said. This can be turned into a tremendous training tool for present and future employees. It also gives you the opportunity to verify the mystery-shoppers are doing their jobs correctly.

Clients are encouraged to share the reports and recordings with their employees so they can hear themselves in a real situation. Its like having a mirror next to your phone: Watch yourself on a call, and its impossible not to see the emotion youre exhibiting. The calls can even be burned onto CDs to give the employer/employee a clear record to use in future training sessions. (Note: Each state has its own laws regarding recording of employee calls. Your mystery-shopping company can provide you details to ensure your compliance with them).

Digital Photos

A picture really is worth a thousand words. Or, in a competitive business like yours, it could be worth a thousand dollars! Digital photos are invaluable tools to selfstorage operators and can be used to evaluate the condition of a property at the moment of a surprise visit, verify that units reported vacant really are, and record any other items for which visual verification is beneficial.

As with digital recordings, digital photos can be linked directly to a site-visitation report so clients can view the report and the photos simultaneously. As with call recordings, this technology results in fast turnaround of reports, usually within 24 to 48 hours of the visit. Digital photos are used to assess many factors at self-storage facilities, including:

• Office condition
• Signage
• Property maintenance
• Landscaping
• Vacancy verifications
• Safety and hazards
• Insurance verifications

Youve Got Mail

The biggest advance in mystery shopping has come with the many options presented by the Internet. In the not-too-distant past, providers would mail out assignments to their shoppers, who would hand-write their reports and mail or fax them back. The reports would be given a quick scan by a proofreader, sometimes hand-corrected, and forwarded to the clientagain, usually via mail or fax. A span of three to four weeks between shop and report was not uncommon.

Some providers eventually developed databases into which the reports were entered by a data-entry team. At the end of the month, if any roll-up/summary reporting was provided at all, it may have been cut and pasted.

Today, web-based reports, ready for the client to view the same day of the visit or within about 48 hours, are the norm. They can be sent automatically via e-mail, and the client can log on to a secured website to view summary or roll-up reports. Roll-up reports are integrated, updated in real time each time an individual shop report is approved. Viewers can compare locations, regions, etc., to each other and over the history of a mystery- shopping program. Reports can be sent simultaneously to multiple people, such as the owner, regional managers and each site manager.

Shopper Certification Takes Off

Earlier this year, to help improve overall skills and assist members in improving the quality of reporting, the Mystery Shopping Providers Association (MSPA) began offering a certification process for interested mystery-shoppers. There are currently two certifications available: Silver and Gold.

Silver certification requires a shopper to take an online test aimed at assessing his general knowledge about what it takes to be a good mystery-shopper. If he passes, he is given instant feedback and awarded Silver certification.

Gold certification is open only to shoppers with Silver certification, and requires them to attend a one-day seminar. Led by a former mystery-shopper, professional author and trainer, these seminars cover many of the issues shoppers are required to know and comply with in the course of their duties.

As of September 2003, more than 4,000 shoppers were awarded Silver certification, and more than 600 were awarded Gold certification. The MSPA is offering seminars through the end of 2003 and will continue in more than 40 locations in 2004.

Todays mystery-shopping programs are sophisticated, proven business tools that, executed and used properly, provide operators a significant strategic advantage over their competition. Using the latest technologies, certified shoppers, advanced analytical tools and other professional methodologies, mystery-shopping providers have assisted their clients in dramatically improving how callers and visitors are handled, and have helped them convert more prospects to customers. In short, they have made themselves exponentially more valuable to their clients than ever before.

Ron Welty is the president of Perrysburg, Ohio based IntelliShop, a national provider of mystery- shopping and other customer-experience measurement services. For more information, call 877.894.6349; visit www.intelli-shop.com.

This column is for the purpose of providing general legal insight to the self-storage field and should not be substituted for the advice of your own attorney.

At first glance, the topic of this column may not seem like my normal fare. This one is more of a suggestion. But first, a question: How well do you really know the person you may allow to move who-knows-what into your multimillion-dollar investment tomorrow?

Before you answer, I know the average tenant only stays for six months, the industry is suffering along in a bad economy like every other, and this business is incredibly price-sensitive. This is particularly true in Ohio where operators have just had to add approximately 7 percent to their rent in the form of a state sales tax beginning August 2003. I also know not all of your tenants have A-rated credit. The industry has a segment of clientele that is temporarily between housing or trying to get a fresh start after a separation, divorce, bankruptcy, death of a family member, etc. I will also state, you do not want to get too involved with your tenant’s situation, lest somebody claim your business to be one of warehousing instead of self-storage.

That being said, I still think you need to know more about your tenants in addition to collecting driver’s license information, a credit-card number and an emergency-contact number. There are some other quick resources you can have at your fingertips when a prospective tenant tries to rent from you. These are items you can look up on the Internet, either through public records or a private subscription service, which may help you avoid those tenants who are dangerous risks to your facility. Following are a few examples:

[1] If you were able to look at tenants’ credit reports or summaries of their credit, you would quickly recognize there are some people to whom it is simply not worthwhile to rent. For example, if you were able to see there were 15 credit-card companies, mortgage lenders, auto-loan companies, etc., actively collecting from a prospect or that have made profit-and-loss write-offs in the last year, would you not imagine this tenant is a perfect candidate for bankruptcy?

The risk is that after placing his possessions in your facility for 30 days, the tenant may file bankruptcy and tie you up for 60 to 90 days before you can commence your lien sale; and while you may get Relief from the Automatic Stay, it will then be 30 to 60 more days before the lien sale or eviction is completed. On top of all that, you will probably spend $750 to $1,500 in attorney’s fees to get to that point. I venture to say the tenant I have described is a guaranteed money-losing proposition for your facility.

[2] If you could see that a tenant files a lot of lawsuits against people, including landlords and credit grantors, might you want to avoid being the next target? By checking certain court records, you can detect a trend wherein certain prospects are never happy with anything except a lawsuit at the end of a relationship. I know most of you want to say you are lucky enough never to have been sued, but still, if you take on one of these litigation-happy malcontents, would you not agree you are almost certainly setting yourself up for a loss?

[3] If you could look to see whether the person has been convicted of any crimes and, if so, what crimes and how recently, might you want to reject that tenant’s application? Certainly you have to set limits, and I am not advocating you refuse rent to anyone who has ever been given a payout ticket for marijuana. On the other hand, what about recent counts of aggravated arson, hazardous-waste transport and disposal without proper EPA licensing, fencing stolen property, petty theft from other self-storage facilities, etc.? What about previous drug convictions, particularly operation or distribution of substances you can manufacture in a self-storage facility, such as methamphetamine?

Under federal drug-forfeiture laws and, even more strictly, certain state drug-forfeiture laws, if you knowingly and intentionally rent a premises for the use, manufacture, storage or distribution of a controlled substance, liability can be imputed on your business, and you can have your property forfeited to the government as part of a drug seizure or be fined. This happened recently to a business that allowed its commercial spaces to be used for teen parties known as “raves,” where methamphetamine had been distributed and consumed. The owner was fined $2 million. The government seeks to not only punish the manufacturers, distributors and consumers of the drug, but the people who allowed the party to occur on their private property.

Please do not read this article to say that if you accidentally discover a methamphetamine lab in your facility you should not report it to the police for fear of drug seizure. The terms “knowingly and intentionally” have very specific definitions. Stumbling across someone making drugs or having a drug dog sniff it out should not constitute the actual knowledge. However, if you have been watching videotapes of people bringing 50-gallon barrels of farm fertilizer in and out of your facility and have not done something about it, you may be subject to liability.

Prevention Is Your Best Cure

This is a different day and age for the self-storage industry. Your tenants seem much more willing to put off paying rent for longer periods of time, allowing more and more property to go to lien sale; and they seem much more willing to sue a facility when property is damaged or their goods are sold, even if done so properly. Your tenants are storing hazardous waste or using your facilities for the manufacture of illegal substances more than ever before, and I fear this is a trend that will continue.

My hypothesis is the more strict your standards for rental, the more likely you are to discourage these kinds of people from storing at your facility. I cannot promise you can rid all self-storage facilities of these sorts of people; however, the smart readers of this column can put up enough barriers to entry.

What Next?

So what can you do to look more closely at your prospective tenants? The first and simplest thing is to make sure you have a strict photograph- identification requirement. You should never rent a unit to a tenant who cannot produce at least two pieces of photo identification, one of which is government-issued, including either a Social Security number (SSN) or individual taxpayer-identification number (ITIN).

The second thing you can do is use the Internet, which has become a wonderful tool for checking backgrounds if used properly. There is a lot of free information out there. The first place I would check, which will only add a few minutes to the verification process, is the website of the Clerk of Courts in the county or counties where your applicant most recently resided. Hopefully, your rental contract asks for at least one prior address if the current address has not been the tenant’s permanent address for at least one year.

You should contact your local Clerk of Courts to determine whether it has a searchable database by name of civil lawsuits and criminal charges or convictions. Most counties now do. If you don’t know where to turn to find your Clerk of Courts website, you can search for it at www.courts.net. It is worth playing around on the website to see what sort of information may be out there for civil records.

For lawsuits, I recommend you check the lowest level above small-claims court your county may have. Normally, this is a “District” or “Municipal” court. These are where small to medium-size lawsuits (in terms of dollars) are filed, and they normally handle evictions. If your tenant shows up as having been evicted five times in the last year, or has filed many lawsuits against creditors or prior landlords, you may want to reject him.

If criminal records are available, you might be able to do a quick check to see if your proposed tenant has criminal convictions and, if so, for what crimes. In your county, you may need a criminal-records release, which might slow down the rental process. Even if you do not actually conduct the criminal-records check, if you ask for the release to do so, it may be enough to scare off a prospective drug manufacturer or other type of offender.

Additionally, for a relatively low price, you can join one of the three major credit bureaus and pull actual credit profiles on your tenants. You do have to enroll with these services. The three major ones are Equifax, Experian and TransUnion. Information about each of these can be obtained on the web or by looking for a customer- service number in your phone directory:

• www.experian.com
  (800.831.5614)
• www.equifax.com
  (888.202.4025)
• www.transunion.com

Once you join, you have Internet access to a database where you can enter a tenant’s name and Social Security number and, in about 15 seconds, have a credit report. There is some training you will need to understand how to read a credit report or abstract, but it is not difficult. With a credit report, it will not take you long to develop a standard for where you want to draw the line with tenants.

I have one final and very important point: If you are going to establish some sort of screening process, you must be consistent in the application of your screening criteria. That is, if you are going to reject anyone who has had a prior felony conviction for distribution of controlled substances, you must reject all applicants who turn up having that type of conviction. You cannot deviate. You also have to set and maintain a standard for the number of prior evictions, lawsuits, open collections, unpaid bills, etc., that will cause you to reject a tenant. I am not asking you to set the standard very high at the start. If you set a standard for unpaid debts, evictions or criminal convictions, you may deter undesirable tenants from the outset.

About five years ago, some companies tried to sell credit- and criminal-screening services to self-storage facilities as a package on the Internet. These services never got off the ground because owners were hesitant to charge the $5 to $7 extra it would cost to have a complete report. I contend it is a small price to pay to avoid having your unit not earn income for three or more months while you perform a lien sale.That wait could be even longer if you are trying to get a bankruptcy stay lifted, or the hazmat team has to clean up and investigate a meth lab.

I am interested in hearing from readers as to whether there would be interest in using a comprehensive screening service if one became available. If you are interested, or if you believe it is an awful idea, please drop me an e-mail at the address below. In the meantime, there are precautions that are fast, inexpensive and easily available. They may give you enough information about a prospective applicant or tenant to save you hundreds—maybe thousands—of dollars in lost revenue and attorney’s fees.

Jeffrey Greenberger practices with the law firm of Katz Greenberger & Norton LLP in Cincinnati, which primarily represents owners and operators of commercial real estate, including self-storage. Mr. Greenberger is licensed to practice in the states of Ohio and Kentucky, and is the legal counsel for the Ohio Self Storage Owners Society and the Kentucky Self Storage Association. He is a regular contributor to Inside Self-Storage magazine and the tradeshows it sponsors. For more information, call 513.721.5151.

You did your feasibility study, went through the tedious trial of getting your plans approved, built your site, hired your managers and opened your doors for business. You have been open for several months now, but the rentals are just not coming as projected. Perhaps during the year it took you to go through the planning stage and the building of the site, other sites were being completed, converted or were on the drawing board. Competition is now very stiff in your area. What can you do to increase rentals and get your share of the market?

Your site has been established for years. You always enjoyed a 95 percent occupancy rate, but that has been steadily dropping over the past year, and now you can't seem to get above 80 percent. What is happening in your market area? Why can't you increase your rentals? Chances are you could be experiencing the effects of an overbuilt market. What can you do to combat this scenario?

Every day you see a new storage facility being built on what seems like every street corner or freeway exit. Your site is not movable; you can't change that. What you can control are three key factors: management, marketing and pricing.

Management

Your on-site management personnel is one of the key elements in the success or failure of your facility. The manager will make or break you. Selecting the management staff is not an easy task: It takes time, diligence and common sense. Each facility has a personality, and in order to make your facility a success, you must choose a manager who's talents and personality will match that of the facility. A facility that is in an economically challenged area may need a manager that is a little more down to earth and hard-edged than a facility that is in an upper-end area where your clientele may identify better with a "yuppie"-type manager.

Once you have selected your manager, you must train, review and retrain them. Shop the other facilities in the area and see how your manager will compare to theirs. A manager at a 20-year-old facility who is customer-service oriented keeps his facility spotless, has marketing ideas and is willing to institute them, possesses good telephone skills, and can run rings around a mediocre manager at a brand-new, state-of-the-art facility. Remember, facilities don't compete for tenants, managers do. If your manager is not productive at your facility, then you must ask yourself if it is tools they are lacking, such as training, or whether it is something you probably can't change, such as a negative attitude. If so, then you must make a hard business decision and consider replacing that manager.

In a saturated market, not only do the on-site managers need to compete for tenants, but the owner must also compete for quality management. With new sites popping up almost monthly, not only does the tenant have a choice of where they might store their goods, but the quality manager now also has choices of where and who they will work for. As part of your feasibility study, you should have shopped the other facilities in your market area. If you did, then you will know who the top managers are. If those managers feel they aren't given the opportunity to manage, that they can't make onsite decisions, they are always micro managed, etc., (and, by the way, this is probably the number-one reason managers call my placement service seeking other employment), then these good managers will seek employment with the new facility being built down the road.

Owners should keep in mind that good management is worth its weight in gold. Paying managers a few hundred dollars a month more than the other guys in the area is just a drop in the bucket compared to the thousands of more dollars a good manager can bring in each and every month. A progressive bonus program, retirement plan or medical insurance, not to mention quality housing, if any, should also be considered when an owner competes for management staff.

Marketing

Marketing is one of the key factors in a saturated market area. Most managers and owners think marketing is the largest Yellow Pages ad they can afford. In a saturated market, the manager must not rely on just the Yellow Pages ad to make the telephone ring, they must extend extra marketing efforts, and the owner must be willing to spend the money to support the manager's marketing efforts. The old saying "it takes money to make money" is so true when it comes to marketing and having a successful investment.

Knowing your market area will determine your plan of action when designing a marketing program. Obviously, a facility in an industrial, commercial area will market differently than a facility in a residential or rural area. Larger cities will market differently than the smaller college or military communities. Gather your facts, i.e., places to market, items you will use in your marketing efforts and the costs involved. Marketing will consist of the old, tried-and-true methods--outside ads in local publications, flier distribution, community involvement, print, audio and visual media, cold calling, etc. No matter what method you choose, the key factor is actually doing the outside marketing. You should have some checks and balances in place to make sure the marketing is getting done, then track the results of your efforts. Unless you are Bill Gates, you probably don't have enough money to throw away without knowing if the money you spent or the efforts you extended are paying off.

Motivating your on-site management staff to actually market is one of the most difficult tasks for an owner or supervisor. Not all managers are cut out for outside marketing, and trying to force a manager into a position he is not comfortable with will only cause your marketing efforts to fail. Look at your management staff, see which manager possesses the skills needed for outside marketing and make that manager your marketing expert. Your managers need to understand that in an overbuilt market extra efforts need to be utilized that perhaps didn't need to be in place several years ago. If you are just opening a new site and hiring management staff, then be sure to explain in detail and in writing the manager's job duties, your expectations and goals. If you have an existing site and staff, then now is the time managers down and explain the market situation and how you will work together to get your share of the market.

Pricing

Lastly, pricing must be considered in a saturated market. If you have recently built or are considering building a new site, then part of your feasibility study consisted of shopping your competition and obtaining different site's rental rates. If you are an existing facility, then your management staff should shop the competition a minimum of every three months. To the tenant, price will very often determine where they chose to store their goods. Part of your manager's telephone training should be to use verbiage such as, "We are all within a few dollars of each other. You should not only be shopping price, but should also consider location, hours of access, convenience and so on. Please come in and have a cup of coffee with us and let me show you our complex."

You must price your facility competitively. Perhaps a newer, state-of-the-art facility with individual door alarms, video cameras, extended access hours, etc., or a facility with higher ceilings, hence more cubic footage, can charge more for their space than another facility in the area. However, this information must be expressed in all printed advertisements and utilized in the manager's telephone presentation in order to be effective in closing the rentals.

Discounting seems to be a way of life in the self-storage industry, but in my opinion, it is not healthy for the industry. It causes price wars and lower income. It erodes a manager's telephone sales presentation where all they have to "sell" is price--it's easier than taking the time to sell the facility and what they have to offer the tenant. I know of some independent companies that offer "pay three months, get three free--pay six months, get six free." Obviously, my managers in that market area had to be trained, motivated and focused on renting their space and competing within that market. If you must discount, then be competitive with what is happening in your area. Only offer one type of discount, i.e., pay two months, get the third free, or a 10 percent senior discount, but not both. Your discount program should also have an ending time, i.e., pay half price the first two months, then your rate goes to the standard rental rate.

Remember that your management staff, your marketing efforts and pricing of your space all go hand in hand when getting your share of the rentals in an over-saturated market. Don't be afraid to try new and unconventional marketing ideas. Don't be afraid to replace management staff that refuses to market or has a negative attitude. Don't be afraid to be competitive in your pricing or discount program. Tread into the uncharted waters; each facility, manager or community has its own unique personality.

With the year 2000 upon us, we begin to wonder where our industry will head. We know that as the population continues to grow--along with our need to amass as many personal items as possible--that storage will always be a needed commodity. What new security items, marketing techniques and management profiles we will need in the future is uncertain. One thing that is certain is that a saturated marketplace is something that we all will probably encounter. If we cooperate and keep our rates level, there will be enough business for everyone, and we will all make money forever.

Pamela Alton is the owner of Mini-Management®, the largest nationwide manager-placement service serving the self-storage industry. Mini-Management also offers full-service and operations-only property management, policy and procedures manuals, sales and marketing training manuals, inspections and audits, consulting and training seminars nationwide. For more information on the various services offered by Mini-Management, call (800) 646-4648.

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].

Many people go to work each day unable to absorb all the events that occur. We often run on autopilot. Our first and only goal is to cover as much as possible and get through the day. It is no wonder our society is pressured for time, overstressed and exhausted.

One of the biggest issues we face is communication in the workplace. This can go two wayspositive or negative. Positive communication involves the ability to ask and/or answer questions, being aware of your surroundings, and making decisions based on factual information. It also involves remembering that action creates reaction, and your behavior in any given situation will bring about a response from those around you, whether good or bad.

The best way to avoid a negative outcome is to be well informed, factual and rational in your dealings with others. Do not allow emotion to prevail. When communicating with fellow staff members or customers, use positive reinforcement and make eye contact. This reassures the other person of your sincerity and confidence. Remember, communication cannot be reversed, but it can be rehearsed. Listeners tend to filter messages through perception. Your body language, tone of voice and words all play a role.

Unjustly criticizing someone, not listening to suggestions, using harsh language, dismissing someones needs, making sarcastic comments or forcing someone to think the way you do is not logical or professional. This will not gain respect or enhance productivity. Instead of reacting immediately to a difficult situation, take the time to sort through all of the information. Is it factual? Do you need more information before addressing the situation? Is it affecting you personally?

The key to giving and receiving communication without having information misconstrued is to train yourself to think before you speak. Select your words carefully. Be responsive, but do not react personally. Identify the issue and direct the conversation toward problem-solving.

One negative form of communication is gossip, which can be like poison to everyone involved. It is built on opinion, emotion and myth. Facts get manipulated. What usually results is deflated work performance, lack of productivity and low morale.

To create a positive work environment that dissuades gossip, it is important to have an open-door policy with employees. Set time frames and provide follow up and feedback. Plan conversations ahead when possible, and begin with the end result. Have a strict no-tolerance policy on gossip. Effective communication when instructing this policy will help prevent the spread of misinformation through the company.

Take ownership for your actions. People and situations cannot improve if problems are not identified and addressed. Do not attempt to give constructive criticism when you are stressed, angry or tired. Timing is everything. By demonstrating the work ethic you expect, you will be a role model for co-workers and employees.

Trina Van Alstine is the administrative support manager for Lyons Investment Properties LLC of Newport Beach, Calif. For more information, call 949.752.5000.

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.

The average self-storage customer calls four to five stores before deciding where to store his belongings. He has more choices and is making a more informed assessment. On the other hand, the average self-storage operation converts less than 35 percent of its callers to renters. This trend will become a greater concern in the future, especially in those selfstorage markets that have reached points of over-saturation.

One of the most successful ways of overcoming the effects of competition is to educate, evaluate and improve the performance of your staff. This can be done through developing and implementing an effective training program. Once you achieve this, it is imperative systems be in place to properly measure what it is you want to improve. For example, one of the best ways to improve the phone performance of your staff is to hire a mystery-shopping service.

A mystery-shopping service calls a self-storage location posing as a prospective customer. The conversation is recorded and an evaluation provided on how the employee handled the call. This is a great way to assess and provide feedback on your staffs sales presentation.

Once the evaluation and audio tape are received, it is critical to use them as positive training tools to improve the effectiveness of your staff. The feedback should be provided by the person responsible for training the shopped employee. The positive points of the sales presentation should be provided first, with areas for improvement presented last. The audio tape will allow the employee to listen to how he articulates the sales presentation and make necessary adjustments. It will also make him better at overcoming customer objections.

If the employee achieves a high score on his shop evaluation, reward him for a job well done. This will reinforce the expectation of a good performance and give him an incentive to perform better on his phone performance. Consequently, this is also a great opportunity to increase the amount of callers your employees convert to renters.

When choosing a mystery-shopping service, it is important to use a service that specializes in the self-storage industry and can make the appropriate recommendations. Be sure it offers a recommended sales presentation and quality charts and graphs for measuring ongoing performance.

It is also imperative to offer ongoing training to keep your people as proactive as possible. This will break up the boredom during slow times and keep staff focused on the bottom line. For example, train your managers to conduct a thorough competition study. Once they are up to speed, have them shop the competition on an ongoing basis to find out as much as they can about their market areas.

This information will become invaluable, as managers will learn the advantages they have over their competitors. It is critical to empower each manager to teach this information to other staff members, as this will make him part of the team and accountable for the performance of his store.

Knowledge of the marketplace will also assist tremendously with the sales presentation by equipping each employee with the opportunity to educate and build value with customers, pointing out the facilitys unique advantages. The results of this training and development can be shared in staff meetings to help reinforce their effectiveness and bring out ideas to improve future performance.

To sell in an aggressive marketplace, you must know your competition. Effective training and measuring can help you accomplish this and set yourself apart. There are many ways to train staff and to keep you on the cutting edge of your market. The key to success is to offer training programs that target and improve the bottom-line performance of your store. Once these programs are implemented, it is critical to have tools that measure results, as the only way you can improve on your performance is to know where we you and where you want to go.

The average self-storage customer likes to deal with people who know their job and their market. They are looking for someone who can educate them on use of the product. This reinforces the importance of properly training your staffto invest the time, money and energy necessary to make your people the best they can. Always remember, the people in your organization are your greatest asset.

Brad North is founder of Advantage Business Consulting, which specializes in on-site sales, marketing, feasibility and operational training for the self-storage industry. He has produced two live videos and a workbook titled Maximizing Your Sales and Marketing Program, which can help managers improve their sales and marketing efforts. He most recently launched A TelePro, a mysteryshopping service that assists in educating, evaluating and improving the phone-sales performance of self-storage professionals. For more information, call 513.229.0400 or visit www.advantagebusinessconsulting.com.

What does it take to fill a facility? To those who ask me the question, I answer: Unearth every stone, chase down every opportunity, close every deal, and generate as many as possible leads and projects as you can—together with creating awareness of your brand and offering within your locality. This plan applies whether you are based in Europe, the United Kingdom or the United States.

Although some people think a good drive-by location and Yellow Pages advertising can bring in the business, it’s the extra work that makes a huge difference to your fill rate. This intensive marketing method works. Since its opening in January, our new Storage World facility in Manchester has rented at an average of 5,000 square feet per month over eight months. That’s £48,000 in income for the calendar month of August, which is normally a stagnant month. I estimate Storage World is probably one of the fastest filling facilities in Western Europe. And our first Yellow Pages ad didn’t come out until the beginning of September.

Storage World’s experience allows me to quantify the positive impact of an intensive marketing method. Since opening nine months ago, Storage World has had 430 customers move in, or nearly 50 customers per month. During the first eight months, with no Yellow Pages advertising, approximately 360 customers moved in, of which 150—just under 40 percent—were drive-bys. Even without Yellow Pages, our marketing brought in nearly 60 percent of our business, more than doubling our fill rate.

What is interesting are the figures from our first month of Yellow Pages exposure. We had a total of 29 new move-ins from the Yellow Pages in the first month. These have been mainly domestic house movers, with an average unit size of fewer than 75 square feet. Let’s just recap those numbers:

• Drive-bys generated 170 customers in nine months (an average of 19 per month).
• Yellow Pages brought in 29 customers in its first month.
• Our intensive marketing method generated 231 customers in nine months, at an average of 25 move-ins per month.

You can see the figures are split into approximate thirds: one-third drive-by, one-third Yellow Pages and one-third intensive marketing. By adding an intense marketing plan, you can increase your fill rate by 50 percent. That’s a big difference, but it will only happen if you stop waiting for customers to drive-in or phone your Yellow Pages number.

Another major factor we haven’t weighed into our previous calculations is the average size customer each of the three marketing methods attracts. Yellow Pages are only worth a 75-square-foot-average customer, whereas the intensive method could be worth double that. Put that one in your calculator, if I’ve not already convinced you to pay attention!

Do you want to know more about my statistics? Let’s break down those 25 customers per month that are equivalent to one-third of our fill rate. Despite not having a referral system in place, referrals are worth six or seven customers per month, some quarter of the intensive numbers. How about the World Wide Web? Add your website address on the side of your building—it’s worth three customers per month. Despite our site still performing badly with search engines, our three customers per month are probably split between Internet advertising and people seeing our web address on our building.

What about cold calling? I’m talking about sending a guy out there into your three-mile radius to knock on doors and prospect for business. Does it sound too scary? It’s worth three customers per month once you’ve built your prospect database. What’s interesting is, in the United Kingdom, those customers are medium-term business users averaging a 200-square-foot unit at self-storage rates.

Filling a facility is about entrepreneurial and guerrilla marketing tactics with 110 percent energy and dedication behind them. Try every idea you can think of and keep thinking about every opportunity you can create.

Andrew Donaldson is the founder and chief executive of Active Supply & Design (CMD) Ltd. of Cheshire, England. He is also the founder of the Self Storage Sentinel newsletter, Rent-A-Space Limited (now a multi-site operator) and selfstorage.uk.net. For more information, e-mail [email protected]; visit www.askactive.com.