Mark Beck, former vice president of operations for the William Warren Group and StorQuest self-storage, has launched a new self-storage coaching firm, StorageAlly. The company will provide industry consultation, facility support and employee training at all levels. Self-storage owners and operators can access a range of services including sales training, phone and mystery shops, facility audits, employee recruiting, collection training, competitor surveying, social media support and strategic planning.

Beck has been in the self-storage industry for 18 years. In addition to his post at StorQuest, he previously served as a market manager for Shurgard Self Storage in Belgium and an ambassador for the California Self Storage Association. During his career, he has assisted in the operation of more than 200 self-storage facilities in Europe and North America.

Having worked his way up the ranks from the position of assistant self-storage manager, Beck said he understands the day-to-day details of the industry. As a result, he wants to provide the type of affordable support that employees and small operators find valuable. His new company aims to serve small to mid-size self-storage businesses.

The assistance a company needs may require one day, one month or even several months. Its about building a strong enough foundation on which the business can ultimately prosper," Beck said. Whether youre a new self-storage facility owner who wants to get off on the right foot or someone who wants to take an existing business to the next level, we can certainly help business owners achieve that goal."

StorageAlly's one-on-one intensive coaching or team instruction is available 365 days per year. All calls placed to the company after normal business hours will receive a response within two hours. Training may be delivered through face-to-face contact, telephone or webinar and involves examining a clients goals. The next step is to remove any barriers and promote a more profitable strategy based on company capacity and current industry trends.

StorageAlly will participate in the upcoming Inside Self-Storage World Expo in Las Vegas, where Beck will present a seminar titled "Handling Customer Reviews and Complaints in a Facebook World." He'll teach attendees the importance of social customer service, how to better serve customers online, why they need an online recovery strategy, examples of social customer-service successes and failures, and how to respond to an upset customer via Facebook and Twitter. Expo details can be found at www.insideselfstorageworldexpo.com.

Consumers and businesses in many parts of South Africa are still learning about the benefits a well-run self-storage operation can offer. However, the demand for units in the KwaZulu-Natal province, particularly around the city of Durban, is so high that the owners of Giba Storage launched their business last year on a large plot of land thats also home to a gravel-borrow pit. In fact, waste material from the quarry comprises the blocks used to construct the storage units.

Giba Storage opened in December 2011 with 56 units. Based on demand, the owners raised rental rates 16 percent by the end of their first week. By the end of the month, 40 units had rented, and by the end of January, the facility was fully booked and placing names on a waiting list. The owners are adding another 20 units and plan to offer 250 by the end of June 2013 as part of their phase-one plan.

We will continue building units while there is a demand, says CEO Chris Harburn, adding that the only marketing Giba Storage has used is Google AdWords. It has been a fascinating introduction to an interesting industry, and we are learning as fast as possible. We realize that no business is easy, and we are trying to keep our feet on the ground. It is early days; we know very little about the industry.

The Attraction

The facility is in an area famous for its diverse nature and outdoor activities. The Giba Valley is known locally as Clifton Canyon, and since 2007, it has become popular with the public thanks to the opening of the Giba Gorge Mountain Bike Park. Outdoor recreation and activities in the valley include boot camps, horse trails, venture groups, mountain-bike rides, organic produce, restaurants and conferences. Harburn believes it has the potential to become one of the major lifestyle and tourist attractions in KwaZulu-Natal and all of South Africa. Giba Storage is in Giba Business Park in Westmead, about 29 kilometers outside of Durban.

Giba Storage offers roll-up, shutter doors on units and plenty of space for customer parking and vehicle access, he says. The standard unit size is 5.52 by 2.78 meters, with a ceiling height of 2.75 meters. Standard units rent for nearly $85 per month, excluding a value-added tax.

Customers have access to the facility 24 hours per day. The office/reception area is open 7 a.m. to 5 p.m., Monday through Friday, and 7 a.m. to 1 p.m. on Saturdays. All units have a 24-hour guard linked to an armed response unit, and an electric fence surrounds the site.

Giba is keen to provide customers with a cost-effective, professional self-storage solution, suited to personal budgets, Harburn says. We are currently reviewing the demand for other unit sizes.

Harburn is optimistic about Giba Storage, particularly with consumer demand high in KwaZulu-Natal. Self-storage operators in the Durban area are either mostly full or have only one or two units available at the end of the each month, he says. Three facilities in the area are currently expanding their operations.

Harburn says hes thankful for the amount of help and advice offered by existing self-storage operators. The industry is still in its infancy and has huge potential for growth, Harburn says. It is exciting times in an otherwise dull economy.

A self-storage auction buyer recently purchased the contents of a unit at Pond Springs Storage in Austin, Texas, for $51 and discovered 500 separate pieces to a 1959 Cadillac under a greasy tarp. In restored condition, the two-door coupe could be valued at more than $50,000, according to MyAustinStorage.com, which owns the facility.

Pat Jones bid uncontested on the unit and knew he was onto something good when he found two restored white bumpers with classic 1950s-style fins. "When I saw that fin, I knew it was a classic car part, but one part doesn't make a whole car, he said. As I started getting a grasp on the volume of parts, I realized we had an entire car here, just in more than 500 separate parts."

The VIN numbers on the parts revealed they belonged to the same vehicle. "It appears the previous owner was using the storage as a second garage and restoring the car in the storage unit, Jones said. He had gotten so far as to have re-chromed and restored over half the parts. It is quite a mystery how and why this car arrived here in pieces."

MyAustinStorage.com holds storage lien auctions about four times a year. Its next auction will likely be held in March, officials said. The company owns two additional self-storage facilities in Austin.

A proposed four-story self-storage facility in Wheaton, Ill., has been approved by the city council despite resistance from officials in nearby Carol Stream and other critics who believe The Lock Up Self Storage structure will negatively impact a local shopping center.

Wheaton officials agreed in December to annex the unincorporated parcel as long as BRB Development LLC purchased the vacant lot within 90 days. The company met the deadline, and council members this week unanimously approved the annexation. Officials also granted a special-use permit for the project.

BRB Development plans to build an 80,772-square-foot indoor facility on the property. Opponents argued against the 46-foot-tall building, insisting it will hurt businesses at the nearby Geneva Crossing shopping center, which is inside the Carol Stream boundary.

In September, Carol Stream board members passed a resolution objecting to BRB Developments plans, including concerns that the height of the storage facility would reduce Geneva Crossings visibility. Wheatons approved plan is now in accordance with city storm-water requirements. An earlier plan complied with county standards but not Wheatons stricter guidelines.

The Lock Up operates self-storage facilities in eight states, including 13 in Illinois.

A five-facility self-storage portfolio in Chicago recently sold to two separate companies for $41 million. Four of the properties were acquired by real estate investment trust Sovran Self Storage Inc. The fifth, near Loyola University, was sold to the Core Property Fund of Chicago-based Harrison Street Real Estate Capital (HSREC). All five properties will be rebranded as Uncle Bobs Self Storage, Sovrans operating brand. The Harrison Street property will be run by Sovrans third-party management company, Uncle Bobs Management LLC.

The portfolio encompasses 253,230 rentable square feet of self-storage space in 3,164 storage units, a 15,000-square-foot Walmart Express store and 84,586 of commercial space. The properties are in the following neighborhoods:

• 3636 N. Broadway St., Wrigleyville
• 6331 N. Broadway St., Loyola University/Rogers Park
• 615 W. Pershing Road, U.S. Cellular Field/Bridgeport
• 345 N. Western Ave., West Loop near the United Center
• 2051 N. Austin Ave., Belmont Central

The transaction consists of a combination of new developments and renovations performed by John S. Mengel on behalf of JSM Venture Inc. and the Matrix Midwest Storage Fund. The sale was brokered by MJ Partners Real Estate Services, a full-service real estate brokerage and investment-banking company specializing in commercial real estate, mortgage banking and consulting services.

Sovran operates 443 properties in 25 states. The company is actively acquiring additional self-storage facilities.

Founded in 2005, HSREC is a real estate private-equity firm that directly and through its affiliates has approximately $4 billion in assets under management.

Cathartes Private Investments (CPI), a Boston-based real estate and energy-development firm, moved a step closer this week to receiving approval for a 570-unit self-storage facility in Westford, Mass. Representatives of the company shared project updates and changes with the planning board in response to previous hearings.

Attorney Doug Deschenes, a partner with Deschenes & Farrell, P.C., and Matt Waterman, a civil engineer with Land Tech Consultants, represented CPI.

Design changes included increasing the facilitys office from 600 to 800 square feet and adding two parking spaces. Waterman also revealed architectural elevation drawings, building floor plans and a site layout.

To accommodate previous city concerns, the onsite cistern has been increased from 10,000 to 32,000 gallons, and shrubs and trees will be removed from a snow-storage area to keep driving aisles clear when it snows. CPI also submitted a waiver request for the full traffic study.

The proposed facility will be on Commerce Way off Groton Road near Westford Solar Park and the ACE Hardware Plaza. It will encompass 72,800 square feet of storage in seven single-story buildings. An existing 14,000-square-foot office building will be demolished.

The proposal also includes reconstruction of the intersection of Commerce Way and Groton Road and roughly 1,100 linear feet of Commerce Way leading up to the facility.

The planning board will discuss the project again Feb. 19.

The Self Storage Industry Group (SSIG) of commercial real estate firm Cushman & Wakefield recently released its fourth-quarter 2012 Self-Storage Performance Quarterly (SSPQ), a research report containing income and operational data from more than 7,000 facilities in the nation's 50 largest metropolitan statistical areas (MSAs). The report also includes data regarding new construction trends, the use and cost of concessions, market rent and vacancy, and trend analyses. Notable findings include:

• The Self Storage Performance Index increased 11.8 percent to 106.9 compared to the fourth quarter of 2011.
• Compared to the fourth quarter of 2011, asking rents increased 2.3 percent to $0.90 per square foot per month for a ground-level, 10-by-10 unit without climate control.
• Median physical occupancy was up 5.3 percent to a national average of 85.7 percent compared to a year earlier.
• The number of facilities offering concessions is down from a year ago. The Concession Cost Index is at 96.5 compared to 103.5 a year earlier and is at its lowest point in the fourth quarter since 2005.

Several years of recessionary market conditions caused many owners to be cautious with respect to raising rental income, but supply-and-demand metrics have improved, as shown by improved occupancy," said R. Christian Sonne, executive managing director of the SSIG.

The complete fourth-quarter SSPQ can be purchased at the Inside Self-Storage Store, a website providing on-demand insight and education for self-storage professionals. The store offers other C&W products including Metropolitan Statistical Area Reports, National Rental Activity Reports and customized Trade Area Snapshot Reports. Details can be found at www.insideselfstoragestore.com.

Cushman & Wakefield advises and represents clients on all aspects of property occupancy and investment. The firm's Valuation & Advisory Division, which includes the SSIG, is one of the largest real estate valuation and consulting organizations in the world. Founded in 1917, the company has 253 offices in 60 countries and more than 14,000 employees. It offers a complete range of services for all property types including leasing, sales and acquisitions, debt and equity financing, investment banking, corporate services, property management, facilities management, project management, consulting and appraisal.

A man who threatened a self-storage employee this week at Secure Care Storage in Oklahoma City, Okla., made off with an unknown amount of cash. Although he did not produce a weapon, the office worker told police she was afraid the man might hurt her.

The suspect first entered the self-storage office and asked what time the facility closed. After asking if he could use the phone, the man told the employee he was locked out of his nutrition business and needed money for gasoline. When the worker refused to give him cash, he said, Give it to me, or I will take it.

The suspect fled in an older model, dark-turquoise Chevrolet pickup truck. He is described as a white male in his late 40s or early 50s. He was thin and wearing blue jeans and a gray sweatshirt. Video cameras at the facility captured the man on tape, and police have released the footage hoping someone will recognize him.

Anyone with information about the crime is encouraged to call Crime Stoppers at 405.235.7300.

Self-storage is known for its ability to weather swings in the economy that negatively impact other property types. However, the end of the last decade was marked by developers and investors who rushed to capitalize on a great opportunity. As builders added to the supply and investor demand drove up prices, the need for storage began to decline as the country sunk into a major recession. The storage industry experienced its first major decrease in operating performance.

The industry has now attained the point reached by other property sectorsthat is, performance depends on the type of market and operator. There are two types of markets, primary and secondary, and two distinct types of operators, real estate investment trusts (REITs) and non-REITs. The non-REITs are divided into large non-REITS, which includes facilities with 300 or more units, and small non-REITs, which are facilities with less than 300 units.

This article examines the current operating performance of REITs and large and small non-REITs. Its focus is the primary markets, which are defined by the U.S. Census Bureau as the nation's 50 largest metropolitan areas (MSAs), having a population of at least 1 million people. Its believed these first-tier markets offer the best opportunity for lower-risk investments due to their high barriers to entry, greater population density, high household incomes and employment opportunities.

Self Storage Data Services Inc. (SSDS), an independent research firm that maintains the nations largest database of self-storage operating statistics, estimates there are about 18,000 storage facilities in the primary markets; 75 percent of these facilities could be considered investment-grade. The majority of REIT facilities are in one of the 50 primary markets.

The majority of the nations self-storage facilities are in secondary (second-tier) or even third-tier markets. Its important to note that being in a secondary market doesnt mean a facility will not perform as well as those in a primary market. Nor does it mean the return on investment will be less. On the contrary, its often the secondary markets that yield the greatest rate of return, which justifies the investment risk.

Where Are We Now?

According to the National Association of Real Estate Investment Trusts (NAREIT), self-storage has been significantly outperforming all other property types during the economic recovery. Based on NAREITs Index of Total Returns, the accompanying graphic illustrates how much better self-storage is performing compared to other investments including retail, industrial and office.

Nationwide operating performance is strong and getting stronger. The strength of demand for storage depends to a great extent on the economic recovery, so a word of caution: Owners should expect to see only moderate increases in asking rental rates, physical occupancy and rental income over the next year compared to what operators experienced in 2012. Nevertheless, current storage fundamentals are improving and are expected to continue doing so in 2013.

Greater barriers to entry and limited construction financing means there will only be limited new supply in the primary markets over the next 12 to 24 months. Demand, however, continues to increase as a result of the recovery in the housing market and improving employment opportunities. Both can generate a need for a household move and new demand for storage. As the economy continues to improve, so will consumer confidence, and more people will seek storage.

SSDS measures performance based on changes in asking rental rates, physical occupancy, concessions and rental income (revenue). The performance-at-a-glance table summarizes performance in the fourth quarter 2012 based on the SSDS preliminary findings on more than 7,000 facilities in the primary markets, in public and privately operated facilities.

Overall, both the REITs and non-REITs experienced improved operating performance in the fourth quarter of 2012 compared to the fourth quarter of 2011. As a result of owners being able to increase asking rental rates and physical occupancy by 2 percent, and due to a large decline in the need for owners to offer more costly concessions, the average facilitys rental income increased 5.5 percent.

By the end of the 2012, facility operating performance had returned to pre-recessionary levels in 21 of the 50 primary markets. Six markets were back to the same level of performance at the time the recession started, and 13 markets, or one-third of the country, was still operating below the third-quarter 2006 peaks.

However, the level of operating performance in the fourth quarter of 2012 was not the same for everyone. The REITs and large non-REITs experienced better performance, but that wasnt the case for small non-REITs. Furthermore, the REITs outperformed the non-REITs in the same primary markets in each of the four regions of the county, and the large non-REITs outperformed the small non-REITs.

Conclusions

The slow but steady economic recovery, the limited new supply, and the gradual absorption of vacant units has allowed most facilities in all the primary markets to return to their pre-recession levels of performance. Self-storage owners should continue to see improvement in performance during 2013, bearing any major economic downturn. Storage facilities in primary markets will outperform those in the rest of the country due to an ever-increasing population density, higher household incomes, better job opportunities and stricter barriers to entry.

The REITs' growth in the months ahead will be slower than what it was in 2012. While their occupancy levels are higher than those of the large non-REITs, their rental rates are also nearly 20 percent higher, giving the non-REITs a slight advantage going forward. But the REITs have a also competitive advantage, particularly over the small non-REITs, due to their superior access to technology with which to build effective revenue-management systems and their easy access to lower-cost capital for marketing. As a result, some small non-REITs will use the services of a third-party management companies to better compete with the larger operators.

Charles Ray Wilson is the founder of Self Storage Data Services Inc., an independent research firm that maintains the nations largest database of self-storage operating statistics. Hes an internationally recognized leader in providing independent research on the self-storage industry. Hes currently the managing director of Cushman & Wakefield Western Inc. For more information, visit www.ssdata.net.