Stop & Stor, a self-storage operator with 15 locations in the New York City area, is celebrating its 25th anniversary this month. Headquartered in Staten Island, the company has prided itself on being ingrained in the communities it serves, donating more than $1.5 million to charitable causes through its Stop & Stor Charitable Fund, company officials said in a press release.

The company was founded by the Henick and Simon families, real estate professionals who came together after noticing the growth in residential development in Staten Islands neighborhoods more than two decades ago. Principals Ken Henick and his son, Jeff, along with Morty Simon and his son, Neil, had the vision to enter the self-storage industry, officials said.

Stop & Stors first facility at 780 Gulf Ave. in the West Shore section of Staten Island opened in November 1988 and remains operational. It was the first outdoor storage facility in New York City, company officials said.

Every day Stop & Stor delivers on a basic needextra space, Neil Simon said. From the basic move from one house to another, to downsizing during the golden years, to fellow business owners who just need to store and secure their records, we provide an affordable, clean and secure [option].

During its time in business, the company has supported each of the neighborhoods in which it does business through its philanthropic fund. Stop & Stor supports a diverse range of organizations, with a major focus on education, arts and culture, community development, humanitarian causes, government, animal protection, park beautification, and medical research, the company said.

In addition to supporting organizations such as the Fund for Public Schools, Wounded Warrior Project, Lincoln Center, Doctors Without Borders, the Muscular Dystrophy Association and the Boy Scouts of America, the Stop & Stor Charitable Fund also has responded with assistance during local and international crises and natural disasters. The fund is currently in the process of identifying an organization to support that is helping victims of the recent typhoon in the Philippines.

Headquartered in Willowbrook, Stop & Stors 15 facilities are in every New York City borough except Manhattan. The company employs more than 70 staff members and serves approximately 18,000 customers.

SmartStop Self Storage has donated $17,000 to the Bahati Foundation's Adopt-a-School Program. The foundation is a community organization created to positively influence the lives of youth, and its school-adoption program is designed to create safe and healthy lifestyles for students in the Los Angeles Unified and Compton Unified School Districts through bike clinics, motivational speakers, and fitness and nutrition programs.

SmartStop's donation will help provide instruments for Crenshaw High School's band program as well as shoes and warm-up suits for the King R. Drew High School girls' basketball teams. Both schools are in Los Angeles County.

"We are honored to be able to support such an amazing school program for kids who just need some extra help," said H. Michael Schwartz, chairman and CEO of Strategic Storage Trust Inc., a real estate investment trust (REIT) that operates the SmartStop brand name. "Thanks to the efforts of the Bahati Foundation, these kids now have the opportunity to gain more knowledge and experience in the world of music and sports."

The foundation was created by Rashaan Bahati, a world-class cyclist who grew up in Compton, Calif. The organization largely supports inner-city youth in underserved communities through inspirational speaking engagements and cycling-outreach programs designed to motivate and empower kids toward higher achievement in education, music and sports. The foundation's GiveBack programs work with corporate partners to supply inner-city youth with health and fitness gear, educational supplies, and musical instruments.

"Having SmartStop see value in the Bahati Foundation is an absolute honor and has been a humbling experience," Bahati said. "We are so grateful and excited to have SmartStop as a partner. I have had the privilege to give back over the last five years to my community after cycling changed my life, but I cannot do this alone. I've always encouraged everyone to help me give back, and SmartStop has stepped up to the plate. We're looking forward to continuing to make a positive impact on our community with SmartStop's generous donation."

The SmartStop Self Storage portfolio includes more than 120 properties across the United States and Canada. It includes approximately 77,000 self-storage units and 10.2 million square feet of rentable storage space.

The board of trustees for self-storage real estate investment trust CubeSmart has declared a quarterly dividend of $0.13 per common share for the period ending Dec. 31. The dividend is payable on Jan. 15 to common shareholders of record on Jan. 2. The quarterly distribution represents an annualized dividend rate of $0.52 per share, an $.08 increase from the previous annual rate of $0.44 per share.

The board also declared a quarterly dividend of $0.484375 for the 7.75 percent Series A Cumulative Redeemable Preferred Shares payable on Jan. 15 to holders of record on Jan. 2.

"Our focus on execution, combined with a favorable balance between limited new self-storage supply and increasing customer demand, continues to produce extremely strong cash-flow growth," said Christopher Marr, president, chief investment officer and chief operating officer. "This latest dividend increase reflects the confidence we have in our business-plan execution in 2014 and beyond, and our commitment to share the resulting cash-flow growth with our shareholders."

CubeSmart owns or manages 526 self-storage facilities across the United States and operates the CubeSmart Network, which consists of more than 800 additional self-storage facilities.

 

Christopher Marr, president, chief operating officer and chief investment officer of self-storage real estate investment trust (REIT) CubeSmart, was recently featured in a video interview for the REITWorld 2013 convention in San Francisco. During the discussion, Marr addresses some of the leading drivers of self-storage performance as well as the acquisition environment.

REITWorld 2013 is the annual convention produced by the National Association of Real Estate Investment Trusts (NAREIT), the representative voice for REITs and publicly traded real estate companies. The video can be viewed at REIT.com.

In the interview, Marr points to a lack of new development projects during the last few years as one of the leading drivers of performance among existing self-storage operators. One of the great things about our business over the past few years is the complete lack of new supply, he said. Typically, self-storage new supply is provided by the local real estate entrepreneur. They can manage through the entitlement process, and they have generally produced most of the new product over the last two decades. When you look at where we are in the climate today, they just cant get financing, and so weve seen very little to no new supplyand thats been great for all of the existing owners and operators of our product.

While new developments have been slow to recover since the Great Recession, CubeSmart and other large operators have remained active in buying self-storage portfolios to expand their footprint. CubeSmart recently purchased 35 Texas self-storage facilities and one property in North Carolina.

The 36-property portfolio was purchased from Private Mini Storage Inc. for $326.2 million. CubeSmart completed the acquisition through a newly formed joint venture with an affiliate of Heitman LLC for an aggregate purchase price of $315.7 million. Each contributed capital equal to their 50 percent ownership in the venture. One facility in Houston was purchased by CubeSmart for $10.5 million.

Were at a stage in the cycle here where cap rates are very attractive to the owner, Marr said in the interview. The fundamentals of the business have been quite strong. So, when you have an attractive cap rate and strong fundamentals, folks look at it as an opportune time to sell, and particularly the larger operators in storage have been able to take advantage of that and grow their platform.

Based in Wayne, Pa., CubeSmart owns or manages 518 self-storage facilities across the United States and operates the CubeSmart Network, which consists of more than 700 additional self-storage facilities.

Storage Post Self Storage acquired a self-storage facility on Long Island, N.Y., the companys fourth purchase since late August, from a private operator. The facility at 88 Hazel St. in Glen Cove, N.Y., comprises 69,000 square feet including 824 climate-controlled storage units, motion-sensor lighting, packing supplies and elevated loading docks. Storage Post has plans for additional upgrades and improvements to this facility, which was last renovated in 2011.

"The self-storage industry is in a great place right now with increasing occupancy and strong demand, not to mention great investing opportunities, said Jack Giannola, Storage Post's director of acquisitions. Many storage companies are expanding and buying properties. We expect to add many more locations in 2014 to bring the Storage Post name to more regions and increase our market share."

The acquisitions team is pursuing single and portfolio transactions for self-storage real estate in dense submarkets, company representatives said in a press release.

Storage Post is headquartered in Atlanta and has more than 25 locations in Georgia, Louisiana, New Jersey and New York. Since 2012, the company has expanded its portfolio with more than 20 acquisitions and is expected to add more properties in the next year through acquisitions, ground-up development and select management contracts. It also launched a full-scale renovation plan for its New Jersey and New York self-storage facilities, with several stores already updated.

All-American Self Storage in Tuscaloosa, Ala., put a twist on traditional industry advertising recently when the company erected a billboard celebrating the contract extension signed by University of Alabama football head coach Nick Saban. The coach was rumored to be interested in the impending opening at the University of Texas, so the billboard pokes fun at the old Texas motto, Dont Mess With Texas.

The top half of the billboard says, We messed with Texas! and features Alabamas iconic elephant mascot looking sinister in the upper right-hand corner. The bottom half features the Alabama logo, the schools Roll Tide! rallying cry, and the All-American Self Storage logo. A photo of the billboard can be viewed on the sports website, College Spun.

Already believed to be the highest paid head coach in college football, Saban signed a multiyear deal expected to pay him between $7 million and $7.5 million annually. The Texas head-coaching job will become vacant on Dec. 30 after longtime coach Mack Brown retires at the conclusion of the Alamo Bowl.

Founded in 1984, All-American Self Storage operates three facilities in Tuscaloosa and two in Macon, Ga.

Investment Real Estate Construction LLC (IREC) has completed the renovation of 140 Mini Storage in Finksburg, Md. The 28,475-square-foot self-storage facility at 3240 Old Westminster Pike just outside of Baltimore was dilapidated and in much need of repair, according to an IREC press release. Many of the unit doors were damaged or broken; the grounds were overrun by weeds and poor landscaping; and the office, porch and stairs were in need of major repairs, company officials said.

The property includes six single-story, drive-up buildings offering 270 storage units and 42 RV-parking spaces. It is paved and fully fenced with surveillance cameras and an onsite rental office.

The renovations were started in August and completed in October. The total project, which covered 24,475 square feet, included improvements to the landscaping, the replacement of 327 roll-up doors, re-skinning on all buildings, bollard installation and upgraded lighting.

IREC sister company Investment Real Estate LLC brokered the sale of 140 Mini Storage earlier in the year. The new owners hired the company's management division, Investment Real Estate Management, to assume facility operation.

IRE is a property-management and consulting firm specializing in the self-storage industry. Since its inception in 1998, the company has provided brokerage, construction, management and development services to facility owners and investors.

BEFORE

AFTER

Inside Self-Storage (ISS) has published a new online podcast, Sounds of Storage: David Wolf Offers Insight to Changes in Google Analytics. The free seven-minute presentation addresses the latest changes in Google's metrics and how they may affect self-storage operators. Presenter David Wolf offers insight to how the change could impact operators online analytics and whether they should alter their online-marketing programs to gauge search-engine page ranks.

The podcast can be heard at www.insideselfstorage.com/topics/podcast.aspx. Other Sounds of Storage installments can be accessed through the same page.

Wolf will also be presenting a four-hour "Social Media Mastery" workshop as part of the Inside Self-Storage World Expo in Las Vegas, March 30-April 2. The session will teach self-storage operators how to maximize their social media efforts, addressing platforms, processes, software, timelines and more. It will also cover content marketing, ways to integrate SEO best practices with social media and much more. Workshop and other event details can be found at www.insideselfstorageworldexpo.com.

Wolf is the managing partner of Linkmedia 360, a marketing firm that plans and places online, mobile, social media, online local listings, Yellow Pages and reputation-management campaigns for self-storage operators. The company specializes in online and offline marketing, branding, and website development.

For more than 20 years, ISS has provided informational resources for the self-storage industry. Its educational offerings include ISS magazine, the annual Inside Self-Storage World Expo in Las Vegas, an extensive website, the Self-Storage Training Institute, the ISS Store, and Self-Storage Talk, the industrys largest online community.

The last few years have been an extraordinary time for the self-storage business, and real estate experts agree now is a good time to buy, sell or refinance. Sounds good all the way around, right? Todays low interest rates and strong fundamentals have made good deals even better, and the cash-on-cash returns are simply staggering for owners, buyers and sellers. Self-storage has truly become a respected, maturing competitor in the national real estate market.

Weve all seen the comparison of the self-storage industry to other real estate sectors in recent years and, in short, the returns for self-storage are higher and the various risks are more moderate with one exception: the risk of overbuilding. The main reason is self-storage properties are all competing for the same customer, and were a more localized business than other real estate sectors.

The office, retail and industrial sectors can target specific customers, businesses, professionals and industries, such as medical-office buildings, research and development industrial complexes, and destination retail. It has been proven that the customers of these real estate products will travel great distances. Conversely, all self-storage customers are basically looking for the same producta friendly, clean, safe and dry place to store their personal treasures. In almost every case where occupancies and rents have declined, theres strong evidence that overbuilding is a substantial contributor to this undesirable market condition.

When it comes to overbuilding, nobody wants to do it. While some builders claim the devil made me do it, most really dont want to develop a poorly performing project. So why do they proceed? While a few are just stubborn beyond any rational considerations, most are thoughtful and concerned about how they invest their money. Thus, when they investigate an opportunity to develop in a specific market, they seek the best information to justify their decision.

The problem is most self-storage information is either unavailable or unreliable. Most other real estate industries (i.e., office, hotels, industrial, retail) have well-developed and reliable information on the state of their markets. For example, in any city in America, an office developer can learn the average rents, concessions, planned projects and occupancies by building quality and submarket in about a half a day. This information is largely developed by empirical data (actual data) as opposed to statistically developed data (small amounts of surveyed data projected to a much larger conclusion).

Every other major real estate sector has information based on substantial, comprehensive empirical data. Unfortunately, the bulk of information in the self-storage industry is still statistically developed.

For the most part, self-storage professionals have to rely on statistical projections which, at best, provide limited information about the largest markets and none about submarkets or secondary markets. Information about submarkets is the most valuable for owners and developers. The lack of quality submarket information leaves most developers flying blind when making the decision to build a self-storage project. Some may say it's a great site, but they should also ask if it's a good market.

For many complex reasons, including the availability of construction money, entrepreneurial developers are rarely scared off by this lack of information; in some cases, they actually seem to be encouraged by it. However, many of the very large self-storage operators seem to have a good handle on whats going on in a specific market and are developing and buying properties with the significant strategic advantage of having empirical (actual) data. Without access to this type of information, the entrepreneurial developer doesnt have the ability to make the right decision and might potentially build a project that could ruin an entire market for a long time.

Dangers of Overbuilding

All over the country, we see building and development cranking up in every place where zoning can be achieved, although nowhere near the levels of the early to mid 90s. Construction loans no longer appear to be a constraint on building. So let me describe a hypothetical market and show you what can happen to a good market when the tipping point of demand has been reached.

Our hypothetical market, summarized in the table below, includes five properties of 50,000 square feet each and an average occupancy of 88 percent. This means theres a supply of 250,000 square feet in the market and an actual demand of 220,000 square feet. A new developer decides to build an 85,000-square-foot facility. Supply is now up to 335,000 square feet, but demand is still at 220,000 square feet, bringing the market occupancy down to 65.7 percent. The new developer didnt bring any new tenants to the market.

Now, if we have indeed hit equilibrium in this market and demand is no longer exponential, we can assume demand will just grow with the population. The U.S. population growth rate is 0.71 percent per year, according to Worldbank.org. As you can imagine, we have a fairly serious problem on our hands, as this market will take years to achieve the 88 percent occupancy it once enjoyed.

Investment Protection

Its clear the development train is back and rolling down the tracks, but to protect your investment and the integrity of the industry, we must take the necessary steps to generate high-quality, reliable information, allowing and encouraging better building decisions. I would encourage independent owners to participate in the following:

• Resolve to help by agreeing to provide information on your project to an independent industry-sanctioned collector of information who can tabulate the data without giving away your secrets.
• Vigorously encourage your state association as well as the national association to create an effective plan to develop this information and be willing to participate.
• Conduct an independent survey of your local submarket, one each operator can share. Make sure your local planning department gets a copy and thats updated regularly.
• Potential developers must get a real and critical feasibility study, including a detailed supply-and-demand analysis. Its an empirical process and not one that can be done by the smell test.

If, indeed, the tipping point has been reached in an area or market, owners in those markets are in for some more extraordinary times. We can only hope that current owners and potential developers have learned lessons from the last development boom and will approach their decisions in an educated and cautious way. If you have any questions or doubts about how your market is poised to absorb potential development, it may be time to review your building plans and holding decisions.

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