You didnt have to raise rents, lower expenses or even increase your occupancyyet you made a lot of money over the last three years or so. In fact, it may have been so easy you didnt know it happened. While you were busy tending to other things, the real estate market became incredibly hot, and interest rates hit lows not before seen in your business lifetime.

A Typical Facility
Class	A
Size	40,000 SF
Occupancy	88%
Rent	$8.52/SF
Expenses	33%
Loan to Value	75%
NOI	$200,000

Let your eye be drawn to Table 1, which represents what has happened to a typical storage facility over the last few years. Being very clever, you will note the increase in value and equity this happy circumstance created. Of course, the equity is the number that interests you most, as it represents the net value of your ownership. Notice a whopping 71 percent increase. Its especially nice because you didnt have to do anything different to earn it.

Table 1
	2001	2004	Percent Increase
Cap Rate	10.0	8.5
Value	$2,000,000	$2,353,000	17.7%
Loan	$1,500,000	$1,500,000
Equity	$800,000	$853,000	70.6%
NOI	$200,000	$200,000
Debt Service (25 Years)	$144,000 @ 8.5%	$110,000 @ 5.5%
Cash Flow	$56,000	$90,000	60.7%

Why Did It Happen?

Why did this extraordinary increase in value and equity occur? The really short story is interest rates went down, and real estate investors were willing to pay more for property that would reap better returns than they could get at the bank, in stocks or in bonds. The cap rate generally represents the total return an investor is willing to accept when he buys a real estate asset. When cap rates drop, prices go up. Its just simple math. (For more details on how cap rates work, read Cap RatesA Mystery Unveiled, in the November 2004 issue of Inside Self-Storage.) It has also helped that, for the first time, self-storage was considered a full-fledged, certified real estate product by major buyers and lenders.

What If You Refinanced?

The good news never seems to end. Not only were things even better if you refinanced, you had a very pleasant choice to make. First, if you didnt want to increase your loan amount, your cash flow would have gone up 61 percent (as you can see from our example). That is sure easier than raising rents. However, if you maximized the loan, you could have taken out $265,000 in casha little more than half of your original equityand still increased your cash flow by $2,000. Oh, the wonders of financial leverage!

So Whats the Bad News?

Interest rates have started to climb, and Mr. Greenspan seems committed to continuing their upward movement while his hand is on the lever. At the moment, there are still many eager buyers around. But as interest rates rise, they simply wont be able to pay as much for the same dollar of income, and facility prices will fall. There are also persistent rumors about overbuilding, though theres probably quite a bit of truth to them. In the long run (maybe not so long), the law of gravity still applies: What goes up must come down. The bad news is the mathematical phenomenon that helped increase values works the same wayand in the same magnitudein reverse.

What Can You Do?

If you plan to keep your facility forever, refinance now. If you arent absolutely sure you want keep it for at least five more years, consider selling. If your facility is not state-of-the-art or in a very good location, you have competition coming on board, your rates and occupancy are not increasing, or you have personal issues that might require you to let go of your business, now is the time to get serious about selling. Dont let your valuation go into reverse. Remember, you had no control when it went up, and you wont have any control when it goes down. Dont be caught napping.

Michael L. McCune has been actively involved in commercial real estate throughout the United States for more than 20 years. Since 1984, he has been owner and president of Argus Real Estate Inc., a real estate consulting, brokerage and development company based in Denver. In 1994, he created the Argus Self Storage Real Estate Network, now the nations largest network of independent commercial real estate brokers dedicated to buying and selling self-storage facilities. For more information, call 800.55.STORE or visit www.selfstorage.com.

New York-based developer and manager Storage Deluxe burst onto the Eastern self-storage scene in 1998, quickly establishing itself as a regional leader. Today, the company boasts 21 locations in metro New York, Connecticut and suburban Philadelphia, and plans several more acquisitions this year. With more than a dozen sites in the Bronx, Brooklyn and Queens, it has become an expert in urban self-storage.

Catering to customers in densely populated, low-income areas presents special challenges. For example, tenants may visit a facility more frequently, pay in cash, and struggle with housing or transportation problems. The experience has led Storage Deluxe to support urban communities in ways that encourage revitalization, hire locally for each facility, and develop strong, personal relationships with tenants. Inside Self-Storage spoke with Chief Operating Officer Nick Coslov about the companys role as a business leader and being the first to build in areas long abandoned by development.

Why is Storage Deluxe committed to revitalizing
New York boroughs?

First, its our way of giving back. Local communities support us with employees and loyal customers, and more than 60 percent of our business comes from referrals. Second, we want to create lifetime value for our customer base. Were not interested in doing anything to get a quick sale. Thats part of the reason we launched our Money Back Guarantee campaign, which we believe to be a first in the industry.

How does the arrival of a Storage Deluxe facility
impact a depressed community?

Many of our facilities are in urban communities where old industries have faded and revitalization efforts are a priority for local government. Part of the initiative involves encouraging new business to come into the neighborhoods. We are proud to be among the first big companies in many areas.

Our 135th Street (Bronx) location is a perfect example. We take old buildings or empty space and turn it into something aesthetic. We also provide a service many people need. On the opening day of a new location, such as the recent one at Wyckoff Avenue in Queens, we always have a rush of new customers who have heard about us and been waiting for us to open. It creates a sense of hope: One company has made the investment and more may follow.

New Yorks boroughs encompass a broad spectrum of cultures and languages. How do managers rise to the challenge of meeting customers varying needs?

While every area is different and comes with its own rich cultural identity, our customer-service pledge is designed to cater to customers everywhere. New Yorks population is diverse, and we embrace that diversity fully. As our mission statement says:

We celebrate the diversity, ideas and cultures of both our employees and the communities we serve. We respect and enrich the neighborhoods in which we do business. We feel a sense of responsibility to lead the self-storage industry by setting new standards in creativity, innovation and property development.

Why is it important to hire from the community, and how do you seek out new employees?

We post ads locally and in the major papers, and then carefully screen respondents. We have raised the bar in terms of self-storage customer service. We pay above industry-average salaries and have very low turnover. What we offer is a career rather than a job. Our staff members are from the communities they serve, and its easy for them to build relationships with tenants. Theyre already familiar with the people and cultures of the neighborhoods. They know many customers on a first-name basis.

Describe your approach to staff training.

Our training program is called Storage Deluxe University, with mandatory training modules on everything from our customer-service policy, to building a relationship with the customer and how to consistently maintain a standard of excellence. We knew we wanted to be significantly better than our competition. To achieve that goal, we needed to elevate the standard of not only our buildings and operations, but our customer service.

We looked at businesses we all know and recognize for excellent customer serviceNordstrom, Mercedes-Benz, Starbucks, etc.and borrowed from their business culture. By providing regular refreshers and training new staff in the Storage Deluxe philosophy right from the start, we avoid sluggish employees.

How did Storage Deluxe become a sponsor of Tour de Bronx, a bike ride advocating alternative forms of transportation?

We were approached to become a sponsor by the Bronx Chamber of Commerce. We made a significant financial investment toward the event, which was held in October 2004, and gave out T-shirts. Some of our staff members took part in the bike ride. A lot of people who live and work in the Bronx commute into Manhattan. It was great for the community to see Storage Deluxe support an event that encouraged the reduction of pollution and congestion in their neighborhoods.

What community events are you participating in this year?

Storage Deluxe just launched Money Management Days, a series of financial-empowerment seminars for small businesses and consumers. We came up with the idea because a large number of our customers dont have credit cards and, in some cases, bank accounts. Many people have a family history of bad credit and debt. We hope to put an end to that cycle by providing the education on money management and debt counseling our communities need.

We partnered with global credit-card companies and a number of local people in the financial sector. The sessions for consumers focused on how to get out of debt, fix bad credit and get a credit card. Classes for small businesses addressed starting a new enterprise, how to get a loan and how to avoid bankruptcy. The events were held at our facilities throughout May and June.

Why is it important for self-storage professionals
to support their communities?

Self-storage is a growing industry with tremendous potential. The onus is on todays storage businesses to establish a positive industry image. Whole industries can get bad reputations they have to spend all their energy fighting against. Look at the reputation car dealers, mechanics and real estate brokers have. We have a responsibility to be honorable community citizens if we want to avoid a similar fate.

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GOOD NEWS

Donated Space Supports Kids

From ConnectionNewspapers.com, 4.8.05

Managers of McLearen Self Storage in Herndon, Va., donated two storage units for Operation Hugs and Operation School Bell, organized by the Assistance League of Northern Virginia. The donation, valued at $3,700, will allow the nonprofit organization to store boxes of toiletries, infant clothes, bags of fabrics, etc., which volunteers previously kept in their overflowing basements and closets. In addition to supporting the league, Manager Nate Rosen sits on a chamber of commerce committee that is developing a community outreach program to link nonprofit organizations with corporate donors. The facility site has also served as a care-package assembly site for the league.

Facility Houses Huggable Friends

From The Woodstock Independent, 4.5.05

Centerville (Ill.) Self-Storage donated a storage unit for a barrage of used stuffed animals collected by April Harman. The 15-year-old girl from Woodstock, Ill., started Operation Huggable Friends as a plan to comfort children who lost parents in the Asian tsunami. As news of the operation spread, thousands of stuffed animals began arriving from as far away as West Virginia. Centerville Self-Storage stepped in when the Harmans home and a local learning center could no longer hold all the donations. More than 12,000 usable stuffed animals were collected. Distribution has proved difficult, and Operation Huggable Friends is now accepting monetary donations for shipping costs.

Jacks store always did well. There were down times, like during the dot-com bust; but four years out of five, for the 40 years Jack ran the business, it was in the black.

When Jack hit age 65, he wanted to retire. His wife wanted to sell the house and move into a condo closer to the beach and their kids, living down South. The business had made money over the past few years, but barely. Profits had covered the couples living expenses but given them only a small savings. A large chain had offered to buy the store 10 years ago when returns were good, but lately interested buyers had dwindled. The few offers coming in only covered a few years retirement. It looked like Jack would have to keep operating a couple more years or take a loss (including his condo).

Phil, on the other hand, ran a nursery. His business, like Jacks, experienced ups and downs and some years of marginal profit. But his profession, being focused as it was on growth, gave him a unique perspective on moneywhich may have saved his retirement. Just as he grew many varieties of flowers and plants, he believed he should grow his money in diverse ways. During each year the business experienced profit, Phil invested half of it. He didnt understand the stock market, but a good friend had referred him to a financial advisor. Over the years, he invested in mutual funds.

A Team of Experts

Why mutual funds? Why not a portfolio of stocks and bonds Phil could buy and sell over time? He and his wife, a schoolteacher, were rarely available to make quick decisions regarding the rise and fall of the market, especially during business hours. Instead, the advisor recommended mutual funds, which are managed by groups of experts on a clients behalf.

This financial team stays on top of the performance of the stock and money markets, as well as the opening and closing of new financial markets around the world. It also keeps track of which companies are doing what, their future plans, and changes in company leadership. Investing in mutual funds puts professionals at your fingertips. The role of the advisor is to inform you which funds have been doing well, when theres a major change in a funds management team, or when a new fund becomes available.

So Phil bought a portfolio of two or three mutual funds and watched his investments grow. Each time his business did well, some money was invested in those funds, all of which behaved slightly different. One gave a slow, safe, but steady income. Another was more variable, but though it fluctuated with the market, its overall value grew nicely.

Phil could have closed his business, even declared it bankrupt, and still retired comfortably. Since he didnt have to take from the business to cover his immediate living expenses, he was able to allow his nephew to buy into the company. If the business remained profitable, the nephew would eventually buy Phil out.

When it comes to your retirement, dont be a Jack. Sometimes the business aint enough! Mutual funds can allow you to retire the way you want to, with money left over.

Pieter Kark was educated in England and Massachusetts and has worked as a teacher for nearly 40 years. He has written extensively on medical, scientific and ethical matters and currently writes creative nonfiction. Last winter, he closed his neurology practice to move to San Jose, Calif., and collaborate on a book about healthcare with his wife. He is also a licensed Avatar Master (www.avatarepc.com). Mr. Kark can be reached at [email protected].

Ken Yap is a registered representative at World Group Securities and an associate at World Financial Group. He shows self-storage business owners and professionals how to potentially pay less taxes, plan for retirement with tax-deductible dollars, transfer ownerships, and protect the future of their companies. For more information, call 408.977.3408; e-mail [email protected].

Buyers remorse is something any salesperson wants to avoid at all costs. The best means of avoiding it is to confront it. As the old cartoon character Pogo used to say, We have met the enemy and he is us!

Records storage provides a good way for owners to make money, but also provides great value to customers. In an era where many companies are apt to take advantage of their stakeholders, its refreshing to find a business opportunity thats good for everyone involved. Records storage is highly valuable to its users for four primary reasons:

First, saving business records is always a pain in the neck. People only save them for fear of the unknown or out of regulative compliance, not because they want to. And they are plagued with common questions: Which records do I keep? How long do I have to keep them? What can I toss out? How do I protect myself from audit, litigation or fraud? There are no easy answers.

Second, the time and effort to manage records and the space in which to keep them are always an issue. The volume of records only increases over time, making the task of record-keeping more demanding. As any business matures, its records amass. The average growth rate for new enterprises is 25 percent or more, while established businesses experience 7 percent to 9 percent escalation per year.

Third, people will always need access to their records at the most inconvenient time. In the records-management industry, we have a saying: Business records go from the basement to the boardroom overnight. No one needs records until they need records. Files are unimportant until they become very important. You dont ever know which items will be crucial until something goes wrong.

Finally, records are often difficult to locate. We have all had the experience of trying to find a business record without success. Is it lost? Has it been discarded? Is it just missing in action? It never fails that the item you need most will be the most elusive.

Selling with No Remorse

Its very common for people to second-guess their buying decision after making a purchase, especially if it was for significant money. As a salesperson, if you understand that buyers remorse is a natural reaction, you can take steps to ensure customers feel good about their choices:

• Always have a clear and valid contract.
• Always face any problems you encounter head on.
• Always be true to your word.

These steps are easy to accomplish when selling records storage within a self-storage operation because the service does exactly what it claims. If you honor your commitment to your customer, he will always be happy, knowing records storage is inexpensive and good for his business.

The value of the service is easy to validate and demonstrate, making it simple to banish buyers remorse. Again, lets consider the benefits:

• Using a records-storage service means keeping records is no longer a pain. Everything is orderly and simple because your system streamlines the process. In essence, you become your customers business partner.
• Your customers never run out of storage space. You provide it on an incremental cubic-foot basis. They can add boxes at any time, with minimal cost.
• Customers never have to worry about their records. You will provide them when they need them, on a timely basis and at reasonable cost.
• You can locate customer records quickly and easily. Records management means knowing what you have, where it is, how to find it when you need it, and when to get rid of it. Its as simple as that.

The great thing about providing records storage is you can do it with existing manpower, outsource any additional labor, and provide services with no overhead. Hows that for avoiding sellers remorse?

Cary F. McGovern is the principal of FileMan Records Management, which offers full-service assistance for commercial records-storage startups and sales training in commercial records-management operations. For help with feasibility determination, operational implementation or marketing support, call 877.FILEMAN; e-mail [email protected]; visit www.fileman.com.

"How is your meal?" This is the typical question asked by restaurant serversusually when you have a mouthful of food! I think restaurants train their staff to catch you at the right moment so you dont have the opportunity to give feedback. So I was extremely surprised by a phone call I recently received after picking up a take-out order from my local Applebees restaurant. The employee said, We just wanted to make sure you enjoyed your meals. The food had been great, but the call is what really got my attention.

Applebees, with its Carside to Go program, has joined the growing number of chain restaurants offering curbside service. The full menu is available for take out, and you can even view it on the website. When you pick up your to-go order, an employee brings it out to your car. I was impressed with the follow-up phone call and wondered if it was just for first-time take-out customers or integrated into the companys customer-service discipline.

For years, self-storage operators have sent welcome and thank-you letters to new customers. While tenants may view them as warm fuzzies, the letters have an underlying purpose. For example, if a letter is returned as undeliverable, it sends up a red flag about the authenticity of the renters contact information. You should always give customers the benefit of the doubt, as you may have transposed a number in the address or made another error while typing in the database, but immediate follow-up is necessary. Some owners will actually lock a tenants gate code until the situation is resolved.

Instead of just using letters, consider placing a welcome/thank-you phone call. It would be easy enough to create a follow-up system by adding all new rentals to a To Be Called list. Then just pick a time frame after the rental, maybe two or three days, during which to make contact. The phone call could help to solidify the relationship you are trying to build with new customers.

Yes, there may be a downside to making these calls (Im sure managers could come up with a long list). For example, talking to Mrs. Smith as she first discovers Mr. Smith has rented a storage unit could make for an uncomfortable conversation, but the same kind of mix-up could easily occur with a welcome letter. Just like when you make a collections call, you have to be sure you are speaking to your actual customer.

Give the thank-you call a try. If you already have a successful calling program, let me know so I can share your results with readers.

Quotes to Share

People who do training or public speaking are always looking for new material to use in their presentations, and Im no exception. So when I find a gem or two, I like to share them. Here are a couple of great quotes to help you keep perspective in operating your storage business.

The first comes from Pope John Paul II. His passing inspired hundreds of hours of news coverage and reminiscences by thousands of people touched by his influence. Many of his meaningful and motivational sayings will be remembered, but the following is one I particularly enjoynot only because its true, but because it shows the mans great sense of humor.

Stupidity is also a gift of God, but one mustnt misuse it.

The next quote, from legendary American author Maya Angelou, truly applies to our industry. I wish everyone who owns or works at a self-storage facility would remember this bit of wisdom each day when they open the office door or pick up the phone.

Ive learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.

There are a number of websites that provide quotes from historical figures, authors and other notables. One of the best sites I have found is www.thinkexist.com. Turn to it the next time you need a particular quote for a special occasion, or even on a daily basis to find motivational tidbits.

Congratulations, Rhode Island!

Congratulations to the owners and managers who gathered in Pawtucket, R.I., on April 14 to officially establish the Rhode Island Self Storage Association (RISSA). The group represented nearly one-third of all storage facilities in the state.

Lianne Marshall, president of Storage Center, will serve as interim association president while the board of directors is created. Chris McGrath and Judith Burke, who already manage the state associations for Connecticut, Massachusetts, New Jersey, New York, Pennsylvania and Vermont, have also been chosen to manage RISSA and provide organizational guidance in the creation of the organization.

The April meeting addressed several critical issues, including the Rhode Island lien law and auction procedures and local changes in fire code. One owner has been ordered by the local building department to install fire-safety systems in her 25-year-old buildings. The traditional grandfather protection normally afforded to structures contracted before new regulations or codes are adopted has been eliminated by legislation. The change is a direct result of The Station nightclub fire that killed 100 people in February 2003. RISSA has created a special task force to address the issues all owners could face as a result of new standards.

State associations serve an important role in protecting self-storage in capitols across the country. We all owe something to the associations that guard, support and market our industry. I urge everyone to join their state association or recruit a new member. For a complete list of associations and detailed contact information, visit the online Buyers Guide at www.insideselfstorage.com/dynamiciss.asp and click on the link for Associations.

Jim Chiswell is the owner of Chiswell & Associates LLC. Since 1990, his firm has provided feasibility studies, acquisition due diligence and customized manager training for the self-storage industry. In addition to being a member of the

Inside Self-Storage Editorial Advisory Board, he contributes regularly to the magazine and is a frequent speaker at ISS Expos and various national and state association meetings. He can be reached at 434.589.4446; visit www.selfstorageconsulting.com.

1. Evaluate your environment.
2. Form must follow function.
3. Build it right.

Rule 1: Evaluate Your Environment

Every state has building regulations to address major environmental factors: wind load, snow load, seismic activity, flood plains, etc. When building a storage site with maintenance in mind, you also need to consider smaller ecological issues, such as trees that shed leaves and twigs on roofs, anticipated rain volume, debris that could blow onto a site from adjacent properties, frost depth, options for snow removal (salt or no salt), humidity, temperature ranges, and a host of other factors. View the facilitys surroundings, assessing how these items can affect operation of your business.

Moisture is the No. 1 enemy of frugal maintenance, whether in the form of rainwater that leaks into units and electrical fixtures, ground swells that crack the asphalt and concrete, or freezing and expansive soils along building foundations. Controlling water-related damage is the most important factor in minimizing the expenses of facility upkeep. What can be done? Lets start at the top.

Roofs.

The pitch of the roof needs to be adequate to shed the volume of water likely to fall on the surface at any given time1/4 inch per linear foot is the minimum. Dont plan for average rainfall; anticipate storms and high winds. In buildings with metal roofs, rolled step-downs are less likely to leak than vertical ones. Vertical step-downs require rake trim, flashings and angles that must be screwed, taped, caulked and sealed. Rolled step-downs provide a continuous flow to the roof line.

Using a good sealant on roof fastenings and penetrations is critical. There are many options, but butyl rubber caulk is tried and true. Dont use neoprene washers, as they deteriorate in ultraviolet light. EDPM rubber washers and high-quality screws are essential to extending the life of the roof.

Hire only contractors experienced with the type of roof being installed. Excess torque on screws with washers can strip holes in eave struts or purlins and stress or crack the washer seal, which is an open invitation to water. Confirm the quantity and placement of clips and screws being used with the installer. If panels are insufficiently fastened, they can move and deflect, especially in windy weather.

Never leave debris of any kind on a roof, particularly metal roofs. The construction crew should sweep the roof clean after construction to remove any small fragments. Metal bits left on metal roofing (yes, even galvanized) will eventually rust.

Gutters and Downspouts.

If debris is likely to blow onto the roof, use covered gutters or establish a program for regular gutter maintenance. The number of downspouts must be sufficient to accommodate the volume of water. Clogged gutters and inadequate downspouts create pooling water, increasing the potential for leaks. Its essential that the gutter-to-downspout attachment is cut out fully, without obstruction, so debris doesnt collect at the junction. All joints should be screwed and caulked, as they are the most likely candidates for leaks over time. Make sure the joints are not above light fixtures. To prevent erosion of landscaping or asphalt, downspouts should empty into a splash guard.

Insulation.

Ceiling insulation must be properly sealed against moisture at the edge of the roof. There are products available to accomplish this, but a knowledgeable construction crew can fold the insulations exterior cover under the roof before screwing it into place, providing an adequate moisture barrier. If moisture comes in contact with insulation, it creates a wicking effect, drawing even more water. This water will pool in the insulation above a unit.

Block.

Block columns absorb moisture, which will cause efflorescence (salt stains) and, in serious cases, seepage into units. Block also deteriorates from salt used in snow removal. To prevent these problems, block must be sealed and painted with a material specifically designed to fill the pin holes that are naturally a part of its composition. It must also be sufficiently covered and sealed at the roof line.

Foundations. Different materials expand and contract at different rates in response to heat and cold. Because a driveway and building will respond to temperatures differently, spaces can be created between them, leaving an entry point for water. To lengthen the life of drives and floors, use pliable sealants to prevent moisture from getting into cracks and beneath structures. Each and every juncture should be sealed to the extent possible.

Rule 2: Form Must Follow Function

Its fine to make things look nice, but dont sacrifice function for aesthetics. To avoid unnecessary building maintenance and keep safety a priority, design your facility with practical use in mind.

Drives.

For example, the fire marshal may only require a drive width of 20 feet; but if one customer is parked and unpacking, and another is trying to get around him in a moving truck, youve got potential damage on your hands. Strategically placed bollards can help, but a wider drive is the better solution. Wide drives also reduce stress on the asphalt from sharp turning radiuses. If large trucks will access the property, use concrete at turning points, as its more durable over the long term. Concrete pads should also be used under dumpsters.

All driveways must be sloped to shed water away from buildings without creating torrents (the necessary grade can be determined by your civil engineer). If drives are flush with unit doors, water will flow freely into units every time it rains or snow melts. Brick lugs around buildings, particularly in front of doors, prevent water from flowing inside. Landscaping should always stop below finished floor elevations and drain away from buildings as well.

Electrical.

Calculate the minimum lighting youll need for the facility, including fixture intensity and placement. This will save on construction costs and operating expenses. As lights determine a good portion of the electrical installation, keep other needs in mind. For example, installing restricted-access electrical outlets every 400 feet will greatly enhance employees ability to handle facility cleaning and maintenance. (Creating water access on every floor will help in this area, too.)

Avoid using wall-mounted lights, as they are easily smashed when tenants move their larger items through hallways. Overhead lighting provides better illumination, costs less to operate and is less likely to be damaged. Make sure ballasts will accommodate long-life fixtures to cut down on replacement.

Modest illumination is usually sufficient for drivesits not necessary to use 150- watt bulbs at 50-foot intervals, and high-wattage bulbs use more electricity and burn out faster. The trend in most municipalities is to require dark-sky lighting, meaning outdoor lights can only shine downward. If theres any chance the facility will be expanded in the future, consider installing dark-sky lighting even if it isnt currently required. Otherwise, you could face an expensive retrofit.

Rule 3: Build It Right

Choose all building components and systems based on your particular site, not just the quality of the product. Your contractor should provide a warranty on the construction of your buildings. In addition, make sure you get warranties for all your individual products, as these are generally for longer periods. For example, the contractor may provide a one-year warranty on general construction, but there may be a five- or 10-year warranty on your HVAC system, and a 20- or 30-year warrant on your roof. (Factory-produced Galvalume carries a 20-year warranty, but it may not extend to product rolled on site. Check with the manufacturer.)

Your contractor should also give you specifications regarding maintenance and replacement parts for all of your primary systems. Never substitute less-expensive parts without first checking with the contractor or manufacturer. For instance, fluorescent light ballasts are made to handle a particular kind of bulb and wattage. Using the wrong one will significantly shorten the life of the ballast. In the end, this costs much more than what you could save by purchasing discount replacement bulbs.

Finally, plan and budget for ongoing maintenance. Examine every facet of the site that may require upkeep, and establish a regular schedule. When left to chance, maintenance is often left undone, and theres more to it than meets the eye. To preserve a facilitys integrity, preparations must be made from day one of construction. You can build preservation into your site, maximizing its usefulness and longevity.

Donna May is president of Cross Metal Buildings, a member of The Parham Cos., which provides high-quality commercial, agricultural and self-storage buildings throughout the South and specializes in assisting first-time builders. May is the former president of Joshua Management Co. and a commercial real estate broker. She has been a partner in 11 startup storage projects totaling more than 703,500 square feet. For information, call 210.477.1260; e-mail [email protected]; visit www.crossmetalbuildings.com.

Fortunately, most of these conditions can be improved or corrected. Repairs and upgrades will be an expense, but not as costly as losing business. For older properties, I suggest an annual allowance of $4,000 to $5,000 for deferred maintenance. This may sound like a lot of money, but when you consider the advantages new facilities enjoyfreshness, cleanliness and the appeal of noveltyits worthwhile to invest a few hundred dollars per month vs. sacrificing occupancy.

The condition of any self-storage site is largely determined by the quality of the components used to build it. Cheap products always cost more in the long run and tend to require more upkeep. They negatively affect revenue every day, in addition to bringing down property value. With that said, its OK to be thrifty, which means getting the most value for the money spent. An informed buyer recognizes quality and understands its long-term effects: less maintenance and improved building life.

First Impressions

Theres nothing more lasting than a first impression, and this is especially true in self-storage, where tenants often base their rental decision on appearances. Their first 10 or 15 seconds on a property will convince them whether or not to store there. Overgrown landscaping, trash-laden driveways and peeling paint will only encourage prospects to go elsewhere. Because customers tend to equate care for your property with how well you will care for their goods, the facility needs a fresh, inviting look. Simple upgrades include flowers and shrubbery, a fresh coat of blacktop on the parking lot and drives, and attractive entryways and doors.

Laying the Groundwork

If you have any ponding on your pavement, correct it immediately. Standing water will sometimes result if driveways arent properly sloped. A slope should have been built into the drive when the facility was constructed to bear water away from units.

Any broken concrete should be removed. Before refilling the resulting gap, make sure the area is completely dry, and key rebar (steel reinforcements) into the existing concrete. Allow adequate curing time before opening the area for use.

Never bury trash on site, as it will eventually rot, creating a large depression in the surface above it. This can be an expensive problem to correct. Recently, a 10-cubic-yard hole appeared overnight in the driveway of one self-storage facility. The hole had to be filled and compacted, and the entire area had to be repaved. Had that area collapsed under a vehicle, the owner could have had serious injuries and a lawsuit on his hands.

Inside buildings, old concrete floors can look cold and dirty. A simple upgrade that makes a big difference is carpeting. You dont need to spend a fortune, but keep in mind carpet will require regular vacuuming to look clean. Some operators are even experimenting with trendy floor treatments, such as painted and etched concrete.

Got It Covered

Because self-storage units are only entered by their renters, its easy for roof leaks to exist without the facility operator knowing about it. With luck, your building has a standing-seam roof rather than a screw-down roof, which is more prone to leaks. If you do have a leak problem, there are several roof coatings that can be applied to alleviate the situation.

If you have a built-up roof, you can patch it for leaks, but this will only delay inevitable replacement. Consider installing a standing-seam roof over the top. Made of Galvalume, it will enjoy long life and can be easily coated in the future if necessary. As most built-up roofs have very little slope, special stand-offs are designed to give enough grade to the new roof installation.

Make sure downspouts are clear of debris and not backing water into the roof eaves. On a standard building, they should be used every 30 feet. Make sure water drained from the downspouts flows away from buildings.

Doors of Opportunity

Early self-storage doors were coated with alkyd or vinyl paint that would fade after only a few years. These doors can be recoated, but it might be best to replace them, especially if they work poorly or have worn weather seals or springs. New doors come equipped with stainless-steel bolts and latches, bearings, bulb-type astragals of UV resistant plastic, and pre-lubricated springs. They also have premium paint finishes with a 25-year guarantee against fading.

Its possible to improve the operation of older doors with lubrication. First, wipe the guides or side rails clean and spray them with Armor All. Spray the exposed springs and axles at the door-support bracket with a heavy coating of white lithium grease. Repeat these procedures every time a unit is vacated. There is no substitute for preventive maintenance when it comes to making doors last.

Re-tensioning can also improve door performance. For older doors, its best to ask your manufacturer or dealer to correct the tension for you. New doors feature an easy, safe, tension-adjustment method that can be performed by the operator.

If the astragals are worn, cracked or missing, they can be replaced with a new, bulb-type product that costs as little as 50 cents per foot. Other plastic parts such as wear guards and side strip can also be swapped to prevent doors from rusting or getting scratched. Finally, watch for rusty latches and bolts and frayed pull cords. Pull cords are the most disregarded maintenance item, but they are very inexpensive and easy to replace. Most door manufacturers carry spare parts for all their models and provide them at reasonable cost.

If you are blessed with an older property, spend the money to keep it looking good. You dont need to be new to be competitive. You just have to be clean, welcoming and well-maintained.

Dan Curtis is president of Atlanta-based Storage Consulting & Marketing, which provides feasibility and marketing studies to potential self-storage owners. Mr. Curtis is a frequent contributor to

Inside Self-Storage as well as a speaker at numerous industry conferences. For more information, call 404.427.9559.

I recently received a direct-mail piece from a company in Gretna, La., and the first page was written in Vietnamese. Unfortunately, I dont speak or read the language, but I was able to figure out it was for a company that sells karaoke equipment. Why did it come to me?

The sender, Phong Le Karaoke Co., practices what I call ethnic marketing. It likely bought a mailing list that included what it thought were Vietnamese first and last names. Even though Tron is a common Norwegian name, its similar to Tran, a popular Vietnamese namehence the marketing piece that came into my possession. Ive also been the recipient of catalogs for Norwegian or Swedish crafts, sweaters and culinary delights, especially during the winter holidays when companies go willy-nilly buying mailing lists.

Many businesses are starting to employ ethnic marketing, and its quite entertaining. For example, my neighbor and I got the same brochure from a bank opening in our community. The only difference was the family printed on the cover. My neighbor got one with an African- American family on it, while mine displayed a Caucasian family. (I bet you can guess my neighbors race.) The mailing gave us a chuckle.

Is ethnic marketing effective, and should you use it as part of the program at your self-storage facility? The answer is yesbut only if you use it well. When I used to run a bottled-water company, my salespeople would sometimes be particularly successful when it came to new customers if they managed to find a way to appeal to a particular ethnic group. For example, I had one route driver who had been stationed with the Army in Korea and could speak some of the language. He managed to get a water cooler into just about every Korean household in town. Another of my salespeople managed to sell to a Cambodian couple. Within a short time, he had added eight other accounts from their family.

Ethic marketing works because, like word-of-mouth, it involves close-knit communities generating referrals. Especially in big cities where there are many enclaves of cultural groups, expressly tailored marketing can be extremely successful.

Making It Work

Here are a few ways to take advantage of ethnic marketing at your facility. First, find out which ethnic groups dominate your community. Learn as much as you can about their culture, including their buying habits and the social approaches to which they best respond. For example, if a large portion of the local populace is Islamic, you wouldnt serve hot dogs that contain pork on customer-appreciation day. You want to learn how to appeal to all segments of your customer base, including how to make them feel comfortable with you and your staff.

An important note: Dont make fake tributes or promises, as they can easily blow up in your face. For example, dont advertise that you cater to Spanish-speaking customers if your manager only knows a few key words or you dont actually know anything about Hispanic culture. If you do employ staff who can speak multiple languages, include this information in your marketing, letting prospects know the days and times these employees are on duty. You can also post a sign in your office, for example, Our manager, (insert name here), speaks Urdu. He is available in the office from noon to 5 p.m., Monday through Friday.

Take advantage of whatever language skills are available to you by putting them to work in your direct-mail pieces and other printed marketing materials. Attempt to procure lists of names that match the language youre using. Keeping in mind the above anecdotes, your list may not be pure; but the mailers should reap some positive results.

You can also try hosting social events at your facility that appeal to one or several ethnic groups. For example, organize a food fair and invite local ethnic restaurants to participate. Consider offering special promotions or discounts to the communitys various cultural and religious groups to help you spread the news of your event and appeal to their clients and members.

Practice Patience

Finally, learn to be patient and polite when it comes to language and cultural barriers. Dont assume someone who cant speak English isnt intelligent, educated or financially sound. Its easy to fall prey to stereotypingdont do it! I recently had a customer who spoke with an extremely thick accent. I thought he might not understand English very well. As it turns out, hes been living in the United States for 23 years, holds two Ph.D.s and works as a university professor.

Anyone who walks through your front door is a potential renter or source of referrals, so treat everyone with courtesy and respect. Beyond that, pay attention to the ethnic groups in your market and make the most of their presence. You might be surprised at the new business you find. In my area, Spanish-speaking customers are the largest language group after English speakers, and theyve become a popular target for marketing. Do you know the second most popular group? E-mail your guess to me and Ill send you a prize if youre right.

Good luck, and good selling.

Tron Jordheim is the director of PhoneSmart, an off-site sales force that helps storage owners rent to more people through its call center, secret-shopping service, sales-training programs, and Want2Store.com facility locator. You can read what he is up to at www.selfstorageblog.com. For more information, e-mail him at [email protected].

Xtra Space Self Storage in Montgomeryville, Pa., learned this lesson. Opened in 1989, the site offered standard drive-up storage. In 1999, when the market was flooded with new shopping centers, homes and pharmaceutical companies, owner David McDowell noticed greater demand for smaller units and climate control. The following year, he contacted an industry building supplier to see what could be done to upgrade his business. They worked together to make key improvements:

• The antiquated screw-down roof was replaced with an insulated standing-seam roof.
• Insulated divider walls were added between exterior and interior units to allow for the addition of 5,000 feet of climate control.
• Dummy doors were added to outside walls to attract the attention of the estimated 35,000 cars that pass the facility every day.

The entire construction process took about three weeks, and only a few tenants were temporarily inconvenienced with having to move their goods. The climate-controlled units are now 97 percent occupied and, according to McDowell, the facility has enjoyed a 30 percent increase in revenue. The renovation allowed Xtra Space to evolve with the market, meeting consumer demand and remaining competitive.

Mr. Storage

Not far away, Mr. Storage of Philadelphia faced a similar scenario. The local market had softened, yielding lower occupancies and making competition fierce. The facilitys owners watched as other developers cloned their business plan, adding important upgrades.

The only way to swim with the sharks was to sharpen the product, says Michael Doyle, vice president of operations. When we found out there was going to be a 50,000-square-foot climate-controlled facility a block away, we realized we didnt have any choice but to renovate. Confined by a small site, we had to convert. The solution was to insulate a section of the building, adding 35 climate-control units.

Site renovation doesnt have to be expensive, but it should be well-planned with the unique attributes of the facility in mind. Upgrades are an easy way to add value to a property without starting from scratch. As the self-storage product (and its customers) becomes more sophisticated, the traditional older facility will not survive without improvements. Renovating may be the smartest thing youve done since opening.

Kevin Ford leads the renovation division of Miller Building Systems Inc., which designs, supplies and installs a full line of pre-engineered metal buildings. The company has specialized in East Coast construction since 1976. For more information, call 800.323.6464; e-mail [email protected]; visit www.millerbldgs.com.

Casaforte Self-Storage, an industry leader in Italy and Switzerland, has become known for highly specialized services and distinctive architectural design. Established in 2001, the company is managed according to the same standards adopted by major U.S. and European operators, though it maintains an unmistakably Italian style. Part of its unique identity springs from its buildings: abandoned historical structures reborn through conversion.

Casaforte Self-Storage centers are marketed as “hotels for things,” a concept reflective of Italian philosophy. Objects people need or love—but cannot keep at home—find lodging in restored buildings deeply rooted in the economical, historical and social fabric of the community.

A mix of strategic and practical circumstances fuels Casaforte’s preference for conversions vs. new facilities. Building a structure from scratch has become increasingly difficult in Italy. The country is small with a severe lack of available land, especially in the outskirts of big cities. Moreover, its urban planning is ruled by bureaucratic and administrative requirements, which drive up costs and create scheduling nightmares.

Fortunately, Italy is well-stocked with buildings prime for refurbishment. Businesses that close or relocate often leave their premises in ideal condition for an efficient, affordable and timely transformation to self-storage. As another plus, converting old factories into fresh new businesses revitalizes urban areas and helps save natural resources.

Like an Old Friend

It’s difficult to deny the popularity of buildings people have become accustomed to seeing on a daily basis. For many long-time residents, historical buildings are closely interwoven with their lives and memories. When locals see old factories turned into self-storage, their curiosity is immediately piqued about the changes and incoming business. When the facility opens, it already has a familiar and friendly look to those who worked in the old factory, as well as their relatives and friends. These people view the commitment to preserve the local architecture and cultural heritage as evidence of Casaforte’s credibility.

Prior to its conversion in 2001, the company’s Milan facility was the Italian headquarters of Pelikan, a well-known brand of luxury ballpoint and fountain pens. The factory, built in 1957, is an excellent example of the period’s architectural trends. The structure’s solid and functional appearance has been preserved, and Casaforte’s brand colors underscore its sleek, monumental size. The outer walls are painted black, and doors and windows are a vibrant yellow, creating a distinctive look and feel.

The Corsico facility (close to Milan) has a similar story. The factory was built during the ’60s, hosting a metal-sheets manufacturer. In converting the factory, Casaforte preserved the peculiar façade with porthole-like windows, but made the unique design more visible by applying the company’s signature colors.

The Rome facility, constructed in the ’50s, used to be a Beretta production factory. After conversion, it retains the wide, quiet and sheltered courtyard, now a loading area. Customers enjoy the pleasant atmosphere, enhanced by centuries-old maritime pines that provide shade and fragrance.

These are only a few examples of how Casaforte places and develops its facilities. Regardless of locale, the company’s self-storage strategy remains consistent: to become part of the urban fabric of a community, ensuring a place close to the heart of its residents.

Sabrina Tordo is the marketing and communication manager for Casaforte Self Storage S.p.A. For more information, visit www.selfstorage.it.