Safeguard Self Storage expanded its presence in the Chicago market this month with the acquisition of its 10th area location. The McCook, Ill., facility is Safeguard's 63rd store nationwide and offers 698 storage units in a variety of sizes, with modern security features and amenities, company officials said.

Facility offerings include heated and air-conditioned space, a drive-in loading area, computer-controlled access to the building and digital video recording of the property. It has 70,000 square feet of leasable space.

"Because of Safeguard's strong capital position, we were able to complete the acquisition in just 41 days from execution of the contract to closing," said CEO Allan Sweet. "This new store complements the company's aggressive development of new locations from new construction."

"We look forward to getting to know and serve the residents and business people of McCook Village," added Ken Finlay, vice president of operations. "It's a great community, and we're proud to be part of it."

The McCook store team is led by Gil Beres, manager, and Sharon Looney, assistant manager.

Headquartered in Atlanta, Safeguard Self Storage was founded in 1989 and today operates facilities in Florida, Illinois, Louisiana, New Jersey, New York and Pennsylvania. Safeguard is a privately held company owned by a real estate investment trust and managed by Morgan Stanley Real Estate Advisors.

By Cary McGovern

In the self-storage industry, records storage is considered an ancillary service, but it has the potential of being the most profitable of your non-core offerings. Some self-storage companies have done so well with the service that they've developed a traditional records-storage business separate from their traditional operation. Lets explore the reasons records storage is such a powerful addition to a facilitys book of services and how you can get in on this good thing.

There are a number of encouraging reasons to offer records storage at your self-storage facility. Each should be considered carefully so you can weigh the benefits and costs and determine if this profit center is right for your business. Here are some things to consider:

Long contract term. The standard records-storage agreement term is from one to five years rather than a 30-day lease. Its relatively easy to open with a one-year lease and close with a five-year lease. Contracts contain an evergreen clause that require positive action by the customer to end the agreement only at the end of the term. Penalties exist for early withdrawal. Even at the end of the contract, there are retrieval and delivery charges.

Renting air. Self-storage rents square feet while records storage rents cubic feet. This will generate two to three times the revenue of any space depending on where you are located.

Walk-in traffic. Commercial records centers have no walk-in traffic whereas self-storage facilities have prospects coming through the door every day. With about 25 percent of your customers being business customers and others likely to be owners or employees of businesses, everyone who walks through your door is a records-storage prospect.

Small-business packages. By using a service-bundling or package approach, youll save your customer 50 percent on his current records-storage costs and make at least twice what you already earn on storage. Your customer savesand you makemore money. Packaging is flexible and pricing is guaranteed to cut costs. Here are some suggested packages:

• Economy (Bronze): From one to 50 boxes, with minimal services built in. At 51 boxes, the contract automatically rolls to the Small Business (Silver) package
• Small Business (Silver): From 51 to 100 boxes, with minimal services built in. At 101 boxes, the contract automatically rolls to the Professional (Gold) package.
• Professional (Gold): From 101 to 200 boxes, with minimal services built in. At 201 boxes, the contract automatically rolls to the standard account package.
• Standard Account: More than 201 boxes. The customer automatically becomes a standard customer account and remains in that status until the contract term is complete.

Quarterly credit card billing. The cost of billing can be a significant cost of operation for a small-business account. To reduce costs, use simplified automatic billing and electronic-funds transfer. This makes a time-consuming task easy.

Limited liability. All records-storage companies have limited liability. Much of your existing insurance will be sufficient for the records maintained under your management. An additional insurance for $2 per box addresses the loss of the boxes through fire, water damage, acts of God or other causes.

Equipment requirement incremental. Racking is a capital cost and can be purchased one unit at a time or leased depending on your financial issues. Shelving vendors already have pre-designed shelving for any storage-unit size. Most equipment can be made available to you in two weeks or less.

Just-In-Time Labor

Unlike traditional self-storage, records storage requires more labor. However, its possible to  outsource 100 percent of the work to resources in your community with a minimum of 50 percent margins. All outsourced labor sources must be trained by you and follow your rules, which you can outline in a strategic partnering agreement. Examples of just-in-time labor are:

• Initial intake of records-storage boxes is outsourced to a small, local moving company. Local movers love regular work since most moves are a one-time event. Youll provide a weekly event for them.
• Indexing of initial intake is outsourced to individuals who have flexible schedules and can work when you need them. Theres an abundance of people available with these skills.
• Indexing of files and boxes after the initial intake is outsourced to the customer by allowing him access to your online data base with security, confidentiality and passwords.
• Courier services are provided by a local independent courier. Couriers are similar to cab driversthey are constantly waiting for the next engagement. Outsourcing this function gives the courier a regular delivery route.
• Retrievals and re-files are generally outsourced to students or individuals who can work after hours. Retrievals are on demand while re-files of boxes or files can be stacked in a temporary receiving area until the volume reaches a point that requires an hour or two of work.
• Regular pick-ups happen after the initial intake of records is complete and reconciled with the client. Additional or returned boxes may be sent back, as well files that can be returned to their regular storage box. Since pick-ups are rarely an emergency, these can be regularly scheduled with a courier.  

Software and Training

Todays record-storage software is inexpensive and can be easy to operate. The software products to manage your inventory all have small-business versions. They also have an Internet interface that enables the customer to access his records or indices from his desktop.

Records storage will require some operations and sales training. However, many companies now offer training on video, audio, MP3 and course workbooks. Your records-storage sales can be handled by employees, telemarketers, agents and others. The key is scripting, which is typically a part of a sales-training course package.

Many of the reasons self-storage operators were wary of records storage in the past have all fallen by the wayside. With outsourcing, just-in-time labor, training availability and technological leaps, its no longer difficult or unusual for a self-storage facility to introduce records storage as an ancillary service. When considering this profit center, do some research first to determine if your market is right for records storage.    

Cary F. McGovern has been in the commercial records-management industry for 34 years. He has assisted more than 500 companies in 23 countries enter and excel in this unique business. He is a member of ARMA International and PRISM International, and is a speaker at numerous industry tradeshows and conferences. To reach him, call 504.669.0559; e-mail [email protected] ; visit www.fileman.com .

A self-storage project was unanimously approved Tuesday by the Sacramento County Board of Supervisors despite vocal opposition from neighboring residents in Arden Arcade, Calif. Marconi Self Storage is scheduled to be completed by next October and will accommodate boat and RV storage.

The facility will replace a former AT&T office building that sat vacant on the lot for several years. A proposal to include a cell-phone tower on the property was rejected.

More than 400 residents reportedly signed a petition in opposition to the self-storage facility, arguing the project was too industrial for the area and citing increased traffic and noise as concerns. Construction plans include a 12-foot wall around the perimeter of the property.

Developer Potter-Taylor & Co. said selling the building under office zoning was prohibitive because of several vacant office buildings in the area. The board changed the zoning on the property from office to commercial to accommodate the use change.

Self-storage real estate investment trust CubeSmart has closed on a new $600 million unsecured credit facility in relation to its acquisition of Storage Deluxe in late October.

The facility consists of a $100 million term loan with a December 2014 maturity, a $200 million term loan with a March 2017 maturity, and a $300 million revolver with a December 2015 maturity. CubeSmart, at its option, has the right to extend the term of the revolver an additional year.

The new financing, along with the common share and debut preferred equity offerings in October, completes the funding for the $560 million Storage Deluxe acquisition. "The $200 million unsecured term loan provides an attractive component of the acquisition financing with an effective fixed-interest rate of 3.09 percent through its maturity in March 2017, said Chief Financial Officer Timothy Martin. The remainder of this financing allowed us to refinance our existing $100 million term loan and revolving line of credit with improved terms, additional capacity and more attractive pricing."

At closing, CubeSmart drew $100 million of the $200 million term loan maturing in 2017. Proceeds were used to fully repay amounts drawn on its line of credit that were used to fund the first closing of the Storage Deluxe transaction in November. The company anticipates drawing the remaining $100 million balance of the 2017 term loan in conjunction with the second closing of the Storage Deluxe transaction in the first quarter of 2012.

The $100 million three-year term loan was fully drawn at closing. Proceeds from this term loan were used to repay CubeSmarts existing $100 million term loan maturing in December 2013. The company's $300 million revolving line of credit was undrawn and fully available at closing.

In conjunction with the repayment of amounts drawn under the company's prior credit facility, CubeSmartexpects to incur a non-cash charge of approximately $6 million in the fourth quarter to write off previously unamortized costs.

To read more about CubeSmarts acquisition of the Storage Deluxe portfolio, including an overview of the facilities, click here.

CubeSmart owns or manages 456 facilities across the United States and operates the CubeSmart Network, which consists of approximately 838 additional self-storage facilities. The companys services include storage customization, logistics, moving, organizational and office amenities.

SpareFoot, an online self-storage marketplace and provider of Web-marketing tools, and the Storage Business Owners Alliance LLC (SBOA) will host a free webinar on Dec. 14 about using video marketing to promote self-storage facilities. SpareFoot Marketing Analyst Rachel Greenfield will explain the do-it-yourself process of planning, shooting, editing, distributing and promoting videos to market self-storage, including "welcome" videos, how-to educational videos and fun commercials. The webinar will take place at 2 p.m. EST.

Webinar attendees will be challenged to think beyond the notion that self-storage is too boring to be entertaining. Greenfield will also illustrate how video can appeal to potential customers and generate return on investment through a low-budget marketing effort that works in a trackable way.

Greenfield also published an article on the topic of video marketing on InsideSelfStorage.com, a comprehensive online resource for self-storage owners, managers, investors and developers. The article can be read at www.insideselfstorage.com/articles/2011/11/doityourself-video-marketing-helps-selfstorage-operators-get-real-with-customers.aspx.

Founded in 2008, SpareFoot is the provider of SiteBuilder, GeoPages and AdNetwork, which tools designed to help self-storage operations get found and generate business online. The company also lists more than 5,000 self-storage facilities in its nationwide directory, which allows consumers to find, compare and reserve self-storage units online. The Austin-based startup company is backed by Silverton Partners, FLOODGATE and Capital Factory.

The SBOA is cooperative organization that enables small to mid-size self-storage businesses to enjoy bulk buying power. The group has grown to include more than 2,200 member facilities and 30 vendor partners. Members pay an annual membership fee to save on items such as packing and moving supplies, marketing services, payroll services, UPS shipping and more.

Brandon Mini Storage, a 52,465-square-foot self-storage facility in Brandon, Fla., was recently sold to a local private investor for $2.125 million. Located at 203 Providence Road, the property was built in 1978, with final expansions complete in 1997.

Situated on approximately 4.35 acres of land, the self-storage investment comprises 545 units. Forty-six are climate controlled, 432 are traditional, and 67 are RV/boat parking spaces.  Amenities include security cameras, wide driveways, perimeter fencing and a managers office.

The seller, a California-based partnership, engaged the services of Marcus & Millichap Real Estate Investment Services, to list the sale. Michael A. Mele, first vice president of investments and senior director of the company's National Self-Storage Group, represented both buyer and seller in the transaction.

Brandon Mini Storage was a non-distressed deal that traded at an aggressive price. This transaction highlights a positive outlook in the Florida self-storage industry. We anticipate more market rate deals like this one in 2012, Mele said. 

The owners of a self-storage facility in San Luis Obispo, Calif., were recently honored at the White House as one of 100 companies that inspire young entrepreneurs. The inaugural Empact 100 List recognizes companies run by entrepreneurs age 30 or younger with annual revenue of more than $100,000. Brothers Aaron and Evan Steed own Meathead Movers and Meathead Mini Storage.

Looking for a way to earn money while attending high school and playing sports, the brothers founded Meathead Movers in 1997. They opened the 703-storage unit Meathead Mini Storage at the companys headquarters nearly two years ago. In addition to a variety of self-storage unit sizes, the facility offers packing supplies, wine storage and a concierge service.

Meathead Movers employs 200 people, and has branches in Los Angeles and Orange counties. The staff is largely made of college athletes dubbed Meatheads. The company launched a new service this year, Princess Packers, in which female employees prepare and pack clients belongings. Princess Packers generates about 10 percent of the companys revenue.

The Empact 100 List is organized by partners including Empact, the Kauffman Foundation, Opportunity International, the Startup America Partnership and other partners. The winners were invited to a special event at the White House on Nov. 17.

By Gavin Lucas

Self-storage operators in South Africa saw little growth over the past year. Rental rates have flat-lined, few new developments are under way, and the industrys image suffers due to the existence of some poor-quality, low-cost projects. Market consolidation and the emergence of new, higher-quality facilities will help the industry reach the next market cycle.

The South African economy is in its second year of a recovery from the recent severe recession, however, there are few signs of acceleration in the underlying growth rates. While economic conditions have improved, these are anything but boom times for the S.A. economy or its property owners.

That said, the drawdown in the S.A. property market wasnt as deep as that in other regions. Vacancies have gradually picked up in the office and industrial marketsmore in the office market than anywhere else. Prime retail assets have been stellar performers, whereas secondary retail locations have underperformed. The impact has been limited new supply in the office, retail and industrial sectors.

It has been a slow grind for South Africa self-storage operators, in both vacancies and rents.

Industry Growth and Quality

The South Africa self-storage market is still in its infancy20 to 25 years behind the U.S. market and 10 to 15 years behind the Australian and European markets. While the industry is starting to see the first signs of market consolidation in certain cities, overall, it's still dominated by poorly located, low-cost, low-quality facilities. Combined with a lack of professionalism, sophistication and public awareness of the benefits, self-storage still has a way to go before it reaches the next stage in its development lifecycle.

The South Africa self-storage market grew from an estimated 120 facilities in 2007 to approximately 220 facilities in 2010, with a lot of that development occurring during 2007 and 2008, largely in Johannesburg and Pretoria. This growth was characterized by a many poor-quality facilities developed on the urban edge or in typical farm-type locations. I estimate that of the 220 facilities, less than 25 percent could be classified as quality third-generation stores, with the significant majority being single-story operations.

Recently, the industry has seen an increase in conversions of industrial space. However, these are being poorly executed, with little attention paid to the location of the property and the overall safety, look and feel.

Consolidation and a New Player

In the early stages of market consolidation, I've seen multiple-site operators pursuing acquisition opportunities and developing superior third-generation facilities in desirable urban locations. A recent addition to the South Africa self-storage market is Stor-Age Self Storage, which builds big-box, third-generation facilities in high-profile locations.

The Stor-Age stores have traded well and attracted significant attention. Their operators strive to raise the profile and awareness of the self-storage product. Since its success in Cape Town, the company is rolling out new facilities in areas including Durban, Johannesburg and Pretoria.

Rental Rates and Future Development

Over the last few years, established operators who trade in quality locations have continued to raise rental rates to desired levels and maintain targeted occupancy levels. It has been tougher for operators in secondary nodes. Occupancy levels have generally been maintained, but at the expense of any meaningful rental-rate growth.

Looking forward, I predict a marked slowdown in the overall growth of new self-storage properties in the next few years. The number of quality facilities coming online will be consistent with prior years. It will be the emergence of two to three dominant players in the South Africa self-storage market that will have the keys to long-term success. Their success will be driven by the quality of their properties and the strength of the operators and the brands managing those portfolios.

Gavin Lucas is the founder and CEO of SASSI Self Storage Group in Cape Town, South Africa. The company has a portfolio of 20 facilities under the Stor-Age Self Storage brand name. For more information, visit www.saselfstorageinvestments.com .