It’s time to sit up and take notice. The times have changed, and nobody seems to be setting up shop on Easy Street anymore.

It is abundantly clear that the so-called sub-prime mortgage debacle may be just the tip of the iceberg of problems in modern finance markets. Easy to obtain, cheap credit is the great lubricant that makes the engines of commerce really hum. Unfortunately these lubricating characteristics are the part of the formula that ultimately causes the credit system to break down.

Credit availability is largely a function of the lender’s confidence to be paid back with reasonable interest. Unfortunately, there are fewer institutions, or individuals, that find they have enough confidence in borrowers to lend money without what would have been significantly excessive guarantees or collateral just six months ago. One reason short-term Treasury Notes are yielding so little interest is that many investors are buying them just to preserve value because they can’t be sure that many of the traditional money funds, and the other so-called secure short-term investments, are not turning out to be secure and illiquid.

What About Wall Street?

We all remember Jimmy Stewart in It’s a Wonderful Life, the run on his little bank and what a pickle it put him in. Well, it is the same story today except that the bank is now the whole international financial system, and it appears to be in trouble because of lending unlikely to be paid back or having the collateral to cover the debt. Thank you, Wall Street, for inventing these "innovative" ways to create credit that appear to be safe, but manage to fail to be repaid just after Wall Street sells it.

You might ask how could we, as mere mortals, have known what was going on? There is an easy-to-read little book called, A Short History of Financial Euphoria, written in 1996 by John Kenneth Galbraith, the famous and witty economist. The book not only tells of similar events in history, but more important, tells how to identify the next wave of "euphoria."

Moving Targets

Being in the self-storage business puts you square in the middle of the real estate business and, thus, the value of your property and the financing are ruled by the valuations imposed by the real estate world. For the last four or five years this arrangement has been absolutely terrific for self-storage owners as cap rates declined between 2.5 percent to 3.5 percent. (Remember, as cap rates decline, values go up; hence, the equation Income/Cap Rates = Value).

At the low end of the range, this means facility value went up by about 37 percent during that time without any increase in income. If you kept your old loan (assuming 75 percent leverage), your equity shot up by 127 percent. But the story still gets better. At the same time cap rates were dropping, interest rates on loans declined by about 3 percent, and the amount you could borrow went from 75 percent of value to 80 percent, possibly more if you included the benefits of substantially looser underwriting.

The combination of the value increase, lower interest rates and easier underwriting would mean you could add about 50 percent to the loan amount and pay roughly the same amount of interest as before the refinance. All of this was available without any personal liability. The real estate business was very good to self-storage owners over the last handful of years. It just doesn’t get any better than free money!

So It Goes

Starting last summer, things began to change. The sub-prime market in residential real estate got very weak, the commercial loan folks said the loan-to-value ratios were out of whack and wanted the underwriting tightened up, then the big Wall Street Banks started taking big write-downs. To quote Kurt Vonnegut, "and so it goes."

Today we find ourselves in quite a different spot than a year ago. Cap rates have gone up between 1 percent and 1.5 percent, causing values to decrease, but even worse, there are fewer buyers around. Despite the Fed lowering short-term rates, the spreads (the difference between the 10-year U.S. Treasury rate and the interest rate) lenders charge for risk have almost tripled, leaving loan rates just slightly above where they were last year (which are still very reasonable in the context of a longer history). The bad news is that all of the Wall Street generated conduit loans are gone; thus, the life companies and banks can now get the exact terms they want and need from needy borrowers.

The underwriting is much more restrictive (maybe saner):

• 12-months trailing income
• No proforma income
• 60 percent to 70 percent loan-to-value ratio
• Good markets only

The remaining lenders, while not impossible, can be pretty picky. I asked Steve Clifford at NorthMarq to compare the loan a hypothetical class-A quality facility could have gotten last February and again this February. His summary is below.

The bad news is that not only are loans harder for you to get, but they are also harder for your potential buyer to get. Even though the cap rates have gone up and values down, the lower loan-to-value ratios means the buyer must still put up about as much equity. This doesn’t mean there are no buyers; there are still many, but they aren’t quite as eager as before.

Evaluation Time

This is the section where, with the advice and opinions presented here and $3.75, you can get a latté at Starbucks. So, for what it is worth, I will try answering the looming questions:

• How bad is it? I don’t think anyone knows, but the bad numbers keep getting bigger and coming from unexpected places. I’ve been in the real estate business 37 years and have seen three major downturns, and this is by far the most widespread problem yet. One measure of the problem so far might be what has happened to the self-storage REITs. For example, one year ago the stock of PSA was trading at $113 per share; today it’s $73. This is a stock with improved business fundamentals!
• When will it be over? No one knows, but no one seriously thinks it will be over quickly. Other commercial real estate performance is probably going to get worse and housing prices may still go down more.
• What do we do? If you don’t have a loan with a fixed interest rate and at least five or six years left on the term, refinance! Now!Get more term. Don’t wait! If you are thinking about selling in the next three years and maybe even five years, sell now! Cap rates will go up more (values down), if for no other reason than longer-term interest rates will go up as investors demand more return for their risk. Think about the value numbers in the first paragraph, but in reverse.

Make sure your property is competitive in your marketplace by comparing your facility to your competitors. Compare visibility, location, access, maintenance, employee quality, security, traffic counts and, of course, price.

Check at the city offices for new building permits or plan approvals in your market. Give very serious thoughts to the potential of overbuilding. If a new facility causes your occupancy to go down by just 5 percent and your rents to go down by 5 percent (including rent concessions), your equity (assuming a 75 percent loan) will decline between 50 percent and 60 percent.

So there you have it. Yes, there’s a new sheriff in town. He doesn’t appear to smile much and he packs a powerful punch. My advice to you is to stand tall and walk on the straight and narrow side ... at least for the time being.

Michael L. McCune is president of the Argus Self Storage Sales Network, a self-storage real estate brokerage and development company based in Denver. Argus also operates www.selfstorage.com, a marketing medium for owners in the self-storage industry. For more information, call 800.55.STORE.

In honor of Memorial Day, USstoragesearch.com and more than 3,000 of its member self-storage facilities will offer a free month of storage and a 5 percent discount on packing supplies to veterans, service members and their families. The special promotion will run from May 1 through May 31, 2008. To participate, qualified parties should visit www.usstoragesearch.com/military.
 
“Many active-duty service members require a good amount of storage for their constant moves, deployments or other circumstances. This promotion will allow them to find the best storage facility in their local area and get a special deal,” said Megan Eckert executive vice president of USstoragesearch.com.
 
USstoragesearch.com provides Internet advertising to more than 10,000 self-storage facilities nationwide. The company’s online marketing program allows owner/operators to instantly put their facilities in front of potential tenants looking for self-storage and portable storage in their local areas. For more information, call 866.880.0742; visit www.usstoragesearch.com.

Start-up property fund manager Internos Real Investors is planning to invest up to £1 billion in commercial property once the market bottoms out, The Telegraph reported in May. The company, backed by Nick Vetch, executive chairman of Big Yellow self-storage group, and Richard Peskin, chairman of London property firm Great Portland Estates, is planning to invest in direct property, equities and debt across Europe over the next two years.

Internos, founded in February, joins a growing list of real estate investors waiting to take advantage of the downturn in the commercial property market. In the last six months, U.K. capital values have fallen more than 15 percent as the credit crisis exacerbates the market correction.

Self-storage software is continually evolving. And because ours is a unique market, it must be specific to the operation of the business. Whether you are new to the industry, shopping for your first program, or seeking to modernize an existing operation, the dynamics of the software world will have an impact on your business sooner or later.

The task can seem daunting. If you do not make a sound buying decision, you may be affected more than once over the next few years as the technology changes.

Begin by identifying what your business needs. Are you simply interested in tracking your store’s revenue? Or would you like to provide your manager with a useful tool to stay organized, print notices and automatically charge late fees? Maybe you’re interested in a more complex program capable of doing a wide variety of useful and time-saving tasks.

Build a list of features that you believe will accomplish how you want your operation to function. Start with the basics. How does the program take care of the day-to-day operations, such as taking payments, move-ins, move-outs, transfers and so forth? All of the bells and whistles in the world will not do you well if the program is cumbersome to navigate, and frequent tasks are not easy to perform.

If more than one person will be using the software, you may want to consider restricting access to certain areas of the program for different personnel. Your relief managers may not need to view financial data, but still be able to access vacancy information to rent spaces. Will you allow staff the ability to adjust rent or deposit amounts? Should your manager be able to change unit numbers and sizes within the software, or reconfigure the cycle schedule for late letters and notices? Settings that are tied to your lease—and state law—should not be easy to change.

Certain packages will accomplish certain functions slightly different than you expect. Do not necessarily rule these out solely for that reason, unless you feel they are crucial. No package will function exactly as you envision. Be aware that software sellers will try to tell you what is important based on what’s contained in their programs. If the software sales representative is telling you it should only function his way, then go find another vendor. What is truly important is how you want to run your business, not how they say you should.

Whatever your needs, it’s important to find the right program for your business and property manager. The needs of the business should take precedence. If you are successful with this match, the manager and software program will complement each other and your operation will be smoother and more profitable.

Once you have compiled your list, request demos and literature from each manufacturer. As you review trial software, compare it to your list of needs. Document your questions. Evaluate those items that are important to how you want your business to operate.

You may want to assess how you, as an owner, will receive or access data from the site. Some software programs have the ability to automatically e-mail reports to your home office every evening. You could even have a copy of your store’s entire database waiting for you on your computer at your office when you arrive in the morning.

Vendor Relationship

The software industry has become very lucrative for manufacturers. New self-storage suppliers appear every year. Many quickly come and go. Maybe they work in other industries that demand more of their attention, or perhaps success in the self-storage market is more difficult to achieve than they anticipated. They will likely sell some packages to operators during their short tenure, leaving some owners in the lurch.

With that in mind, seek vendors who have been around in the self-storage industry for while. If they have, and they have conducted themselves ethically, you will have no trouble finding customers who use their products and approve of their practices.

Ask yourself, "Does this vendor have enough industry knowledge?" Industry knowledge gives them the ability to write helpful software for your self-storage office. It needs to be rich in features specific to this industry. While QuickBooks is a valuable accounting program, comparing it to software written for self-storage exposes its shortcomings. The package written by a self-storage vendor would have so many more features to benefit your day-to-day operations, like rental activities, automatic lien processing, late-fee and mailing capabilities.

It is probably not a fair question to ask vendors how many software sets they have in use. Changes such as buyouts, different owners, new partners and management companies affect the program being utilized. A better question to ask might be how much of their business comes from existing customers and referrals. This will reveal the level of customer satisfaction with the product and supplier.

Beware of companies who make a living by trying to convince you to change your current program. They are desperate to make a name for themselves instead of going out and finding new business. Buy based on the needs of your business, not based on the needs of the vendor. Because programs are ever-changing, one vendor will not know everything about competitors. And no vendor should try to speak on behalf of a competitor’s product.

A while ago an owner attended a tradeshow with the intent of shopping for new software. He already had a program, but wanted to see what was available to better his operation. In one seminar he attended the speaker urged attendees to upgrade their software to the most recent version available, regardless of whose program they were using.

The owner took the advice to heart. He went home and updated all of his facilities’ software. To his amazement, most everything he had been searching for was already right there in his current program. The simple task of upgrading his software saved him from spending thousands of dollars on something new.

Upgrades, Support and Training

Program enhancements, through version upgrades, should be expected and implemented regularly. Improvements to the program, corrections, revisions and added features are necessary to keep up with the industry and technology. Asking your vendor about the recent changes within your program might give you an idea of how much that company pays attention to the industry.

Of course, in many cases, if you sign up for your vendor’s service agreement/support, not only will your vendor send you all of the latest revisions to software, but it will entitle you to unlimited telephone support. This is a really great way to keep your software updated and provide your manager all the support he will need.

Speaking of support, remember to ask about the software-support options. Do you know who to call for assistance, and do they have a toll-free number? Some companies like to show a little appreciation for their customers by paying for the telephone call. Also, check on support hours and what time zone you will be calling.

Reputable software manufacturers will offer training classes, usually at their headquarters. In most cases, the programs are easy to learn. With the help of a good manual and a few quick calls on the vendor’s help line, your manager will quickly be on his way. If onsite help is what you need, consider hiring industry consultants and trainers.

Make an implementation plan. Set a "magic date" to go live. Make it comfortable, not hurried. Too often store managers are given a new program on one of the last days of the month, and are expected to be up and running by the first. If this process is hurried, the chaos may frustrate employees, lead to mistakes, or the totals for the first month will not be accurate, leaving everyone involved feeling terrible.

Cost vs.Value

Everyone is looking for the best value for dollars spent. Cost differences are sometimes tied to the amount of features and benefits the product provides, but not always. Some high-price programs warrant the price tag, based on all that is contained. Some may not. Mid-priced packages may provide all of what is required and more. Your purchase price not only pays for the development of an existing product but technical support expertise to support that product, as well as future development of newer updated products.

Last but not least, evaluate the potential relationship you will have with the supplier and your representative. In the end, people still buy from people. Fortunately, this industry has not outgrown that. Rely on the expertise of the representatives you are dealing with, and their time in the business. The people you work with should truly care about making your business more successful, not just about writing an order.

David Essman and John Fogg are part of the management team at Sentinel Systems Corp. Sentinel Systems has been supplying software and security products exclusively to the self-storage industry since 1975. To reach them, call 800.456.9955; e-mail [email protected].

New technology has made several new, money-making features available. Good Web-based systems are complete re-writes rather than add-ons or enhancements of older, PC-based programs. New programming languages and databases give you more speed, faster operation and printing, fewer clicks and more features. With the right Web system, you don’t have to learn a new program. Instead, you get the user-friendly look and feel you are accustomed to in your old Windows program.

What the Web Offers

While there are different options to design Web systems, Microsoft’s “Smart Client” architecture runs lookup, reporting and printing on local PCs. “Smart Client” means your data exists on each of your computers. Only active transactions, like payments, call up the database on the Web server. The new Web system works even if the Internet is temporarily out of service, and requires little training because it looks like a Windows (not browser-based) system. Microsoft’s method is safe because it does not require using a Web browser.

Here’s what you can expect from a good Web system:

• Operate from anywhere, on as many machines as you like, even simultaneously, without servers, networking computers, maintaining networks or making backups.
• Save immediately from lower hardware cost, easier maintenance via live updates rather than upgrade CD ROMs.
• Enjoy more features on a kiosk-based system.
• Tie in with your website. Online management modules let your customers view real-time data and manage their accounts online. Customers can view their balance, unit by unit, with itemized charges and their payment history. After the integration, owners can customize settings on the fly and change coupons, promos, office hours, etc.
• It’s easy to add more stores or just additional computers or users.
• Save money on software. Web systems are far less expensive than old DOS or Windows-based systems. Users should not have to worry about long-term contracts. Web systems should come with only month-to-month plans.
• Make changes via dashboard-style menus from anywhere. Apply changes to one or multiple stores.
• Download into accounting systems from anywhere. Enterprise level integration means it’s one download, whether you have one store or many.
• Give real-time access to your data to call centers that can enter payments, reservations and move-ins in real time.
• Offer online payments, even reservations and move-ins, from your website to customers.

Make the Most of Marketing

New software has taken favorite tools like marketing to new levels. More operators measure who their clients are, where they come from, how long they stay, and how they found the facility. Because advertising is costly and goes beyond the traditional Yellow Pages, it’s important to know which method works best and deserves the attention of your hard-earned dollars. New, more powerful management programs let you target marketing spending and rent increases.

Few operators who want to get the most out of their investment can ignore the concept of revenue management. Older programs do not offer clear, easy-to-use, sensible tools for managing rates. Good Web systems do. Now, it’s easy to analyze rates, filter out customers and units for rent changes, and send alerts to operators. Because Web systems offer access from anywhere, owners and managers alike can monitor and execute rent changes and letter printing. Unlimited access not only lets you make changes from anywhere, it also lets you link to other platforms like accounting systems.

Make the Most of Export

Web systems come with better export features. Expect to be able to save all documents as PDFs, Excel or text files. Flexible document formats and user access to powerful databases like SQL make mining and massaging data a cinch. Web systems have more fine-tuned categories for tying into accounting systems. Downloading data to accounting systems, be it for one store or many, is now a one-step process. And export features apply to most accounting programs, even less popular ones.

Integration with other platforms such as kiosks and call centers is much more seamless. Because Web systems were written from the ground up, developers have the chance to offer more features to kiosk users. Customers using these automated attendants find a full set of features including merchandise sales, pay-with-rent insurance, specials and more. Call centers, or any offsite user, now have access to stores’ data. Call center operators see pricing and availability, take payments, do move-ins, move-outs and more. All transactions from operators go right into programs, and reports show how many payments, move-ins and move-outs each operator completed.

International Adaptation

Users have long had the choice between metric or imperial measurements or labels like “postal code” instead of the U.S.-typical ZIP code in their management software. Web systems better manage and itemize multiple tax rates like GST and PST. With Web systems, they can translate letters and notices now. New programming tools let end users translate all documents including leases, invoices, receipts and late letters.

Web systems have made credit card processing for stores more reliable and added online management and payments for tenants. Credit card payments in older PC-based systems use credit card software loaded onto PCs at the store. These credit card programs can be slow and limit operation to one user at a time. New Web-based management programs process credit cards via online gateways. These gateways eliminate network problems and slow processing speeds of PC-based systems. Web-based systems let you process credit cards on any computer from any office.

What’s more, Web systems offer owners a Web module integrating with their website. The Web module uses the same credit card gateway to let tenants make one or recurring credit card payments online. Online payments are popular if tenants can look up their balance and payment history. Owners, on the other hand, can set rules for online payments. They can force tenants to pay in full only and automatically stop payments if tenants are so many days past due.

The next logical, and imminent, step is completing interaction with Interac machines for processing pin-based bank or debit cards. Credit cards are less popular and less common than these bank cards in Canada. It takes so long for software vendors to link to Interac because the path to completion is tedious and expensive. First software vendors have to write the link, then have a processor audit both the software vendor and the integration, and finally give its stamp of approval.

However, years of working with processors in Canada has paid off for software vendors who forged closer ties. These software vendors now find it relatively easy to take the final step of the Interac integration. Look for it by the end of this year.

Markus Hecker is the chief operations officer of SMD Software, which provides Windows- and Web-based management software. SiteLink offers features such as revenue management, online payments and search-engine optimization. For more information, call 919.865.0789; e-mail [email protected]; visit www.smdsoftware.com.

I thought it would be interesting to take a trip back in time to look at and review articles from the past written about the use and future of technology in the self-storage industry. Fortunately, the Inside Self-Storage website (through the use of today’s technology) has archived articles published in the magazine back to the late 1990s.

In my search I found an article, "Self-Storage Software: Facility management becomes automated and auspicious," written by Teri Lanza in May 1998. It was fascinating to review the quotes of the numerous software vendors interviewed. Many of them talked about what the future held for the industry as it related to technology. I thought it would be interesting to share that information with you and put it into context of both today and the future as I see it.

Setting the Stage

The self-storage industry has witnessed a period of significant growth in the past 10 years, growing from 26,000 to more than 52,000 facilities as of 2007. Many owners/operators in the late ’90s worried more about how quickly they could develop and build their next facility, or how to identify and close their next acquisition than about how they could best manage and operate their growing portfolios. Self-storage demand seemed to have no limit, and market saturation and increasing competition was still in the future.

Pressing issues revolved around moving from a DOS-based to Windows-based applications, and what the impact of Y2K (Year 2000) would have on self-storage management software. In fact, much of the article dealt with the subject of "should I automate?" But for some of the more forward-thinking owners/operators, it was more important to manage and support the vision they had for growth, and how to leverage technology as a competitive advantage.

The perspective of the software vendors at the time might be summed up with a quote and the debate over automation. Glenn Hunter, owner and president of Berkeley, Calif.-based Domico, stated, "This industry has been terribly slow to deal with change of any kind but, fortunately, what’s happening now, with the large amount of outside investment companies involved, is that the industry itself is being modernized in a very dramatic fashion." Additionally, numerous suggestions indicated why owners/operators should automate and the benefits.

Fortunately, that debate didn’t last much longer as self-storage owners/operators accelerated their acceptance and use of the Windows-based rental-management applications.

Predictions and Outcomes of 1998

Prediction: Accelerated movement to Windows-based management software. Marcus Hecker with SMD Technologies stated the most obvious, "Users finally have a choice of Windows-based programs for managing their sites because DOS vendors finally had to offer Windows versions."

Outcome: Although a very small number of owners/operators still use DOS-based management software today (10 years later), those management software providers that either came into the market or released a Windows-based version of their software early in the game obtained a competitive advantage over those that were slow to market.

Prediction: Windows-based products will not be the end of the road for self-storage software. Hunter predicted, "I’ll make a future prognostication that, within three years, Windows-look products will appear as momentary bumps in the road to tomorrow’s software. I believe the most exciting, interesting, innovative and simple design work that’s taking place in the field of software is on the Internet. I think that’s where you’ll see the future of software design, at least as far as the look and feel and user complexity."

Outcome: In my opinion, Hunter was right on the money. By 2001, the first of a number of Internet-based rental-management applications were getting a start. Public Storage, for example, was running trials of its initial version of Web Champ application, StorageUSA was testing its PropertyMax solution, U-Haul was introducing its WebSelfStorage product, and Centershift had released its initial version of STORE.

Prediction: More service-oriented features. According to Space Control System’s Ramona Taylor, "Owners are leaning toward offering more and more service, and certainly software can help them accomplish that." The example was given of the interest of owners/operators to utilize their software to automate a "unified" reservation center where customers can call in to reserve units, with the reservation being forwarded to the appropriate site.

Outcome: Taylor was headed in the right direction, especially as it pertains to the broad use and acceptance of call centers, but perhaps did not envision the use of real-time data exchange between the call-center application and rental-management software that has been occurring for the past five years. As far as the broad category of more service-oriented features, this has been a significant area for many software vendors as they have offered clients services, such as e-commerce-enabled websites, kiosk integration, centralize mail processing, consolidated reporting, recurring automated payments, tax rate updates and many other service-oriented features.

Prediction: Website accessible statements and pay-at-the-gate based payments. Mike Richards, of Hi-Tech Smart Systems, was clairvoyant with his view of tenants being able to access a statement of their account: "I also think it will be possible, in a few years, for customers to go to a facility’s website, enter a pin code (password) and see a statement of their account." Eric Young with Quikstor indicated that pay-at-the-gate would become more prolific: "It’s the kind of integration where the industry is headed."

Outcome: Richards was right on with his forecast, and I suspect he knew it wouldn’t just be statements that tenants would be looking for online, but the actual ability to make a payment once they received an update of their current status. Young’s vision has come to pass as well, although kiosks are also providing that capability and more.

Prediction: Integration with third-party applications, such as accounting packages and gate-access solutions. Hunter stated, "We don’t have a payables module. We didn’t want to reinvent the wheel. Instead we interface with all the currently available accounting packages." Regarding gate-access products, Tom Garden of Syrasoft pleaded with the gate-access vendors to offer an integration standard. "Someone has to develop a standard that people will comply to. A standard needs to be thrust upon the vendors who don’t seem to understand that open systems are positive and will enhance their sales. It’s the gate vendors that need to do this."

Outcome: Hunter’s direction for integration to accounting packages has become the norm in the industry. Unfortunately, Garden’s pleading fell on deaf ears. But the need was there and continues to be a hoped-for solution.

What Can We Learn?

It is my observation that when the software vendors listened to their clients’ needs and could see a clear path to a technological solution, they were generally able to find it. Their ability to predict the future was generally limited to three to five years, as none of them predicted a solution that was not implemented within that timeframe.

The one big miss for the industry was the request from the software vendors that the gate-access vendors provide a universal standard for integration to improve the information and capabilities of both the gate-access and the rental-management solutions.

Most important in the article was the discussion of choosing a software vendor based on the ability to form a partnership. I like the statement best from Jim Teske of O’Neil Software. "The primary things to consider are: How does this investment help me generate more revenue? How does it help me lower my operating expenses? And, how does this solution minimize my risk? By risk I mean both the risk that what I buy will do everything I want for the customer today as well as be able to provide the same solutions and competitive advantages five years from now."

What Does the Future Hold?

Since I quoted liberally from many of my competitors’ predictions from 10 years ago, it seems only fair that I take a shot at what the future holds and put my predictions out for others to evaluate in the future. I learned the accuracy of the predictions decline significantly after five years, so I will stick to that window.

Automation. Technology will continue to automate both operational processes as well as backend requirements (accounting, reporting, analytics, yield management, promotions, etc). I perceive owners/operators will find ever-increasing services to offer tenants or retail clients. As a result, software solutions will adapt to provide better ability to offer those services.

Second, I predict that operators’ requirements for reporting and analytics will be fulfilled in ways they haven’t ever imagined, and they will be able to collect, drill down and analyze data in new ways.

Integration. For those rental-management software vendors with data centralized in powerful data base applications—with access to third-party solutions via the Internet—integration will provide their clients access to more services that they can leverage to better support their tenants, be more competitive, and increase their profitability.

This might seem like a lofty prediction, but this was really an easy prediction to make because integration is already happening on an ever-increasing scale for some rental-management software vendors.

Certified-mail integration.Accountable Document Solutions is providing the industry ability to automate certified mail processes using technology already in use in the legal industry.

Payment-processing integration. Companies are offering the ability to provide Internet-based credit card and ACH processing as well as make phone and mobile device payments.

Verification integration. Using Internet-based partners, operators will soon be able to verify tenant addresses, phone numbers, e-mail addresses, credit worthiness and background checks in an instant.

Communication integration. Using Internet-based partners, users will also be able to communicate in more efficient ways in an instant at a very low cost per transaction. This would include automated "late" phone calls as well as collection calls.

Customer-relationship management (CRM), marketing and communication. This is a key area where the use of technology will be critical to remaining competitive in the self-storage market.

As competition increases as a result of increasing saturation or decreased demand for self-storage, it will be important for owners/operators to have good and timely data on tenants, why they choose to rent from them and why they come back. An increasing emphasis will be put into tracking and analyzing this information using CRM and survey tools.

It is increasingly important to have a method to measure the return-on-investment of your marketing programs by tracking the effectiveness and use of the programs, and the length-of-stay data generated at the marketing campaign level.

One of the key competitive advantages to marketing in the self-storage market today is search-engine optimization. Larger self-storage operators are using search-engine optimization vendors to increase lead generation off organic and pay-per-click searches. This will become more competitive and used by more operators. It may also shift marketing dollars from traditional Yellow Pages to websites and search optimization.

Another important trend is the use of self-storage call centers to answer all calls. With call agents trained and focused on selling techniques, armed with real-time facility data and a call-agent application, they can make sure every call is answered quickly by a professional agent over extended hours.

I could make many more predictions, but I sense that my odds of getting them all right would start to decrease as I add more to the mix. Clearly, if I can do as well at predicting the future regarding the use of technology as some of my competitors did 10 years ago, we are in for an exciting time in self-storage.

With new self-storage development declining over the past few years, along with increasing competition, I predict owners/operators will adapt to change and successfully implement the technologies on the horizon will be the long-term winners in this unique and interesting industry.

Terry Bagley is the president and CEO of Centershift Inc. Centershift’s latest offerings, STORE Enterprise and STORE Advantage, are the next generation of STORE rental-management solution. The programs are Internet-based rental-management and point-of-sale software for growing, multiple-facility self-storage ownerships. For more information, call 801.303.1300; visit www.centershift.com.

David Montané has received the Donnie Tart Sales Award of Excellence for 2007, bestowed by BETCO Inc., a single-source manufacturer of self-storage building components. Montané is the fourth recipient of the annual honor, established in 2003 and named for the company’s first sales consultant of two decades ago. The award is presented to the salesperson who generates the most points on a scoring system that includes performance-related items such as self-storage sales volume, sales increase from the previous year, closing ratios, and numbers of repeat and new customers. 
 
Montané owns Aragon Crown LLC in Decatur, Ga., and represents BETCO in the northern half of the state. Prior to joining the company in 2004, he was trained in skills including land surveying and mapping, civil engineering, product marketing, site acquisition and real estate sales. He is an active member of the Georgia Self Storage Association and continues to maintain a Georgia real estate license. In 1992, he received his bachelor’s degree in computer science from National University, San Jose campus. Montané resides in Decatur with his wife, Perri.
For more information, visit www.betcoinc.com.

Terry Campbell (left), BETCO's vice president of sales and marketing, with David Montané, the 2007 winner of the company's Donnie Tart Sales Award of Excellence.