Moove In Self Storage in Lancaster, Pa., will expand with a second phase of building in May that will add more than 12,600 square feet of storage to the facility. Phase two will consist of two single-story, drive-up buildings and cost an estimated $450,000. The expansion is in response to high demand, according to a press release from Investment Real Estate Construction LLC (IREC), the company that built the facility in 2007 and will construct the second phase.

The facility at 1250 Shreiner Station Road is one of six Moove In Self Storage facilities in the Lancaster, Pa., area. Opened in 2008, it currently has 588 drive-up and interior storage units. Facility amenities include a retail store, security cameras and keypad entry. Showcasing the unique dairy-barn design for which the brand is known, the facility sits on more than 10 acres.

Investment Real Estate Management (IREM) oversees management and marketing of the Moove In brand. IREM and IREC are branches of York, Pa.-based Investment Real Estate LLC, 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.

Moove In Self Storage operates 12 facilities in Huntingdon, Lancaster and York counties in Pennsylvania. 

Real estate prices have been gradually increasing over the last several years, and self-storage has continued to be the shining star of “niche” real estate sectors. In these very optimistic times, many facility owners are giving some thought to selling their property rather than waiting out the market. Trying to squeeze out every last penny comes with the risk of going on the always bumpy ride of the next real estate cycle.

Typically, in a real estate transaction, one party’s gain is another’s loss. But today we're in a very unique situation, where buyers and sellers can both win. The current economic climate allows each party to achieve his goals without hurting the other's position.

There is a material difference between thinking about selling and becoming an actual seller. Eventually, almost all owners will become sellers. It’s a matter of when that concerns most of them. Thinking through the following factors will help you determine how close you are to becoming a real seller, which will help maximize your investment return. Now is a time to be smart, not emotional.

Financing

It's been well-documented that the current low interest rates have something to do with the pleasant situation most self-storage owners enjoy today. While this probably doesn't come as a surprise, the magnitude of the current finance market is worth more than a cursory nod. The low interest rates, along with some financial engineering (interest-only, high-leverage, Libor floater rates, etc.), have created a tremendous opportunity for investors to achieve very compelling cash-on-cash returns, all while paying very aggressive prices.

The availability and aggressive nature of the current financing market may have to do with the supply and demand for commercial real estate loans. According to Trepp LLC, a provider of information, analytics and technology to the global commercial real estate and finance markets, commercial mortgage-backed security (CMBS) debt due in 2014 is relativity low compared to 2015, 2016 and 2017.

Because of the relatively small amount of CMBS debt coming due over the last two years and this year, it has been challenging for financial institutions to grow their production. This has led many to make loans that are outside their traditional investment criteria; for example, they've made smaller loans or loans in secondary markets, and offered better terms to bowers to grow their production.

The growing supply of willing and able lenders and the shortage of qualified borrowers has swung the leverage to the borrowers for the time being, which has allowed sellers to reap the benefits of the qualified buyer’s ability to pay more due to better financing terms. However, it’s possible the pendulum could swing back to the financial intuitions in 2016 and 2017, as they will have many more opportunities to make loans.

Competition

Another factor facing sellers today is increased competition or potential future competition. We’re seeing many local markets being are seriously affected by larger, more sophisticated operators. In addition, the prospects of new competition being built is coming back into the picture after a five-year hiatus. New development is slow in coming; however, it never seems slow if one is built in your market!

A Real Seller

Determining if you’re a real seller is the single most important decision any self-storage owner can make. A real seller has a defined reason to sell and is willing to price the property at level within the market. Serious buyers want serious sellers. When a buyer finds out a seller isn’t realistic about selling due to price, timing or market conditions, he will seldom become interested again. The result is a non-serious seller offends his best prospects, and they will remember. Overpricing is not harmless!

Personal Issues

Retirement, estate planning, partnership problems, liquidity and divorce are just a few things that make owning an investment property difficult. Experience has shown the vast majority of self-storage sales are a result of personal issues, not what brokers would consider market-driven factors. This tendency of owners to base their final decision on personal issues is entirely appropriate. However, with a bit of forward thinking about the market, small adjustments in the timing of a sale—one to three years—can have a very beneficial effect on an investment's internal rate of return. Just consider the value swings we’ve experienced over the last five years!

Any of the topics mentioned above may have a material impact on a buyer’s or seller’s investment outcome. It’s my unfortunate duty to report these unique market conditions will come to an end. I wish I could predict exactly when this will happen, but I can’t. It has been my experience that you can’t call the top of the market because by the time you make the call, the market has passed you by. If you’re at or near one of those “personal crossroads” or your gut tells you now’s the time to capitalize on the market conditions, it’s time to get serious about selling.

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.

StorageAhead, a provider of online-marketing services for the self-storage industry, will launch a cloud-based management software called StorEdge during the Inside Self-Storage World Expo, March 30-April 2, in Las Vegas. The platform will offer built-in customer relationship management (CRM) capability as well as financial and business analytics, company officials said in a press release. It also includes rate-management tools and manager task lists, and consolidates lead, tenant and unit management.

The company worked with its customers to develop the new software. “We put our engineers and designers in self-storage facilities for months of hands-on experience so they could design and build a product that they would actually use themselves,” said Robert Zhou, president. “The result is an intuitive product that a manager can learn in a day instead of in months.”

The cloud-based platform allows facility owners to supervise their facilities from any location. “With the evolution of mobile computing, renters and owners are demanding solutions that meet those needs,” Zhou said. “Whether you’re moving in prospective renters from iPads or opening gates from smartphones, you need a Web-based solution to reach those goals.”

Forthcoming updates will release quickly and directly with no disturbance to the user, company officials said.

Live demonstrations of the software will be available at the StorageAhead booth, No. 421, during expo-hall hours on March 31, 5:30 to 7:30 p.m., and April 1, noon to 5 p.m.

StorageAhead’s online marketing-support services include StorageFront.com, an online directory of self-storage facilities, and WebWorks, a Web-design and marketing service for larger operators.

Approximately 130 vendors are expected to exhibit during the ISS Expo, the industry’s largest conference and tradeshow. The event’s concurrent education program, March 31 and April 1, includes nine tracks covering issues related to self-storage ownership, management, marketing, investment, finance, building, development, liability and more. Five add-on workshop options are also available, focusing on day-to-day management, development, facility ownership, legal issues and social media.

The conference and tradeshow will take place at the Paris Hotel & Resort. Discount registration rates are available through March 28.

Created for self-storage owners, managers, developers, investors and suppliers, the ISS Expo comprises four days of education, exhibits and networking opportunities. The event focuses on strategies for generating revenue, best practices, current trends, and new products and services. Details and online registration are available at www.insideselfstorageworldexpo.com.

Real estate developer Alfred Weissman Real Estate LLC received special-permit and revised site-plan approvals last week from the Pittsfield, Mass., Community Development Board for a planned self-storage project intended to revive the look of its Pittsfield Plaza retail center. The company plans to build a 40,000-square-foot storage facility on West Housatonic Street and also agreed to update the center’s facade and make other site improvements.

The self-storage facility will be constructed at the west end of the center and offer up to 400 indoor units. The company will likely reserve a section of unfinished space until it better understands customer preferences on unit size and “other factors,” Joseph Genzano, general counsel for Weissman, told the source.

Board member Louis Costi said he would not support the project unless it included an update to the center’s entire facade, and Genzano said that was part of Weissman’s plan. "We want people to see a place that is alive," he said.

The project also required a zoning amendment to allow indoor self-storage units in commercial zones with a special permit, according to the source. Weissman received preliminary zoning approval last December and wants to begin the storage project this spring.

The company has spent months looking for ways to revive the retail center and proposed the self-storage facility last August. Weissman purchased the 51-year-old center six years ago for $2.8 million. The shopping center encompasses 13.8 acres.

Joshua Self Storage Solutions in Joshua, Texas, is hosting an auction on March 29 to benefit Makenzie Wethington, a Joshua High School student who was seriously injured in January after her parachute malfunctioned while skydiving. The proceeds will help the family cover medical expenses.

Wethington doesn’t have health insurance, according to Joseph Sidawi, who manages the self-storage business and organized the auction. The facility has already filled a 10-by-15-foot unit with donations including furniture, tools, electronics, outdoor equipment and other items. Auction items are still being accepted.

Joshua Self Storage hosted a similar charity event in 2012 that raised $700 for the local Meals on Wheels program. Sidawi told the source he hopes to raise at least that much for Wethington. The auction begins at 10 a.m. at 2032 W. FM 917.

In addition to the auction, Caddo Grove Masonic Lodge No. 352 is hosting a raffle on June 14 for a .22-caliber Henry rifle, with all proceeds benefiting Wethington. Donated by Chisholm Trail Firearms in Burleson, Texas, the rifle will be on display during the storage auction. Tickets are $5 each or five for $20 and can be purchased at the Masonic Lodge or the storage facility. To date, the raffle has raised $1,300. The Masonic Charity Foundation will match the contribution if it reaches $1,500, Sidawi told the source. The raffle drawing will be held during the lodge’s annual barbecue at the Mountain Valley Country Club.

Joshua Self Storage Solutions has served the local community since 2003. The family-owned facility offers 300 storage units, gate-coded access and 21 surveillance cameras for added security.

Oceanside EZ Storage in Oceanside, Calif., recently sold for $3.8 million to Heritage Glen Investments LLC, a Nevada limited-liability company. Built in 1973, the 209-unit facility at 444 Edgehill Lane encompasses 65,509 square feet and includes 81 boat/RV-parking spaces.

The sellers were Oceanside EZ Storage LLC, a California limited-liability company, and Ronald S. Green, trustee of the Ted J. Green Trust. The property is managed by KAN Management and the onsite manager is Jeannine Caryl.

The purchase was financed with loans for $1.9 million and $950,000 from U.S. Bank and $978,000 from Capital Access Group, according to the source.

The buyer was represented by Craig Stewart, senior vice president/principal of ACRE Investment Real Estate Services, and Chase Sandrik, senior director of ACRE. Escrow was provided by Annemarie Lococo of Chicago Title. Cameron Aldrich, also of Chicago Title, provided the title-insurance services. The seller was represented by Michael J. Gross, vice president of Allied Commercial Real Estate Inc. in Ontario, Calif.

By Molly Bilker

Canadian self-storage is an odd body. It seems pretty healthy from the outside. The heart of the market is still pumping in customers to keep facilities healthy. Growth is steady. Renovations and additions to existing facilities are regular. But there's a worrisome microbe in the bloodstream—what Canadian Self Storage Association Director Robert Madsen calls "the discount disease."

While self-storage demand is strong, discounting rental rates is a common practice among operators, Madsen says. It’s decaying profit and keeping the body that is Canadian self-storage from being its healthiest.

The cure comes in the form of marketing. Competitiveness on the Internet reduces the need for lowering costs to bring in more customers, says Hal Spradling, general manager and operating partner of Toronto-based All Canadian Self Storage. Besides, discounting may not even work as well as it seems.

"It’s extremely unlikely these concessions really change anything in the distribution of storage demand," Madsen says. "Self-storage is not a product you can increase market demand just by a price decrease."

A Heart Pumping Steady Demand

While self-storage demand isn't growing rapidly in Canada, it also isn't falling, which Madsen says is a pretty good sign. Occupancies are holding steady or improving slightly. "This will give operators great confidence to hold their rates and even work to improve them to cover some of the rising expenses we’ve experienced over the years," he adds.

Many operators expect to raise rates in 2014, now that occupancy and rental rates are picking up, says Marc Goodin, a civil engineer and owner of Caraquet & RV Storage in Caraquet, New Brunswick, Canada. "After several slow years, the rentals and rental rates are increasing," he says. A large amount of sites should start increasing rents modestly in the coming year, Madsen agrees.

With consistent demand, many operators have renovations and additions planned for the upcoming year. Vanguard Self Storage will add four buildings to the current six at its site in Peterborough, Ontario, a plan the company was always intending to carry out and chose to do in 2014 because demand was steady enough, says site manager Mark Blodgett.

Likewise, All Canadian Self Storage will add roughly 500 units to one facility and build another in Toronto, Spradling says. Apple Self Storage in Aurora, Ontario, has two expansions and a couple sites in early-stage development, says company president Phil Allan.

Madsen points out that while many existing facilities are being expanded, development of new facilities is much more difficult. "We see a lot of new activity brewing in the industry as existing facilities look to expand," he says. "New developments often see problems in high land and construction costs."

The Discount Disease

Discounting is prevalent throughout the Canadian self-storage industry. Apple Self Storage has no plans for increasing rents in the coming months because competition in the area is adding downward pressure on prices. "Everything is just going to keep pushing it down," Allan says. "We've got a lot of our competitors giving away free months and free this and free that."

But discounting only causes operators to lose money in the long run, Spradling says. "If they just figure out how much discount they're doing, how much that's costing them a year, take half of that money and put it in intelligent advertising, they could quit discounting and they'd have more money, more occupancy and better business."

Better advertising and marketing will rid operators of the need to discount, he continues. "The thinking being, ‘Oh, if I discount it, I won't get as much money, but I'll sell more.' And that's a huge fallacy, because to sell more, you have to advertise and expose your product more. Just because you're the lowest guy on the block doesn't mean more people will come to you. They have to know you're the lowest guy on the block."

Another way to minimize losses from discounting is to get creative, Allan advises. He suggests using prepayments such as giving a customer a 10 percent discount if he pays 12 months in advance. This way, the commitment is made and the customer is paid for the full year. "Depending on how you discount, if somebody walks in and wants the price on a 10-by-10 and you just reduce the price, that's one thing," he says. "And that has been happening. But pretty soon, that has to quit happening, because the prices are getting jumped on."

While some operators say rent concessions are “winding down," others, believe it’s rampant. "This is a fact of self-storage life and will become more so as operators become more focused on revenue management," says Mike Burnam, CEO of Columbia, Mo.-based StorageMart, which operates 135 facilities in Canada and the United States.

A Cure? The Digital World

The health of the Canadian self-storage market hangs in the hands of the Internet, according to Spradling. "The powers of the Web and website electronic advertising—marketing—are definitely becoming more important every day," he says. Social media such as Facebook and Twitter are becoming ever more prevalent, while search engines like Google require attentive search engine optimization as part of the marketing.

Without a handle on technology, discounting (and losing profit), may be the only answer, Spradling says. "Most people aren't concentrating on Google and reviews, and on being on the first page. They don't really know how to get there," he says. "They don't know anything about it. So those people, in order to capture the market they're losing, are going into discounting."

Many companies have a number of ideas for how to get involved with technology. Goodin says he uses Facebook and Pinterest, as well as offering customers the ability to research and reserve a unit online.

Blodgett plans to use more technology in 2014. "[We want to] look at new and different venues for advertising such as radio ads, electronic billboards and social media advertising," he says.

It's important operators invest the time and energy in using and understanding new technology when using it as an advertising tool. "How do we stay right up on the leading edge of developing value through technology?" Allan asks. "We invest in it. We invest in people and technologies to try to make it better, constantly."

Technology is rapidly defining and changing the Canadian self-storage market. Though demand may be steady, the playing field has changed. Even smaller operators can now compete with larger chains online, if they do it right. "Get better with the Internet," Allan advises. "Get better with that world, because that's where the generation has moved very, very quickly. The markets have moved dramatically in the last 12 to 18 months. They're not recognizable from where they were two years ago."

Champion Self Storage in Cape Coral, Fla., raised $540 during a Feb. 22 community yard sale to benefit Wounded Warrior Anglers of America Inc., which provides fishing excursions for inured, wounded and disabled military veterans. The facility at 2607 S.W. Pine Island Road hosts the event annually and donates all the proceeds to a local organization. Participants can rent a 10-by-10 unit from which to sell their items for the day for $15.

Facility manager Lindy Lord-Cooper presented the donation check to the organization’s founders, David Souders, a wounded warrior, and his wife, Judy.

Founded in 2012 and headquartered in Matlacha, Fla., Wounded Warrior Anglers is a national chartered 501(C) (3) public charity that provides support and programs for wounded service members and their families.

Champion Self Storage operates nine facilities in Florida, and one each in Georgia and Indiana. Facility amenities include RV parking and a retail store that sells packing and moving supplies.

StorageMart, an owner and operator of self-storage facilities throughout the United States and Canada, has purchased 16 Budget Storage and two Advance Self Storage facilities in Iowa, Kansas and Nebraska. The acquisition adds more than 1 million net rentable square feet and 8,573 storage units to the company’s portfolio, which now includes nearly 10 million square feet of rental space.

“We have been working on this portfolio since 1987 and are pleased it has finally come to fruition,” said StorageMart CEO Mike Burnam. “It fits well with our acquisition criteria for increasing or maintaining critical mass in markets where we can control expenses and push our revenue.”

The Budget Storage properties are: 

• 6520 Northwest Blvd., Davenport, Iowa
• 1800 E. Army Post Road, Des Moines, Iowa
• 2500 S.E. 14th St., Des Moines, Iowa
• 4043 E. 14th St., Des Moines, Iowa
• 3221 Martin Luther King, Jr. Parkway, Des Moines, Iowa
• 139 S.W. 63rd St., Des Moines, Iowa
• 125 S. 13th St., West Des Moines, Iowa
• 5267 Merle Hay Road, Johnston, Iowa
• 1850 S.E. Miehe Drive, Grimes, Iowa
• 205 S.W. Irvinedale Drive, Ankeny, Iowa
• 205 S.E. Delaware Ave., Ankeny, Iowa
• 60 N.E. Venture Drive, Waukee, Iowa
• 9821 Douglas Ave., Urbandale, Iowa
• 6600 Hickman Road, Windsor Heights, Iowa
• 6525 Center St., Windsor Heights, Iowa
• 1050 E. MacArthur Road, Wichita, Kan. 

The Advance Self Storage facilities are at 1501 Mahaffie Circle in Olathe, Kan., and 6101 Cornhusker Highway in Lincoln, Neb.

“We’re excited by the opportunity to not only enter the Des Moines market but to do so as the largest provider of self-storage in the area,” said StorageMart President Cris Burnam. “We’re looking forward to bringing to the people of Des Moines the high standards of service and innovation which have become synonymous with the StorageMart brand and made us a leader in the self-storage industry.”

The properties will be rebranded StorageMart and new amenities will be added if necessary, company representatives said in a press release. Amenities will include perimeter fencing, keypad gate entry and video monitoring. Storage options will include indoor and outdoor vehicle parking, climate control and drive-up access.

Founded in 1999 and headquartered in Columbia, Mo., StorageMart owns and operates more than 149 self-storage properties in the United States and Canada.