Fort Knox Self Storage of Melbourne, Australia, recently paid for four disable youths to attend the Melbourne City Mission (MCM) Gala Ball, an annual event that raises awareness around the unlimited potential for people with disabilities. The Oct. 19 celebration took place at the Grand Hyatt Melbourne as part of the charity organization’s Fashioning Futures campaign, according to a Fort Knox blog.

The evening included a two-course dinner and a fashion show featuring Madeline Stuart, the first professional model with Down Syndrome. It also acted as the launch for the organization’s new “Kickstart Your Dream” program, which matches disabled youths with mentors and provides grants of up to $2,000 that enable recipients to pursue employment, education or community opportunities.

Fort Knox has supported MCM for four years, acting as a primary sponsor for its Sleep at the G event, which raises money and awareness for homeless youths. ­This year’s event took place in late May.

MCM is a nonprofit that provides funds, programs and support to the city’s children and adults. The organization operates more than 80 programs and services each week.

Family-owned Fort Knox Self Storage opened its first facility in 1996. It now operates nine storage properties in Melbourne.

Riverside Storage Partners LLC is looking to build two self-storage facilities in Mt. Pleasant, S.C. Once complete, the properties will be managed by Extra Space Storage Inc., a self-storage real estate investment trust, according to the source.

The five-story Johnnie Dodds Lifestyle Storage at 602 Johnnie Dodds Blvd. will comprise 76,125 square feet of storage space in 535 units. The site is the former bank branch for First Federal, which closed and relocated after the company merged with South State Bank. Construction is slated for the second quarter of 2017.

The second project on Long Point Road is near the Belle Hall neighborhood. It will comprise 85,000 square feet of storage space in 652 units in one three-story building as well as a single-story structure. Construction will begin this month. Both projects will take about eight months to complete, the source reported.

As self-storage facility managers, we wear many hats. We see the good and bad. We help people and businesses in our neighborhoods solve some of their problems, often during stressful times in their lives. For some of us, the most enjoyable part of the job is simply talking with kind and friendly customers. We like keeping our facilities clean and in great condition for them. Others of us love that we’re running a multi-million-dollar business, almost on our own! We get to apply what we learned in economics class on a daily basis and watch it work.

Like any profession, self-storage management involves challenges. The lien process is probably the least fun part of the job—nobody enjoys selling tenants’ belongings. Collection calls aren’t particularly enjoyable, but many managers don’t mind it because they’re helping their customers avoid future late fees by providing friendly reminders. The only other job complaint I hear from time to time is managers get really nervous when increasing existing tenants’ rental rates.

The perspective we have when analyzing and setting rates at our self-storage stores is what determines our success. If we believe in ourselves and our facilities, we understand the value we’re providing and can confidently sell space at reasonable prices.

Setting Street Rates

To determine what you should be asking new renters to pay monthly for their units, consider the following:

Competition. How do competitors’ units, amenities, services and location compare to yours? If you were renting space, would you consider paying more to rent at your store than the other facilities in your area?

Occupancy. How much demand is there for each particular unit type? If your large spaces are always full, push the street rates on those. If you have more 5-by-10s than you could ever imagine renting, consider dropping that rate, offering a move-in special or converting them to 10-by-10s.

Not sure how much to increase rates? Try just a few dollars at a time, and keep adjusting every two weeks or month until you start losing occupancy. Your software may have a report that tells you how many days it’s been since you rented a particular size/type unit. If you notice a unit type that’s not renting and you have several available, it may be time to drop the price.

Objections. When you get to the point that rates are too high, you’ll know! You’ll hear it from your customers, or your Web reservations will start to decrease. Pay attention to your normal activity, and listen to your current and potential customers. They’ll be your guide.

Be prepared with responses to the potential “Whoa, that’s too expensive!” comments from prospective tenants. When countering price complaints, explain the great security features at your property that come with their lease. Let them know what you do to keep the property clean and dry, as well as cool or warm in off seasons. Think about other unit options for them as well. Maybe a smaller unit or an interior space without temperature control will be more palatable to tenants who display high sensitivity to rates.

Something else to consider is the expected length of stay for a tenant. If a customer is going to rent for only two months—January and February—there’s a good chance you won’t be able to rent to someone else at a higher rate during their stay. Give him a deal if you need to, but only if you need to!

Adjusting Rates for Existing Tenants

Unfortunately, the cost of just about everything in our world goes up with time, including health insurance, utilities, repairs and maintenance, and manager salaries. If a storage owner wants to continue making the same profit every year, he’ll need to increase rates.

Store managers can help by sticking to a schedule that raises rates on existing tenants at least annually. If your management software includes a system for automating rate increases, use it. Set increases to occur regularly based on move-in date. Send tenants a letter notifying them of their firstrate increase after nine months and then every 12 months after that. Many large operators are more aggressive, raising tenant rates every nine months.

How much should the rate increase be? We usually raise tenant rates between 6 percent and 8 percent annually, depending on the occupancy of the unit type as well as the gap between the tenant and street rates. If a customer got a great deal at move-in and you’ve increased street rates significantly due to high occupancy since, you may want to manually push his rate higher to close the gap. If he chooses to move out, you can rent the unit to someone at full street rate right away if demand is high. Consider holding off on raising a tenant’s rate, however, if he’s already paying 20 percent or more above street rate.

Try to take the personal aspect out of rate increases; treat it as a process that’s computer-generated. Sometimes we try to predict the reactions our tenants will have when they read their rate is going up, but we’re rarely right. All the data we’ve studied shows that less than 2 percent of self-storage tenants will move out due to a rate increase.

Similar to street-rate pricing, there are ways to overcome tenant objections to rate hikes. These include explaining the increased costs you’ve incurred to run the facility, pointing out they’re still receiving a discount (if they’re below your current street rates) and noting any physical improvements made to your property. You can also meet them halfway—agree to a $4 rate increase instead of $8. Another strategy is to push back the increase for a month or two, if you need to prevent the tenant from moving out. Usually just showing some empathy and offering help, even if it’s just a little gesture, goes a long way.

Remember, self-storage tenants tend to rent at locations that are convenient to them and managed by people they trust. Creating good rapport with new and existing tenants through conversation is the best way to help your property succeed.

Alyssa Quill is an owner of Storage Asset Management Inc., a third-party management and consulting company that oversees more than 50 self-storage facilities across the East Coast. To reach her, call 717.779.0044; e-mail [email protected]; visit www.storageassetmanagement.com.

Sam Kennard, owner of Australia-based Kennards Self Storage, last week railed against the Workplace Gender Equality Agency (WGEA) after the government agency named his company among 74 businesses identified as “non-compliant” in an annual report that monitors gender equity in business. The self-storage operator reportedly didn’t submit answers to a questionnaire on gender-equality indicators as required by law. In response to the report, Kennard said the WGEA was “dripping in hypocrisy” and “should be abolished,” according to the source.

“My company does not discriminate for race, age, sex or religion,” Kennard told the source. “If someone has a good attitude, [is] not afraid of work and willing to learn, they’re a starter in our view. This is not a particularly profound or enlightened perspective; it is just common sense. It is good for business.”

Australia law requires companies with more than 100 employees to submit information each year to the WGEA that details male-to-female ratios and salaries, among other data. Kennard is among a group of business owners who have criticized the questionnaire as being too time-consuming and a violation of private information. “I can confirm that we do discriminate against time-wasting bureaucracies,” Kennard said. “The WGEA is a prime example of unnecessary government intrusion into the activities of businesses. My business has much more productive endeavors to pursue than filling out paperwork for government agencies like the WGEA.”

By failing to comply with the Workplace Gender Equality Act of 2012, “organizations may not be eligible to tender for contracts under commonwealth and some state procurement frameworks, and may not be eligible for some commonwealth grants or other financial assistance,” according to the WGEA report.

“While politicians and economists lament the declining productivity in our economy, it is exactly this red tape and the imposts of these bureaucracies that tax the efforts of enterprise,” Kennard told the source. “If the government was serious about tackling productivity, it would get out of our way; it would abolish the WGEA and the abundance of other regulations they lay on.”

Kennards operates more than 80 self-storage facilities in Australia and New Zealand. Based in Sydney, the family-owned business opened its first storage facility in 1973 in Moorebank, Australia.

Self-storage developer Arcland Property Co. has proposed a land exchange with Arlington County, Va., that would enable it to build a six-story, 150,000-square-foot storage facility on land near Washington-Lee High School. Under the proposal, Arcland would exchange 3.5 acres it owns on South Shirlington Road for 2.3 acres on North Quincy Street. The properties are adjacent.

Arcland already leases a portion of the Shirlington land to the county for bus parking. The deal would provide the county a permanent spot to park buses and expand its fleet. It would also save $4 million in lease payments. The county agreed to buy 6.1 acres on North Quincy in 2015 for $30 million. Arcland would get a portion of the parcel, known as the Buck property, closest to North Quincy. The developer intends to use only 1.2 acres of the land for the self-storage facility and lease the remaining 1.1 acres back to the county “at below market rate,” a source reported.

Though the Buck property is already zoned for light-industrial use, which includes self-storage, the county would require a building design that aesthetically fits in with the community and meets set-back and height restrictions, according to a source. Arcland developed a CubeSmart self-storage facility that’s also adjacent to the two properties discussed in the proposed exchange.

“This is a rare opportunity for the county to secure land in Shirlington, zoned for light-industrial use, that could accommodate our growing bus fleet,” county manager Mark Schwartz said in a released statement. “We have a critical need for support facilities, and must make smart, tough decisions about land to meet those needs. If the [county board] is interested in pursuing this proposal, I will work to shape an agreement with Arcland. I am confident that we can put facilities on these sites that will both serve our community’s needs and allow us to be a good neighbor.”

If approved, the land swap would occur after Nov. 20, 2017, which is when the county is expected to exercise its option to close on the Buck property. The county board is expected to discuss the proposal during its Dec. 13 meeting, but would most likely vote only on whether to enter negotiations with Arcland, a source reported.

Based in Washington, D.C., Arcland is a real estate development and investment company specializing in self-storage acquisitions and development, including conversions, according to its website.

Homeowners in Richmond, Va., are contesting a self-storage development proposed for a 2-acre landmark site in a residential area. More than 100 people signed an online petition against the project last week, according to the source. A public meeting to discuss the proposal is scheduled for Dec. 6.

Hanky LLC, which signed a contract to purchase the former Forest View Rescue Squad building, is seeking a special-use permit to change the property on Forest Hill Avenue from residential to commercial. Michael C. Hanky sent a letter to neighbors in July outlining the company’s plans for the development, which includes about 700 interior, climate-controlled units. “I believe this use is a great fit for the location due to its low impact on surrounding properties,” Hanky wrote. “The type of storage building that I am proposing incorporates area-appropriate architecture, is extremely quiet and generates very little traffic.”

A second letter on Nov. 21 from Hanky’s attorney stated the storage building had been redesigned based on homeowners’ input “in an effort to offer a more aesthetically pleasing view and preserve sight lines from neighboring property.” The facility would incorporate four-sided architecture and high-quality building materials including brick, split-faced concrete masonry units and synthetic stucco, wrote Andrew Condlin, a partner at Roth Doner Jackson Gibbons Condlin PLC.

Krystyna Lineberry, who launched the Change.org petition and shares a property line with the site, said she and her neighbors plan to fight the zoning request. “If we’re enjoying our deck or pool in the summer, I don’t want to have to look at a commercial building next to me. I think the effect on my property value would be very detrimental,” she said.

Residents are also concerned about increased traffic and the property’s lighting. “If I ever put my house on the market and people walk out back and see this monstrosity of a storage unit, that’s a pretty big negative,” said Paul Hamlet, whose property borders the lot. “Traffic’s a big issue. A lot of people are concerned about theft.”

The facility’s design includes screening trees and a 50-foot buffer along the rear of the property to block any negative visual or noise impacts, Condlin said.

Hanky declined to address the online petition. “We reached out to the community several months ago in an effort to make neighbors aware of our proposal and solicit their feedback. We have just recently become aware of these concerns and want to respond appropriately at the community meeting,” Hanky wrote in an e-mail to the source.

The William Warren Group (WWG), a privately held real estate company that operates the StorQuest Self Storage brand, is building a $14 million facility at the edge of the River North Art District (RiNo) in Globeville, Colo. The company purchased an acre of land near Interstate 70 and Washington Street last month for $1.43 million. Construction is expected to begin in early 2017 and take about 12 months, according to the source.

The location offers access to the highway as well as downtown Denver, according to Jon Suddarth, development manager for WWG. “The visibility to the freeway is huge. It’s a major ingress and egress point to downtown and the RiNo area, especially with all the new apartments that are being built on Brighton Boulevard,” he said.

The property will comprise 80,000 square feet of storage space in 900 units. Customers will enter the facility off Pearl Street and drive into the building to access units. The retail office will feature a variety of tenant amenities including the use of iPads for new rentals. “We’re putting in some incredible amenities and a really cool leasing office,” Suddarth said.

WWG has aggressively pursued the Denver market for the last couple of years. It opened a facility this summer in the Denver Technological Center and expects to open another at 549 Kalamath St. this week. A third property on Colfax Avenue is under construction and slated to open next summer. Each property comprises 70,000 to 80,000 square feet of storage space.

The company targeted Colorado to meet pent-up demand, Suddarth told the source. “There were over 70 projects in metro Denver planned, rumored on under construction as of last summer,” he said. “Of course not all of those will be built, but 70 projects in a market that can take only about 10 or 15 in year was a concern.”

Founded in 1994 and based in Santa Monica, Calif., WWG acquires, develops and operates more than 100 self-storage facilities in Arizona, California, Colorado, Florida, Hawaii, South Carolina and Texas.

We all want some control in our lives. Whether we’re concerned about our health, lifestyle or working environment, it’s good to be in control. At the same time, it’s good to recognize that some things are beyond our control, like the weather, football kickoff times and our Thanksgiving dinner appetite.

By a similar token, self-storage owners have many things beyond and within their control when it comes to refinancing their properties. With today’s low interest-rate environment and compressing capitalization (cap) rates, it’s easy to think you’re in control—and you are to a certain degree. More important, it’s critical to understand factors that affect a lender’s decision so you can be in the driver’s seat throughout the refinancing process. Following are factors you can and can’t control along the way.

Beyond Your Control: Interest Rates

Global economics and bond markets, combined with the Federal Reserve’s hesitancy to rapidly increase rates, have created a sustained low-interest environment. There are indications the Fed will continue to monitor economic conditions and gradually increase short-term rates into 2017.

If these projections hold true, then variable-rate loans tied to LIBOR (London Interbank Offered Rate) or prime rates will be immediately affected. The Fed historically increases or decreases short-term rates to influence the pace of national growth. Long-term rates are tied to additional factors, such as global economics, inflation and supply and demand, and don’t directly move with short-term rates. Expect increases on both types of rates over time.

Beyond Your Control: Credit Standards

Be prepared for lenders to diligently underwrite and document your loan request. Bank credit committees and compliance departments have remained in check due to conservative regulatory oversight and guidance. Among many regulations affecting commercial real estate financing are those correlating the level of construction loans relative to the lender’s size, as well as guidance regarding a borrower’s ongoing equity.

At the end of 2016, risk retention regulations come into effect requiring commercial mortgage-backed securities (CMBS) lenders and related bond investors to retain a portion of every bond deal. Time will tell how these new risk-retention rules potentially affect CMBS lenders’ interest rates and refinancing programs.

Beyond Your Control: Property Management and Economics

Despite currently high occupancy and rent levels, every self-storage facility and submarket is affected by new storage construction. Among other influencing factors are a facility’s relative location, marketing, Internet presence and local market demand. Even the best-positioned properties are likely to experience rent and occupancy pressure with the arrival of new competitors. Rest assured, lenders will consider the new developments’ potential economic impact on your property performance when underwriting loans and determining financing amounts.

While historically high occupancies with upward trending rents bode well when presenting a loan request, lenders can be more cautious with terms and leverage if new competition enters or starts building within your immediate locale. Worse, if your revenue declines due to new competitors, lenders will likely make downward adjustments to your income when deriving a loan amount.

Within Your Control: Your Priorities

It’s hard to have the best of all worlds, so you must prioritize your priorities. Your answers to the following questions will help determine the type of lender best suited for your refinancing needs:

• What loan size are you are seeking?
• How much would you like to leverage your facility?
• If leveraging up from a current loan, how much cash investment will still be in the deal?
• Do you want a variable- or fixed-rate loan?
• How important is it to have prepayment flexibility with limited penalty?
• Is reducing recourse exposure important to you?
• Do you want to reduce your monthly payments with a longer amortization or interest-only period?
• What is this asset’s credit history, along with the rest of your real estate portfolio?

Within Your Control: Lender Selection

Local, regional and national lenders—primarily banks and CMBS institutions—have embraced self-storage as an attractive market. Today, more banks than ever will finance self-storage, while CMBS sources have remained steady. As we all know, though, talk is cheap and comes down to a lender who understands the industry and wants to lend by providing aggressive loan terms vs. those who will lend with conservative rates and terms relative to other property types.

Any lender’s policies and portfolio mix changes over time based on performance results. A lender who offered aggressive terms on one deal may not necessarily offer the best options for the next. By creating relationships with lenders, monitoring markets and researching alternative financing quotes, you’re more likely to receive competitive terms.

Within Your Control: Early Financing

While fixed-rate loans are attractive for locking in an interest rate for a defined period, they often come with prepayment-penalty provisions. Consider a cost-benefit analysis of prepayment penalties as you reach the latter stages of your current loan.

Incurring a prepayment fee to refinance your property could offer access to significant equity trapped in the current loan. It also may make sense to pay an existing loan’s prepayment fee to secure new financing with a much larger balance; the resulting cash-out can then be used to redeploy your capital for new acquisitions, development or investments. You can also consider capitalizing on today’s low interest-rate environment to refinance into a new fixed-rate loan.

Within Your Control: Borrowing Track Record and Reputation

Successful real estate owners strive to maintain strong reputations among their financing sources. Remember, lenders will examine your entire portfolio’s performance—along with historic financing/operating track records—from positive and negative perspectives.

For CMBS loans, reporting and historic information are highly transparent. By using reporting vehicles, such as Trepp or Bloomberg, CMBS lenders can access your entire loan history, including occupancy levels, operating performance, payment history and any relevant servicer conversations. Accordingly, if your servicer records a “blip,” then you’ll likely have to explain its circumstances when seeking CMBS financing related to that asset or another one in your portfolio.

Within Your Control: Refinance Planning Horizon

Undoubtedly, you know when your current loans mature and the timetable for examining your refinance options. Here are a few simple tips when planning your options:

• Watch economic and banking markets since they may have as large an impact on your property investment as your daily operations.
• Run your facility in accordance to how your daily operation could affect refinancing or potential sale.
• Maintain strong banking relationships, yet look for alternative lending options that may be available when you choose to refinance. Consult with a mortgage broker who specializes in self-storage and can advise you on current and historical lending environments.

It’s nice to be in control; but when you can’t be, it’s beneficial to understand the factors affecting present circumstances. When it comes to refinancing your self-storage property, accept the influences within and outside your grasp, and the process will go more smoothly.

Neal Gussis is a principal at CCM Commercial Mortgage, a mortgage-banking firm that secures financing for self-storage owners nationwide. With 25 years of experience as a national self-storage mortgage broker and adviser, Neal has secured more than $3 billion of self-storage transactions for operators. For more information, call 847.922.3750; e-mail [email protected]; visit www.ccmcommercialmortgage.com.

Mamaroneck Self Storage in Mamaroneck, N.Y., is the recipient of the 2016 Home Building Industry Award (HOBI) for Best Green Commercial Project by The Home Builders & Remodelers Association (HBRA) of Central Connecticut, a nonprofit association comprising 400 companies in the home-building industry. The HOBI Awards recognize excellence in design, construction, sales and marketing, and financing by members of the organization.

Mamaroneck Self Storage comprises 40,000 square feet of storage and was designed by local architect Kim Martelli. It was built according to the New York State Energy Research Development Agency’s new-construction program’s energy-efficiency guidelines under the direction of energy-consulting firm Steven Winter Associates. The energy upgrades incorporated into the construction have made the building 52 percent more energy-efficient than required by the building code, according to a company press release. This has resulted in more than $30,000 in annual electric-cost savings.

"Award-winning projects are always the result of teamwork,” said Chris Murphy, president of Murphy Brothers Contracting, the developer and owner of Mamaroneck Self-Storage. "We are grateful to our entire team for what they contributed to building a very successful building and business as reflected by this award."

Murphy Brothers was also awarded Best Exterior Home Feature, Outstanding Library and Best (commercial) Adaptive Reuse.

Founded in 1979 and headquartered in Mamaroneck, Murphy Brothers constructs and renovates custom homes and builds commercial projects in the Westchester Hudson Valley region and Fairfield County. It also owns Murphy Brothers Millworks.