A multi-agency task force in New York City has shut down four alleged trademark counterfeiting rings operating out of self-storage facilities in Queens and Brooklyn. The three-year operation has resulted in the indictment of 26 individuals and two corporations, with 19 suspects currently in custody. The illegal operations allegedly grossed a combined $10 million in annual revenue.

Two self-storage locations were identified by the Queens County District Attorneys Office in a press release. A Stop & Stor location at 534 63rd St. in Brooklyn and a Storage Quarters facility at 31-40 Whitestone Expressway in Queens are expected to face nuisance abatement lawsuits being filed by the Mayors Office of Special Enforcement. Neither company was named a suspect in the case. In its release, the district attorneys office identified both facilities as Stop & Stor locations, but a Google search revealed the Whitestone Expressway location belonging to Storage Quarters, which was confirmed on the operators website.

Both storage facilities were allegedly used for storing, selling and distributing counterfeit merchandise in at least 21 states and the U.S. Virgin Islands, according to Queens County District Attorney Richard A. Brown. Counterfeit goods included apparel from brands such as Nike, Polo By Ralph Lauren, Timberland, True Religion and The North Face, as well as watches, headphones and cigarettes. In addition to those arrested, investigators used search warrants to seize more than $500,000 in cash and more than 1,000 boxes of merchandise and business records.

The nuisance abatement lawsuits against the storage operators would be similar to a New York civil lawsuit settled out of court earlier this year by self-storage operator Safeguard Properties LLC. In that case, New York City authorities sued the company over counterfeit merchandise that was seized in 2012 from one of its facilities. Approximately 44,000 counterfeit trademarked goods and pirated video and audio recordings worth more than $550,000 were being stored and distributed by Safeguard tenants.

As part of its settlement, Safeguard Properties agreed to adopt a code of best practices and include more stringent rules in its rental agreements with tenants. The new procedures include a requirement to report all suspected criminal activity to law enforcement and a tenant-lease requirement granting Safeguard access to units without prior notice.

By filing nuisance abatement lawsuits against the operators, city authorities are trying to keep self-storage operators partially accountable for illegal activity that may occur on their property. [The] seizures build upon the citys comprehensive efforts to target counterfeit goods and the self-storage facilities that all-too-often look the other way, said John Feinblatt, the citys criminal justice coordinator. Counterfeit goods hurt both legitimate businesses and consumers, and self-storage owners have a responsibility to monitor their premises for illegal behavior, just like any other landlord.

Twelve of the defendants in this case have been indicted for enterprise corruption under New Yorks Organized Crime Control Act, among other charges. Those defendants face up to 25 years in prison. The remaining defendants face felony trademark counterfeiting and conspiracy charges and up to seven years in prison if convicted. The two corporations included in the indictment (not the self-storage operators) face up to $10,000 in fines or double the amount of their alleged illegal gains.

Operations such as those allegedly run by the defendants fuel an underground economy, Brown said. They are cash businesses that pay no taxes and damage the reputations of reputable brand owners and lower consumer confidence in the name brands by foisting inferior products into the marketplace.

Dubbed Operation Finish Line, the New York Police Departments Trademark Infringement Unit and the district attorneys Economic Crimes Bureau launched a joint undercover operation in November 2010. During the investigation, officials seized alleged counterfeit merchandise worth an estimated street value of $750,000. The investigation included physical surveillance of the self-storage facilities, undercover buys and court-authorized wiretapping of telephones and e-mail accounts that intercepted thousands of conversations, many of which had to be translated from Arabic and Chinese into English.

The 19 defendants in custody were arraigned in Queens County Supreme Court.

With the winter holidays in full swing, self-storage operators from around the world continue to show their giving spirit through a variety of charity drives, collecting food, toys, coats and more.

Edison Properties, which operates Manhattan Mini Storage in New York City, is teaming up with several charities this season to make the holidays brighter for New Yorkers in need. In addition to making a $20,000 donation to the Partnership for the Homeless, Edison is participating in the organizations annual toy drive for homeless N.Y.C. kids, setting up collection boxes at all 17 Manhattan Mini Storage locations, as well as at the other properties it manages. Forty extra-large Manhattan Mini Storage boxes will also be donated to the charity to facilitate toy collection among non-Edison businesses.

The Partnership for the Homeless toy drive runs through Dec. 12. Toys will be distributed by volunteers at an all-day holiday party for children on Dec. 14. Partnership for the Homeless offers an array of services for New Yorkers experiencing homelessness, at risk for homelessness, or those who are rebuilding their lives after leaving shelters.

Edison also partnered with LivePerson, an online marketing and Web analytics company, and the charity volunteer program FeedingNYC to supply boxes used to pack complete Thanksgiving dinners in early November. The boxes were hand-delivered to families in need across all five N.Y.C. boroughs. Each year, FeedingNYC delivers nearly 3,000 Thanksgiving dinners. Manhattan Mini Storage customers were able to contribute to this effort by adopting a box for $35. Participants were eligible to receive 10 percent off a new storage rental.

Edison Properties is the family-owned parent company of Manhattan Mini Storage. It also owns and operates Edison ParkFast, WorkSpace Offices, The Hippodrome office building and The Ludlow.

Another New York self-storage operator is seeking coat donations for its annual drive. Storage Post Self Storage is once again supporting New York Cares in its 25^th Annual Coat Drive, providing drop-off points for coat donations at its 17 N.Y. facilities. In addition to collections, Storage Post will deliver the coats to the New York Cares warehouse.

This is the third year the company has joined the coat-drive effort to provide thousands of New Yorkers with warm coats. Accepted donations are new coats or gently-used, freshly-laundered coats of all sizes until Feb. 7, 2014.

"We look forward to this event every year because we believe in being a good neighbor and helping our communities as much as possible. This coat drive is so important to the local people in need, especially after Hurricane Sandy left so many families without homes last year," said Pete Gioiello, Storage Post's vice president of operations. "We encourage our customers, friends and families to donate to the New York Cares Coat Drive."

New York Cares is N.Y.Cs largest volunteer-management organization, running programs for 1,300 nonprofit, city agencies and public schools. More than 59,000 people volunteer every year, helping 400,000 disadvantaged New Yorkers through its many programs, with an additional 22,000 volunteer positions being filled in the aftermath of Hurricane Sandy.

Headquartered in Atlanta, Storage Post is rapidly expanding through self-storage acquisitions and development.

SafeKeeping Self Storage in Baytown, Texas, is accepting toy donations and has provided free self-storage to store toys for the annual Cruisin Texas Toy Run and Toy Drive, sponsored by the city and the Freedom Cruisers Riding Club. In its seventh year, the Dec. 21 event at the Baytown Community Center features motorcycle riders from the riding club ushering Santa Claus and his bevy of gifts for the communitys youth. Riders wishing to participate in the event can donate a toy or $10.

Children accompanied by a parent or guardian can receive a gift and have their photo taken with Santa. The drive has already collected 500 toys. About 2,500 children are expected to attend the event. In addition to toys, the organizers are also seeking cookies and punch, and cash donations to purchase additional toys.

The Freedom Cruisers Riding Club is a free, family-oriented motorcycle riding club, representing motorcycle riding, family, traveling, fun and camaraderie.

ABC Self Storage LLC in Loveland, Colo., is also collecting toys but will make its donation to the McKee Medical Center, a local organization that adopts 15 families during the holidays and gives out toys year-round to its young patients. ABC Self Storage will offer participants their choice of a coupon from a local business for the donation of a new, unwrapped toy through Dec. 20. Donators will also be entered into a raffle for a quilted Christmas blanket.

The self-storage operator is partnering with other local businesses to collect toys including Cactus Grille Restaurant, the Pourhouse Bar and Grill, The Wing Shack and Thrifty Nickel. ABC Self Storage collected 500 toys last year, its first year to sponsor the toy drive. Donations can be dropped off during business hours, 9 a.m. to 5 p.m., Monday through Saturday, at 2600 S. Lincoln.

The self-storage operator also holds a toy-donation drive in the summer to benefit the House of Neighborly Service, a nonprofit that provides resources for community members. The toys are reserved for the nonprofits birthday closet.

A family-owned business, ABC Self Storage offers more than 950 self-storage units and vehicle storage. The company will open a second facility in Boyd Lake, Colo., in spring 2014.

Apple Self Storage kicked off its campaign to collect food for residents and families in need in Nova Scotia, Canada. The food drive, now taking place at two Halifax self-storage facilities and one in Dartmouth, will run until Dec. 23.

Customers who drop off a nonperishable food items at one of three facilities in Nova Scotia will receive 10 percent off the rental price of a new storage unit. Apple hopes to collect 300 pounds of food.

In addition to the food drive, Apple Self Storage recently participated in other charitable events. Earlier this year, the Dartmouth facility partnered with a local furniture bank to help fulfill the basic furniture needs of struggling families, and donated a storage unit to the volunteer-run Circle of Care Society, which used the extra space to collect and store donated furniture.

Apple also recently wrapped up a company-wide charity effort in support of the ABLE Network, a nonprofit organization that performs valuable services for individuals with intellectual disabilities. The three-month fundraiser set a goal of collecting $6,000 by the end of November.

Apple Self Storage operates 15 facilities in Canada. The family-owned company regularly works in support of local charities to strengthen the communities in which it operates, company officials said.

In the United Kingdom, Access Self Storage locations in Mitcham and Wimbledon, England, are appealing to customers to help raise money to aid medical research for the Merton Sickle Cell & Thalassaemia Group, which offers information and support to people suffering from sickle cell anemia and thalassaemia, a form of inherited autosomal recessive blood disorder. The drive is part of the storage operators annual Christmas Charity Appeal in which the company supports a number of charities. This year, Access Self Storage is supporting 21 charities across the United Kingdom, collecting, sorting and delivering donated goods and funds to various charities.

Last year, the self-storage operator garnered more than 100 donations for Merton Sickle Cell & Thalassaemia Group, said Ajanthan Naguleswaran, manager of Access Self Storage Mitcham. "This year we hope the public will get behind us to support such a great local charity and beat last years total, Naguleswaran told the source. Donations can be made at the facilities, Unit 1 Gresham Way in Wimbledon, and 141 Morden Road in Mitcham.

Eulalee Valentine of the Merton Sickle Cell & Thalassaemia Group told the source the organization hopes to raise £100,000 ($136,950) for its premises and an outreach worker.

Access Self Storage operates more than 50 facilities in the United Kingdom, with a large concentration in Greater London.

Another U.K. self-storage operator, Dainton Self Storage, is offering temporary free self-storage at its Plymouth, England, facility to anyone who makes a small donation to the Childrens Hospice South West (CHWS). The self-storage operator has raised funds for CHWS throughout the year and hoped to champion the cause during the holidays, according to Daintons Operations Director Shaun Duncan.

Dainton Self Storage operates facilities in the English counties of Devon and Cornwall, as well as Wales. In addition to self-storage, the company also offers moving services and portable buildings under its parent company, Dainton Group Services. 

Greenbox Self Storage opened its third facility in Denver this week, across from Coors Field. The facility is comprised of 135,000 square feet of rentable storage space in 651 units. In keeping with the companys environmental-design philosophy, the two-story building was constructed with energy-efficient insulation, recycled materials, beetle-kill wood and other sustainable features such as solar power.

The structure includes 296 solar panels, which are projected to produce more than 120,000 kilowatt hours of electricity each year. That output will cover approximately 96 percent of the buildings needs, company officials said in a press release.

We are thrilled to be opening our third location and expanding into new areas of the city, said company founder Bahman Shafa. The residential population of downtown Denver is expected to grow by 18 percent over the next five years, and Greenbox is the ideal sustainable storage option for this growing population.

The facility at 2424 Delgany St. has storage space ranging from units as small as 12.5 square feet to warehouse space as large as 15,000 square feet. It is central to numerous downtown neighborhoods, including LoDo, Ballpark, Highlands, Prospect, RiNo and Union Station, officials said. It is also the only Greenbox location with a business center and conference room available to customers. Workshop space is also available for rent.

In addition, the Delgany location has three freight-capacity elevators and loading docks big enough to accommodate 18-wheelers. Other amenities include computerized keypad access, climate-controlled units, energy-efficient LED lighting, video surveillance and free use of moving trucks.

Greenbox opened its first facility in January in Denvers River North district. That facility is LEED (Leadership in Energy and Environmental Design) certified from the U.S. Green Building Council, company officials said. Its second facility opened in August in the South Broadway area.

Update 12/5/13 Real estate developer Alfred Weissman Real Estate LLC cleared another important hurdle this week toward changing the Pittsfield, Mass., zoning law to allow self-storage in commercial and industrial zones with a special permit. On Monday, the proposal was moved forward with support from the City Council's Ordinance and Rules Committee.

"We're here tonight hoping that you will look at this as a change that is not only better for our property, but one that recognizes the growing market of client-controlled, more retail-oriented storage, and one that will help foster a more competitive free market," said Joseph Genzano, general counsel for Weissman, in addressing the council.

Council member Jonathan Lothrop expanded the special-permit proposal to include light-industrial zones. During the proceedings, City Planner C.J. Hoss also clarified that the zoning change would simply allow special permits for self-storage in the designated zones. A site plan for Weissmans storage project would still need to go through a separate approval process.

If the special-permit allowance is approved by the full council, Weissman representatives said the company will work with the citys community-development officials and the development board to reach an acceptable design.

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Update 11/23/13 After being denied a zoning variance in August for a proposed self-storage development at its Pittsfield Plaza retail center, real estate developer Alfred Weissman Real Estate LLC cleared an important hurdle this week toward changing the Pittsfield, Mass., zoning law to allow self-storage in commercial and industrial zones with a special permit. The citys Community Development Board voted to recommend the zoning change and will forward its advisement to the City Council.

After denying Weissmans appeal for a zoning variance this summer, the Zoning Board of Appeals suggested the developer seek a zoning change rather than a use variance. Weissman representative Joseph Genzano said the company has tried to redevelop the shopping center but has been unable to find the right mix of businesses. A marketing study identified self-storage as a favorable project for the deteriorating property.

Genzano said the zoning proposal specifically limits the size and structure of the storage units, drawing a distinction between self-storage from larger storage warehouses. The developer also argued that self-storage operates in the retail sector, not industrial warehousing. "Our view is not to look at it as a storage use but more as retail," Genzano said.

Although the board voted to recommend the change, members debated whether a single definition for all types of storage should be created and identify which forms of storage would be allowable in which zones. Currently, self-storage is allowed in three zones but not in business-commercial districts, according to the source.

In its recommendation, the board adopted language specifying self-storage as allowable in zones where other storage businesses operate, as well as in business-commercial zones, under a special permit.

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Update 8/16/13 Real estate developer Alfred Weissman Real Estate LLC had its request for a zoning variance rejected this week by the Pittsfield, Mass., Zoning Board of Appeals, blocking a proposed self-storage facility the company wants to build within its deteriorating Gateway Plaza. The board voted 4-1 against the variance and also rejected the companys plan to include a live-in apartment for the facility manager.

Weissman sought the zoning variance after city inspectors said self-storage is not permitted in a business commercial zoning district. The zoning board suggested the developer seek a zoning change rather than a use variance.

The boards ruling came despite support from several residents living near the 51-year-old former Pittsfield Plaza. The proposed 320-unit self-storage facility would be built in an area that is least visible from the road, and Weissman officials argued the project would spur retail companies to sign tenant leases inside the vacant 105,000-square-foot retail center.

"This is an eyesore to the city," said resident Frances King. "Anything would be better than whats there."

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8/9/13 Real estate developer Alfred Weissman Real Estate LLC is hopeful its request for a zoning variance will be approved next week, paving the way for a proposed self-storage project within a defunct shopping center it owns in Pittsfield, Mass. The zoning request will be heard on Aug. 14 by the Zoning Board of Appeals. The storage facility would be built within a segment of the retail building, but a permit for the project was previously rejected by inspectors because self-storage is not permitted in a business commercial zoning district.

Weissman, which is based in Rye, N.Y., but operates locally as Pittsfield Plaza Members LLC, has already begun working on lighting, sidewalks and clearing out the interior spaces of the retail facility, according to Beverly "B-Mile" Milenski, a broker with leasing agent RE/MAX Integrity Realtors. The self-storage facility would use 37,880 square feet of the 105,625 square feet of retail space inside what is now called Gateway Plaza. About 20,000 square feet would be designated for storage units.

The facility would cater to business tenants of the shopping center as well as local residents. It would also include an office and apartment for the property manager. In addition, the project calls for a marquee sign at the plazas entrance and the demolition of the far western edge of the building to accommodate the movement of large trucks, Milenski said.

The self-storage facility would be situated in an area that is least visible from the road, but the developers are hopeful the project can revive the center and spark other development in the area, Milenski said. "This is a really positive thing they are doing. This will get the construction going and people can see what it will look like. It will set the template for the new center. This will bring life back to a long-vacant property."

Weissman purchased the 51-year-old former Pittsfield Plaza six years ago for $2.8 million. The shopping-center property encompasses 13.8 acres.

Self-storage real estate investment trust (REIT) Public Storage Inc. has secured a one-year, $700 million loan from Wells Fargo Bank. The company intends to use the money to fund acquisitions and development projects as well as general corporate purposes, according to John Reyes, senior vice president and chief financial officer.

Given the state of the preferred equity market, we have decided to take advantage of the attractive rate on a short-term bank loan, Reyes said. Wells Fargo, our bank for over 30 years, once again has supported us with this financing.

Public Storage has been actively pursuing self-storage property acquisitions, including the October purchase of 43 facilities from investment management firm Harrison Street Real Estate Capital LLC and operator Morningstar Properties LLC for $315 million. The deal is believed to be the largest self-storage portfolio transaction of the year. The facilities comprise more than 2.9 million square feet in 22,500 units across five states: Georgia, North Carolina, South Carolina, Texas and Virginia.

During the third quarter that ended Sept. 30, the REIT also acquired 29 self-storage facilities comprising approximately 2.2 million net rentable square feet for $371 million. The properties are located in California, Florida, Massachusetts, Rhode Island and Texas.

Based in Glendale, Calif., Public Storage has interests in more than 2,110 self-storage facilities in 38 states with approximately 135 million net rentable square feet. Operating under the Shurgard brand name, the company also has 188 facilities in seven European countries, with approximately 10 million net rentable square feet.

By Hugh Odom

When it comes to a cell-tower lease, the one question that still baffles self-storage owners is how much rent should they receive. The answer lies not in looking at the value of having a cell tower on your property but the value and potential value of the use of your property to the company that wants to lease it for decades into the future.

Unlike other contracts you may enter, a typical cell-tower lease is lasting in nature and cannot be renegotiated when you believe the value of the use of your property has increased. It's not a sprint but a marathon. As such, you need a short- and long-term strategy to get the most value from the partnership.

Just Say No to Market Rent

The mistake many self-storage operators make is, being in the real estate business, they continue to track the elusive market rent figures when determining how much to charge a cell-tower company. To be crystal clear, theres no such thing as market rent when it comes to a cell-tower lease. If you try to use comparable rents in your area, youre using data that will only cause you to perpetuate under-valued rents that have been paid to property owners for the last few decades.   

Simply put, what another property owner may have been paid doesn't determine the value of your cell-tower lease. If you rely on this measure to determine how to negotiate a new or existing agreement, it can cost you hundreds of thousands of dollars, if not more, over the life of the contract.

How Much Do Cell-Tower Companies Earn?

If you doubt that relying on past rent figures is the wrong way to negotiate your cell-tower lease, look at the revenue and profit garnered by the companies that owned the majority of North America cell towers in 2012. The largest companies averaged almost $2.5 billion in annual revenue. More impressive is the gross profit margin on this revenue was approximately 72 percent.

How can a cell-tower company achieve such profit? Its a simple formula that has been used since the beginning of time: knowing a lot more than the other guy. This doesnt mean self-storage operators aren't astute real estate professionals; but at its core and especially when it comes to value, a cell-tower lease is not a real estate deal, its a telecom one. The cell-tower companies understand that and so should you. 

Think Long-Term Strategy

So how does a self-storage operator get the best deal when it comes to cell-tower rent? The first step is turning the mirror toward the cell-tower company and looking at the value it gets from either building a cell tower on your property or continuing to have the right to lease your land.

The cell-tower company will try to get you to agree to rent with an escalator that will (hopefully) keep the rent growing at a rate that maintains with inflation. In doing this, it will have achieved exactly what it set out to do. If it can get these terms, it will have fixed the expense of leasing your land for the next couple of decades at minimum, and no matter how valuable the site becomes, you will never achieve any increase in rent received.

Focus on structuring a lease that allows you to capture a portion of the value the cell-tower company derives from your land. This can be difficult if you're unfamiliar with the telecom industry, particularly when you're attempting to forecast how a cell-tower company will derive revenue in the future. You may think this only means subtenant rents, but a cell-tower site may greatly increase in value without another wireless carrier even using the site.

They say the definition of insanity is doing the same thing over and over again and expecting a different result. That is basically what property owners of all types have been doing since the first cell-tower lease was consummated back in the 1980s. This will continue until self-storage owners arm themselves with the information and representation needed to level the playing field.

Hugh D. Odom is president of Vertical Consultants, a telecommunications-consulting firm currently working with approximately 1,500 self-storage facilities across North America to place telecommunications equipment and optimize existing leases. He has more than 18 years of legal and telecom experience, including representing AT&T as an attorney for more than 10 years. For more information, call 877.456.7552; visit www.vertical-consultants.com .

Fulton Storage LLC recently purchased two Galizia's All Safe Storage facilities in Fulton, N.Y. The purchase was finalized on Nov. 21. Owners Richard and Deborah Rogler will rebrand the properties as Fulton Self Storage.

The facilities are located at  2723 County Route 57 and 153 N. 2nd St. The first is the company's primary location, sitting between Route 481 and Route 57 on 5.5 acres of commercially zoned land. This facility comprises eight buildings that were built between 2002 and 2006. The smaller in-town location sits at the corner of 2nd and Ontario streets, consisting of one building on .5 acres of commercially zoned land.

The total net leasable capacity of the properties totals 43,950 square feet. Both facilities are managed from a 150-square-foot management office at the Route 57 location. Occupancy has historically been high and remains so today, according to a press release issued by Investment Real Estate LLC, the firm that brokered the sale.

The facilities, constructed by self-storage building manufacturer Heritage Building Systems, include screw-down, pitched metal roofs, gravel driveways, exterior lighting, security cameras, a fenced perimeter, and a keypad-operated gate. The Roglers plan to pave the Route 57 location and upgrade its security gate and software. Randy Jackson will serve as property manager.

“With the seller’s and buyer’s cooperation, we overcame multiple issues over a year’s time to enable a sale to occur. Normally, self-storage properties sell in two to four months; but occasionally the broker has to go the extra mile to overcome all the issues," said John H. Gilliland, president and CEO of IRE.

Since its inception in 1998, York, Pa.-based IRE has specialized in self-storage brokerage, construction, management and development. The company offers property-management and consulting services to self-storage owners in the mid-Atlantic and Northeast states.

Bell Tower Mini Storage, a self-storage facility in Haledon, N.J., sold in November for $750,000. Built in 1894, the building once served as the Kossuth Street School. Converted to self-storage in 1980, the facility encompasses 17,224 rentable square feet. The original bell that was rung to call children to the school still sits atop the building. The structure was added to the National Register of Historic Places on April 10, 1980, according to Wikipedia.

Bell Tower Mini Storage has an onsite manager, offers a tenant-insurance program, and sells packing, shipping and moving supplies. Its currently managed by Storage Asset Management, a third-party management company that oversees approximately 30 self-storage properties and three UPS Stores along the East Coast.

The self-storage real estate transaction faced delays due to property conditions that needed to be repaired after Hurricane Sandy in 2012. The buyer is an experienced operator who was attracted to the aggressive capitalization rate the real estate transaction provided, according to a press release from the Argus Self Storage Sales Network. Linda Cinelli of LC Realty represented the seller. Cinelli is the Argus Self Storage Sales Network broker affiliate for the northern New Jersey, New York City and Long Island, N.Y., markets.

Argus is a Denver-based network of real estate brokers who specialize in storage properties. Formed in 1994, the company has 36 broker affiliates covering nearly 40 markets.