Compass Self Storage in Shelby Township, Mich., will celebrate its recent facility expansion this Saturday with a Grand Re-Opening and Barbeque Extravaganza for community members. Compass added a new building that features a range of unit sizes suitable for small contents up to commercial use.

"We are excited to expand our offering to the local market and further serve the self-storage needs of our community," said Sean Bentley, district manager. "We hope the community will join us to celebrate at this fun event."

The event will feature tours of the new building, a barbecue lunch and refreshments. Attendees also will have the opportunity to win door prizes, including a barbecue grill and Kindle Fire. In addition, proceeds from a 50/50 raffle will benefit the Leukemia-Lymphoma Society.

Compass Self Storage has a rental special to tie in with the event, offering half off the first month's rent to new customers. Some restrictions may apply.

Compass Self Storage LLC is part of the Amsdell family of companies. Headquartered in Cleveland, the Amsdell Cos. draws its roots from a family owned construction company founded in 1928. The company has since been active in several billion dollars worth of real estate ventures with a primary focus in self-storage. There are 15 Compass Self Storage facilities in Florida, Michigan and Pennsylvania.

Metroplex Self Storage in Colleyville, Texas, was evacuated yesterday after 275 gallons of sulfuric acid spilled inside the facility and ran onto a roadway. A small amount also reportedly trickled into a storm drain. One man was injured, suffering burns to his hands and feet.

Industrial Boulevard, which runs adjacent to the facility, was closed yesterday afternoon as hazardous-materials workers used clay to contain the spill and absorb the acid. Officials blamed a damaged valve for the incident.

The acid reportedly had a 93 percent concentration. Sulfuric acid is widely used in manufacturing, including the production of fertilizers, making other chemicals like hydrochloric acid, and synthetic detergents. It can pose a health risk if inhaled, ingested or when in contact with skin or eyes. Symptoms include skin irritation and burns, pulmonary edema, bronchitis and emphysema, according to the National Institute for Occupational Safety and Health.

Metroplex Self Storage operates six facilities in the Dallas-Fort Worth metro area.

A Denver businessman and real estate developer believes he has found a niche market for self-storage by developing environmentally friendly facilities in growing urban residential neighborhoods. Bahman Shafa currently has one facility open near downtown Denver with two more in development, and he envisions his company eventually growing into a national brand.

My vision is to have a nationwide brand of urban, sustainable self-storage facilities, Shafa said. He believes the urban market has potential for self-storage across the nation because he says storage space has not necessarily kept pace with the influx of people moving into modern urban developments. In Denvers case, available storage space has lagged behind a 60 percent rise in Denvers downtown population since 2000, he said.

Shafa has one $5.5 million Greenbox Self Storage facility in development in Denvers trendy River North neighborhood. The site will be 65,000 square feet and offer 690 storage units. Scheduled to open in December, the facility will be constructed using recycled materials and energy-efficient insulation, as Shafa wants to meet criteria to earn LEED certification.

A second 65,000-square-foot Greenbox facility is scheduled to open in January in a former warehouse.

Denvers downtown area features at least five other self-storage facilities.

Shafa has been successful turning around and redeveloping old properties in the residential areas near Coors Field, including bringing in small merchants to serve those communities. He also owns souvenir shops in the downtown areas of Boulder, Colo., New Orleans and Chicago, as well as a yogurt shop in Spain. In addition he owns or manages eight parking lots.

Atlanta-based Storage Post Self Storage, an operator with facilities in Georgia, Louisiana and New York, reached out to customers this week by exhibiting at the Maspeth, N.Y., Chamber of Commerce Grand Avenue Festival. Storage Post featured an arcade-style basketball game in its booth and raffled off an Apple iPod nano.

The annual festival stretched eight blocks and featured nearly 500 vendors in addition to a variety of family friendly rides, attractions and food.

"Our employees actively seek opportunities to connect with the community, and we enjoy getting to know the people in the area," said Susie O'Connell, Storage Post vice president of communications. "At this event, we had an interactive game at our space to add to the family fun. It was truly an enjoyable and exciting event, and we thank everyone who stopped by our booth."

Storage Post officials said the company strives to have all of its locations take part in neighborhood events and support local businesses as part of its community outreach efforts.

California self-storage provider A-1 Self Storage is supporting several charities with monetary contributions.

The company gave a donation to Indian Hills Camp, which provides outdoor experiences for groups, families and youth. The organization hosts more than 18,000 children annually at its camp grounds, which offers activities such as nature hikes, zip lines and archery.

A-1 also made a contribution to Ignation Volunteer Corps (IVC) San Diego Region, which provides individuals, aged 50-plus, opportunities to serve others by addressing social injustices and transforming lives. IVC matches volunteers with organizations in need of their talents.

Saint Vincent de Paul Villages is also a beneficiary of A-1 Self Storages charitable donations. The organization helps provide shelter and food to the homeless in San Diego. In recent years, more than 14,000 San Diegans living in poverty were served with one or more services from Saint Vincent de Villages.

A-1 also made a monetary donation to CASA Riverside County. The charitys mission is to advocate on behalf of abused, neglected and abandoned children in the courts of Riverside County. CASA supports volunteers to act on behalf of the children and ensures they have a safe, permanent and nurturing home.

The Juvenile Diabetes Research Foundation (JDRF) also received a donation from A-1 Self Storage following JDRFs Father of the Year event on June 7 at the Hilton San Diego Bayfront. A-1 Self Storage CEO Brian Caster was honored at the event with the Father of the Year award from the National Fathers Day Committee.

JDRF is the leading charitable funder and advocate of Type 1 (juvenile) diabetes research worldwide. The organizations mission is to find a cure for diabetes and its complications through the support of research. Type 1 diabetes is a disease which strikes children suddenly. It is treated by multiple injections of insulin daily or a continuous infusion of insulin through a pump in order to maintain their health.

A-1 Self Storage has 17 locations in the San Diego County area and more than 40 locations statewide. It is the self-storage division of the Caster Cos., a third-generation, family-owned company headquartered in Southern California since 1959. Caster Cos. develops and manages A-1 Self Storage, A-1 Car Storage and other commercial properties in California. Its portfolio includes more than 4 million square feet of real estate.

Seven former Sparkle Stor-All Self Storage facilities in North-Central Ohio sold recently to two different investors for a total of $2.5 million. The businesses will be renamed Prime Storage and Star-Brite Self Storage.

The facilities total 888 units and 137,380 square feet. Some of the facilities also have excess land suitable for future expansion, according to the source.

The deals were handled by commercial real estate broker NAI Cummins, which represented JWA Associates acting as a receiver on behalf of Lorain National Bank. Apple Creek Banking Co. and Kilbuck Savings Bank provided financing.

While reality television shows depicting live auctions at self-storage facilities are ratings winners with the public, the vast majority of storage operators would like to see programmers add disclaimers that educate consumers about the auction process.

In a survey conducted last month by the national Self Storage Association (SSA), 77 percent of respondents said they would like shows such as Storage Wars and Auction Hunters to carry a disclaimer that more accurately informs the public about the legal and revenue recovery process. More specifically, 60 percent would like to see a disclaimer clarifying that revenues recovered through auctions are typically less than the amounts owed by tenants in default.

Those numbers seem to reflect the opinions of the most vocal industry opposition to the way self-storage is portrayed on cable television. The most common criticisms from operators have been that the shows can mislead the public into believing no one knows what items are inside an abandoned storage unit and that storage facilities make more money by auctioning a units contents than keeping tenants current on their payments.

Of course, criticism of the shows has not necessarily kept self-storage operators from watching. The survey indicated 46 percent of owners and managers like the auction shows, while 38 percent dislike them. The SSA did not indicate how many of the 400 storage operators contacted across the nation regularly watched any episodes.

The shows appear to be more popular among operators in the mid-Atlantic and southern states, with more than half of respondents in those regions liking the shows, while less than one-third of operators out West responded favorably.

As a whole, 50 percent of operators indicated that self-storage exposure through the auction shows has at least moderately increased the number of bidders who show up to their lien sales.

The survey had a margin of error of +/- 5 percent.

Self-storage owners interested in refinancing an existing or acquiring a new facility are always concerned with interest rates. Based on historical standards, today's rates are low. But is this an abnormal period of sustained low rates that will soon revert to the long-term mean interest rate," or have we entered a new norm, where all-in rates of 4 percent to 6 percent will continue indefinitely?

Because interest rates are critical to the financeability and value of a self-storage property, it's important to have a sense of where rates are today relative to where they will be in the short and long term. Rather than opine on where I believe rates are headed, I'll present the facts and let you draw your own conclusions.

Limits to Borrowing

So what could happen to self-storage if interest rates increase? In a higher interest-rate environment, borrowers facing a refinance will be constrained in cash flow and value. As interest rates increase, cap rates increase, and self-storage values will almost certainly decrease.

Cap rates increase so investors can accommodate the new interest-rate environment while generating similar returns. However, because the self-storage real estate investment trusts (or other low-leverage buyers) can purchase with cash, the effect on interest rates may be tempered in markets where REITs compete. Secondary and tertiary markets will be more susceptible to changes in value due to increased interest rates.

With constant net cash flow and higher annual debt service thanks to higher interest rates, self-storage owners may be limited in terms of what they can borrow. In the example below, we assume that a 200 bps (basis points) increase in interest rate translates to a 150 bps increase in cap rate.

If inflationary pressure is causing rates to rise, this can sometimes work in a self-storage owners favor. Facility owners are well-equipped to respond in an inflationary environment by increasing rental rates  accordingly. While it's true that expenses will likely increase at a similar rate, the bottom line net operating income should grow with inflation, helping to offset increases in cap rates and stabilize facility value.

Interest Rates: Current vs. Historical

Currently the federal funds rate, LIBOR and the prime rate, as well as 5- and 10-year treasury yields, are at historical lows (see the accompanying infographics). Some argue these low rates are not sustainable and must eventually rise to historical averages, while others see this as a new era in which low rates are the new norm, due to international liquidity in the new global marketplace.

Note: The federal funds rate shown is the weighted average of rates brokered on trades, not the target rate as set by the Federal Reserve. The historical averages date back to 1954. Click here for a line-graph illustration of historical interest rates.

Predicting rates is like asking a sportscaster to predict which team is going to win the game. Regardless of what the team looks like on paper, there are infinite variables that influence the outcome. The same can be said for interest rates. Here are some factors that have a direct effect on rates.

Inflation

Inflation is the one factor that will likely cause all index rates, both short- and long-term, to rise. Whether their debt is floating or fixed-rate, storage owners can expect their index rate to increase if there is inflationary pressure. Shock events that sharply increase the price of necessary goods like food, housing and energy can trigger inflation. With so much pressure on prices, its not hard to imagine how the United States could see a period of inflation.

Will inflation be an issue in 2012 and beyond? It's time to examine the data so you can make your own predictions.

Lets take a look at the yield curve, which highlights the relationship between interest rates and maturities. A sharply positive curve often indicates growth, with the potential for inflation. An inverted yield curve, with short-term rates higher than long-term rates, suggests a slowing economy with little likelihood of inflation. The current yield curve plotted in the accompanying graph is relatively steep slope, showing the potential for inflation risk.

Credit Risk Spread

Credit spread, the second component of commercial mortgage interest rates, is affected by property-level metrics and macro-level economics. As gross domestic product grows at an accelerating pace and unemployment decreases, bond investors appetite for commercial real estate paper increases. Conversely, there are national and international events that push credit spreads higher.

The depreciation in the housing market in 2008 created a marketwide knee-jerk reaction. CMBS (commercial mortgage-backed securities) bond buyers were terrified of investing in commercial real estate, and spreads on those bonds skyrocketed from 30 bps to nearly 1,200 bps (see the accompanying graph). So clearly, market shocks can play a role in determining credit risk spread.

In addition, property- and borrower-specific drivers affect the credit spread. For instance, the leverage of the loan, the location of the real estate, the consistency of the income stream, the experience of operator, and the strength of the sponsor all have an effect.

Experts will offer their opinions about the future of interest rates, but it's very difficult to determine whether the current period of low rates is just an abnormal dip or, in fact, the new norm. If you conclude rates are abnormally low and will likely increase, it would be wise to lock in long-term, fixed-rate financing today. If you believe we have entered a new era in which rates are permanently low and could even go lower, it may be wise to wait and see.

Even for those who believe rates will remain low, there is 10-year, fixed-rate debt available with no prepayment penalty, creating a nice hedge against higher rates, while allowing for early refinance if rates decrease. Just remember: Even after considering all of the factors, your prediction will still be as reliable as that of a sportscaster predicting the winner of a game.

Devin Huber is a principal at The BSC Group, which offers financial and loan advisory, mortgage-brokerage and loan-workout solutions to commercial real estate property owners and investors, with a special emphasis on the self-storage market. Prior to helping found The BSC Group, Huber was a senior vice president at Beacon Realty Capital and a key member of the firms Self Storage Group. To reach him, call 800.605.7880; e-mail [email protected]; visit www.thebscgroup.com.

Commercial real estate developer Acucap Properties announced its intention to lead the fledgling self-storage property sector in South Africa. The company has entered a strategic joint venture with Faircape and SA Self Storage Investments (SASSI) to develop several self-storage sites. Faircape is a property investment, development and management firm that includes Stor-age Self Storage among its companies. SASSI is South Africas largest self-storage investment trust.

The three companies already have 12 operational self-storage facilities together, with seven additional sites acquired, under construction or in the planning stages. In all, the companies plan to have 23 operational sites worth approximately $118 million.

Acucap is also in discussions with other existing self-storage property owners about acquiring their facilities, company officials said.

Some real estate analysts applauded the joint-venture move, citing a high ceiling for the growth of self-storage in the region.

"There will be a point when the growth will be limited but not anytime soon. I see this as a very clever move on their part," said Maurice Shapiro, fund manager for Alternative Real Estate, a capital management firm.