The self-storage industry has evolved, and so has Safeguard Self Storage! In this new video, the company looks at how the business has changed and why it’s experiencing explosive growth. From there, viewers get a tour of Safeguard facilities and their modern-day amenities, and hear commentary from company executives and customers on elevating customer service and setting a new storage standard. How is your facility setting the bar higher?
If you were to step back and look at the self-storage industry, you’d see a specialized real estate service that covers more than 2.3 billion square feet in rentable space and creates a combined annual revenue of more than $38 billion. For such a relatively young business, it remains one of the strongest sectors in real estate.
As the industry has grown and matured, it has begun to use some of the techniques learned over the years by owners of commercial and multi-family properties to enhance their operation and improve revenue collection. One of those is to use a point-of-sale credit screening and reporting system to weed out customers with a history of delinquency and lease default. That system can also be used to report payment activity back to the credit agencies, potentially motivating timely and reliable payments by tenants who are focused on maintaining their credit score.
On the front end, self-storage operators need to ask themselves, “If I know a tenant is a bad credit risk, will I still rent to him?” The answer would typically be “no.” Why? Because they recognize that time spent dealing with late payments and enforcing the lien process distracts facility managers from the more profitable side of the business—renting units to tenants who can pay.
It’s true that if a tenant doesn’t pay, there’s a statutory remedy for addressing the default. However, if you have the choice between renting to a good-paying tenant and one for which you might need to invoke your lien rights, the answer seems obvious.
Although there has been very little effort to bring credit checks into the self-storage industry before now, the main reason was because the verification process was time-consuming, paper-intensive and costly. Essentially, using a credit check in the process of renting a unit drove up the cost per lease.
These days, with Internet capabilities, a credit check can be almost instantaneous and the cost is negligible. It’s certainly low enough to outweigh the potential costs involved in dealing with a delinquent tenant and a possible lien sale. Not to mention, there’s the “contingent liability” associated with selling tenants’ units.
There’s an opportunity now—with the customer’s consent—to pull a credit score and determine the payment risk. Subject to an operator’s discretion, a system could be put implemented in which a credit score of 720 to 850 would clearly be “green,” a score of 620 to 719 would be “yellow,” and a score of 450 to 619 would be “red.” Those traffic-light colors signify the potential risk of renting to that person. Based on the information provided and the corresponding credit score, you could still decide to rent to him even if his score is low; but you would maintain the right to adjust the rental rate accordingly.
This concept of “risk-based pricing” is already in use in multiple businesses, such as those specializing in credit cards, mortgage rates and car loans. With its use, you could balance his risk of a rental based on independent information. In other words, rather than potentially turning away a customer based on the belief that he’s homeless or appears to be a payment risk—which may open a challenge of discriminatory rental practices—the third-party credit-check method creates a consistent, unified approach to measuring the risk, with all tenants being treated the same based on this financial data.
This is separate from the benefit of weeding out customers who might offer false identification when entering their lease. You could learn immediately if a name, address or Social Security number is valid. With all these benefits of doing a credit check as part of the rental process—immediate verification, low cost, risk-based pricing and increased validation of tenant identity—why would you not take advantage of this service?
A tenant’s understanding that the timeliness of his self-storage rent payments will impact his credit score has been shown to dramatically reduce delinquencies and associated costs, including intangible ones like manager frustration and stress arising from tenant defaults. Facility operators who report their tenant’s monthly payment activity to the credit agencies elevate the importance of those payments to the same priority as mortgages, auto loans and credit cards because the customer’s credit score is at risk if there’s a failure.
Data clearly shows that monthly credit reporting by property landlords influences payment behavior by tenants who wish to avoid a negative credit history. It also allows you to determine at point-of-sale if an applicant has previously generated a delinquent account. The use of credit reporting reduces bad debt because of the effect of late-payment reports on customers’ credit scores.
Under the current system, a self-storage tenant can wait indefinitely to pay, even up to the time of the lien sale, with no impact on his credit. At the end of the day, the enforcement of a lien on his stored goods and even their sale may not be as impactful to him as a lower credit score. By understanding his rent payments are being reported, a tenant can avoid defaulting to protect his credit.
Adding credit reporting to a self-storage operation should increase operational cash flow, which directly increases the net value of the business. Similarly, there are benefits for customers, namely higher credit scores for those who create a record of timely payments. On-time payments are rewarded with positive points, whereas late payments result in a negative impact.
An additional advantage of the credit-reporting approach concerns past uncollected debt. If you’re carrying unpaid rent deficiencies after conducting lien sales, those can also be uploaded into the credit system. This enhances your ability to recoup the unpaid debt, especially when those tenants seek to update and improve their credit record. A customer can’t apply for a new credit card, or obtain a car or house loan with a bad credit history. He might even be denied employment. Your credit reporting can motivate him to pay off his self-storage account and obtain a release letter, which would clear the tradeline for a delinquent report.
As a model of success, we can look to the impact credit reporting has had on other industries, such as homeowner’s associations. Associations using ongoing credit reporting identified a decrease of as much as 58 percent in past-due membership balances in the first three months, and a decrease of as much as 74 percent over a 12-month period. Clearly, providing monthly payment records to the credit-reporting agencies can positively impact a self-storage facility’s bottom line.
Scott Zucker is a partner in the law firm Weissmann Zucker Euster Morochnik & Garber P.C. in Atlanta, which specializes in business litigation with an emphasis on real estate, landlord-tenant and construction law. He’s a frequent speaker at self-storage industry events, author of “Legal Topics in Self Storage: A Sourcebook for Owners and Managers,” first and second editions, and a partner in the Self Storage Legal Network, a subscription-based legal service for storage owners and managers. He’s also the deputy general counsel for the Self Storage Association. For more information, e-mail [email protected]; visit www.wzlegal.com.
Update 6/5/18 – Citadel Self Storage, now open for business, is celebrating its grand opening on June 28. A community event will feature wine-tasting with Scott Harper, co-owner of the Bristol Bar & Grille and Cuvée Wine Table. Harper designed Citadel’s wine-storage area, according to the source.
“The self-storage industry has taken off, and we are so excited to bring our concept to Louisville,” said Schubert., who recently opened similar properties in Cincinnati and Nashville, Tenn. “This unique and interesting facility takes the trend to a new level.”
5/10/17 – Citadel Storage Partners held a ground-breaking ceremony today for its storage facility in St. Matthews, Ky. The 11 a.m. event included city officials, members of the chamber of commerce and representatives from Greater Louisville Inc., an organization that promotes business growth in Louisville, Ky., and surrounding areas, according to the source.
Designed by Louisville-based Potter & Associates Architects PLLC, the facility will feature wine storage, a covered loading/unloading area, and individual door alarms. The contractor is JM Williams Contractors of Marietta, Ga.
“The self-storage industry has taken off, and we wanted to be the first to design a unique and interesting facility that takes the trend to a new level in the region,” said Allen Schubert, the developer. “We are thrilled to locate the facility in the St. Matthews area and thank the city of St. Matthews, the city of Louisville and Greater Louisville Inc. for helping us make this project a reality.”
Construction on another Citadel facility is underway in Nashville, Tenn., the source reported. It’s expected to open in late 2017. Schubert said he’s seeking additional sites to expand the brand.
3/27/17 – Self-storage developer Citadel Storage Partners I LP, a Delaware limited partnership, has received approval to begin construction on a three-story facility in St. Matthews, Ky., a suburb of Louisville. Company affiliate Dupont Self Storage LLC acquired the 2.5-acre site at 1403 Browns Lane for $1.35 million. The developer plans to build a 145,000-square-foot structure containing 900 storage units, with completion expected by March 2018, according to the source.
The site was previously home to a church, elementary school and daycare center. The seller was Fruitful Ministries Global Inc. Citadel has permission to remove the existing buildings, and the property has been rezoned from residential to commercial use, the source reported.
Construction on the facility is expected to cost about $10 million, project manager Dan Kunau told the source. The developer chose the property near DuPont Square and Norton Suburban Hospital due to its visibility and proximity to Interstates 64 and 264, according to the source.
Founded in 2015, Citadel Storage Partners I is based in Louisville.
Sources:
The Lane Report, Citadel Wine Storage Facility Opens in St. Matthews
Louisville Business First, Massive $10M Development Coming Near Busy St. Matthews Intersection
The Lane Report, CITADEL Climate-Controlled, Self-Storage Facility Breaks Ground in St. Matthews
Minnesota Gov. Mark Dayton signed an update to the state’s self-storage lien law on May 29 that grants facility operators the right to hold their lien-sale auctions online. Though the previous wording indicated “online sales are permitted,” the new language in House Bill 3380 (HF 3380) explicitly lists “online auction” or a public in-person auction as the two allowable methods to satisfy a self-storage lien.
The measure passed the house with a 125-0 vote and the senate 65-0. The new law goes into effect immediately.
The bill was supported by the Minnesota Self Storage Association and national Self Storage Association (SSA). Minnesota becomes the 22nd state to allow unit contents from delinquent accounts to be sold via online auctions, according to a June 4 SSA e-mail newsletter to its members.
HF 3380 was introduced on March 5.
Sources:
Minnesota State Legislature, HF 3380
The Monday Morning Globe 6/4/18, Minnesota Governor Signs SSA's Bill Authorizing Online Auctions
Mark Neeham, owner of Yakima Mini Storage Properties LLC with four facilities in Yakima, Wash., is battling the city over several portable-storage containers at one of his sites. Following an unrelated inspection of Chestnut Avenue Storage by the Yakima Fire Department, Neeham was told the containers at 5010 W. Chestnut Ave. violate building codes. City officials said several of them need to be set on foundations, while three would need to be removed altogether, according to the source. They also told Neeham he needs a building permit for the structures.
Neeham is now threatening to sue the city, stating he’s being treated unfairly. He claims there are dozens of similar containers at other storage properties that aren’t on foundations. “In fact, I couldn’t find any that did have foundations under them,” he said in his appeal, which goes before the city’s hearing examiner on June 14. Though the containers were placed four years ago, Neeham claims they’re not permanent and he has a right to use them on his private property.
According to city codes and the International Building Code, commercial storage containers of more than 120 square feet must have a footing, foundation and building permit, said Joe Caruso, code-enforcement manager. The city noted there have been two recent instances in which other business owners spoke with the planning department about the requirements or implemented portable containers at their sites, said Eric Crowell, assistant planner. If the department becomes aware of other sites that aren’t following code, they’ll be held to the same standards, he added.
“We went through the process and approved [Needham’s] storage containers but put conditions on it,” Crowell said. “But he’s basically appealing all the requirements we gave.”
Neeham’s other sites are 48th Avenue Mini-Storage, 58th Avenue Mini-Storage and 96th Avenue Mini-Storage. His facilities are family-owned and -operated.
Source:
Yakima Herald, Yakima Man Says City Unfairly Enforcing City Building Codes
NorthPoint Development has applied to rezone the site of a former Chevrolet car dealership in Des Plaines, Ill., to build a four-story self-storage facility. The developer is proposing a Beyond Self Storage location for the south side of Miner Street, between Campground Road and Busse Highway, near the Des Plaines River. The planning and zoning board will discuss changing the site from commercial to general manufacturing on June 12, according to the source.
The property was home to various car dealers for decades, beginning in 1950. Flood damage led to the demolition of the last showroom about 15 years ago, the source reported.
NorthPoint recently opened a facility in Maplewood, Minn. It launched its multi-facility development initiative in February 2016. The company also operates two Beyond Self Storage facilities in Chesterfield and McCausland, Mo., and Joco Self Storage in Overland Park, Kan.
Based in Riverside, Mo., and founded in 2012, NorthPoint is a development, management and leasing firm that’s principally focused on the industrial, multi-family, senior living and self-storage markets in the Central United States. The company has $2.1 billion in raised capital and operates 28 million square feet of industrial properties, thousands of multi-family apartment units, and numerous developed or managed senior-living communities.
Source:
Journal & Topics, Self-Storage Proposed for Former Car Dealership Site
As a self-storage operator, you’re not just offering your tenants extra space, you’re offering space that’s secure. A storage facility should be designed to provide superior protection for customers’ goods. It might have gated access, surveillance cameras, individually alarmed units or even a dedicated security team.
In a competitive market, preventing crime at your property helps to maintain your excellent reputation and keeps tenants happy. That said, all the disc locks and onsite managers in the world don’t always add up to a 100 percent crime-free environment. To work toward that goal, you must take additional measures. Here are 10.
Do you remember that old horror-movie trope in which the babysitter realizes the threatening call is coming from inside the house? Don’t let that happen at your storage facility. Start preventing crime from within. During the lease signing, make new tenants aware of items and activities that aren’t allowed on the property. Always get identification and accurate contact information; and never rent to tenants who can only give you a P.O. box.
You can take this further by doing background checks on customers; but be aware this will require you to ask for their Social Security numbers, and some may take issue with this. If you go this route, you’ll be able to assure tenants they’re renting at a facility where all renters have passed a background check, making your property one of the safest in town.
Any time you’re in a new space, whether that be a neighborhood, workplace or home, you take stock of your surroundings. After you’ve been there for a while, it’s normal to lose that awareness. Try to look at your storage facility and the neighboring area with fresh eyes. Ask yourself:
All these factors will either aid or prevent would-be criminals from committing crimes and fleeing the property.
Law-enforcement officers are there to help you keep your facility safe, so it’s important to have a relationship with them. You can do this by offering police a 24-hour access code to your gate, showing up at community events such as “National Night Out,” or seeking smaller events where you can meet officers in a relaxed setting. If you offer a military discount, consider extending this to officers so you have some renting at your facility.
Another creative way to develop a relationship with law enforcement is to allow them to conduct training at your site. Take, for example, the story of Lake Mary Mini Storage in Florida. The property allows K9 units to train on the property at night. One evening, two burglars showed up, and officers could act immediately because they were already there. If you have a similar relationship with authorities, you can expect a faster response when crimes occur.
Like many self-storage challenges, crime prevention often comes down to staff training. Teach everyone how to monitor surveillance cameras, make rounds on foot, and check for problems with gates and locks. Consider having a log where employees note what goes on, so you have a record of anything unusual.
When discussing crime prevention at storage facilities, the focus is typically on the units themselves (and their contents, of course). While that approach is largely appropriate, it overlooks other spaces such as your management office, maintenance shed and parking lot.
You should always protect your most important asset—your employees. Have cameras in staff areas and ensure your office is alarmed and locked overnight. If your facility receives a lot of cash payments, make deposits at least once a day. Have a set amount of cash you keep in the office and don’t exceed it.
Everyone has been to a business with ancient, non-functioning surveillance cameras. The owner thinks their mere presence will ward off crime, but when an incident occurs, there’s no record.
Don’t be that self-storage operator. Maintain the security features at your facility. Fix broken fences. Upgrade your cameras, and trim branches that may be obscuring their view or casting shadows. Focus on curb appeal so your facility doesn’t look like the kind of place where criminals might lurk. If you pick up trash, remove graffiti and plant flowers, you’ll demonstrate that your property is run by people who care about—and keep an eye on—what happens there.
There are many reasons to avoid being tied to a desk. It fosters boredom, makes you sedentary and even makes time pass slower. It also causes you to be complacent, and a complacent self-storage employee misses out on preventing crime.
Get out of the office whenever you can. Talk to your customers. Get to know the ones who are long-term tenants so you can greet them when they stop by. Make note of anyone who’s loitering or appears to be acting suspiciously. Don’t be nosy, just be a hands-on manager. Approach individuals with the goal of offering assistance. Legitimate tenants will be grateful, while would-be criminals will be deterred.
Every self-storage operator knows the number of tenants who truly need 24-hour facility access is a lot lower than those who think they do. If you’re considering this, have it available as an amenity for which tenants pay extra. This will limit the number of customers on the property after hours, allowing you to better monitor who should and shouldn’t be there.
Many tenants look for storage facilities with onsite management. This feature shows them help is readily available and someone is always there to keep their belongings safe. If you have an onsite manager, shout it from the rooftops (not literally). Including the phrase “onsite manager” on your signage and website will attract tenants and dissuade criminals.
You probably already know the best way to prevent crime at your facility is to have modern, effective security tools in place. Still, it bears repeating. Do a thorough audit of your current features. Inspect your lighting, cameras, locks and everything else that keeps you and your tenants safe. Is there something that hasn’t been upgraded in years? Invest in better security and you’ll gain loyal tenants.
When implementing the above crime-prevention steps, prioritize your safety and that of your employees. Never go into a unit where you suspect something dangerous, such as illegal squatters or a meth lab. If there’s an assault on the property or an armed robber, remember it’s not your responsibility to place yourself in harm’s way. Contact the authorities. If you’ve done your part in preventing crime on your site, your day-to-day operation should be smooth and crime-free; but don’t hesitate to ask for help if you need it.
Krista Diamond is a staff writer for StorageFront, which allows customers to custom search and compare thousands of self-storage facilities. She’s a graduate of the University of New Hampshire and lives in Las Vegas. When she isn't writing about storage, she’s climbing mountains in the desert. For more information, visit www.storagefront.com.
Let’s take a walk down memory lane. The year is 2000 and the Internet is still a toddler. Self-storage management software is DOS-based; Yellow Pages advertisements are the way to bring in new customers; the BlackBerry is the “smarter” phone; social media is just an idea on a white board; Google is two-year-old private company; and the music industry is just starting to realize the problem with digital-music piracy.
Fast forward 18 years and the world is a very different place. Yellow Pages have been replaced with online marketing; management software can do everything but make you a cup of coffee; and in-person communication has been replaced with Instagram, Snapchat and text messaging. Automation is the rage, encompassing everything from driving to ordering pizza. In self-storage, smartphones can now open access gates, kiosks can assist customers with renting units, and so much more.
The influence of technology on our industry has been significant. If you’re an operator or investor, the shift has given you the ability to generate large amounts of useful business data. Technology not only helps you collect data, but to analyze it as well. Let’s see how.
To collect data, we need technology that’s accurate and easy to use. To begin, every storage facility should have a basic computer setup as well as Internet access, e-mail, management software, a spreadsheet software such as Excel or Google Sheets, online banking access, and an accounting program like QuickBooks. This is the minimum that should be considered. Working together, these systems will provide you with the basic information you need to make data-driven decisions.
However, in today’s business environment, the essentials are no longer enough. Yes, you can make accurate decisions with this intel and you’ll be ahead of a competitor who lacks even simple systems, but this data is only part of the story. What we need to know in 2018 is every piece of information available on our potential, current and past customers, and how they interact with our business. For prospects, this includes:
For current customers, you need the same things, plus:
For past customers, you should also know:
Depending on how much time you have or the investment you’re willing to make, you can collect this information in several ways:
Manual. This type of collection involves entering the information manually into a spreadsheet from your management software. (Sometimes you can export the information from the software into a spreadsheet.) Then you can calculate the numbers you need. The disadvantages to this method are the amount of time it takes, human error, and the fact that not all management software provides the same data.
Semi-automated. You could semi-automate your system and use an online form from a software package such as Google Forms, which can be customized with specific questions to collect the information you need. Once a form is complete, the information is automatically downloaded into a spreadsheet for review; but you still have to make your own calculations.
Fully automated. The ideal way to collect tenant information is to use customer relationship management (CRM) software, for example, a program like SalesForce. With this software, you can program the information you’d like to collect, and then use either internal reporting functions or a separate program through the CRM’s application-programming interface to customize the data you’d like to view.
If you find your analytical results are unfavorable, you have the means to improve them. Like a doctor or auto mechanic, a self-storage operator will find the quality of his data directly correlates to how well he identifies problems. The better the information he collects, the easier it is to make a diagnosis and attribute facility performance to specific causes.
Here’s an example: Let’s assume your facility has two managers and their goal is to gain 25 new rentals this month. At the end of the month, your data shows your marketing campaigns drove 38 potential customers to your facility and you had 22 new rentals. The facility missed its goal, but why?
You dive deeper and see that Manager A rented to 15 of 19 potential customers for a closing percentage of 79 percent. Manager B rented to 10 of 19 potential customers for a closing percentage of 37 percent. Why was Manager B’s percentage so low? Does he need additional training or have a personal issue that’s affecting his performance?
Upon closer examination, you discover Manager B had more customers who requested 10-by-20 units and your facility has been out of this size for the last two months. Without this data, you might have missed the reason behind his lower close ratio. Plus, you’re now armed with new information about unit-size demand for your property and can revisit your revenue-management plan.
If your marketing campaign only drove 22 potential customers to your site, you’d have a different problem. Even if your managers rented a unit to 100 percent of these prospects, you’d still fall short of your goal of 25 new rentals per month. In this case, you’d need to take closer look at the design and execution of your marketing campaign and find out why it’s not bringing new customers to your door.
The ability to apply technology to the collection and analysis of data is imperative for every self-storage operation. It can help us bridge the gap between the general information we’ve always used and the specific data needed to make informed decisions. You must invest time and resources into these systems. If you don’t, your facility will have a competitive disadvantage—or worse, it may have a financial weakness. As economist Edgar Fiedler once said, “He who lives by the crystal ball soon learns to eat ground glass.”
Matthew Van Horn is co-founder of 3 Mile Domination Self Storage Services, a full-service operations company specializing in self-storage management, marketing and consulting. He’s also co-author of “Self Storage Domination.” To speak with him about your self-storage operations, schedule a free 30-minute strategy session at www.3miledomination.com.
Real estate developer and owner Ziff Properties Inc. has acquired Starpoint Storage, a self-storage and warehouse facility in Chapel Hill, N.C. The property at 2000 Ashley Wade Lane contains eight single- and multi-story buildings comprising 83,000 square feet of space. Ziff plans to convert the warehouse areas to self-storage, some of which will be climate-controlled. A small office will also be built on an outparcel that was included in the sale, according to a press release.
Once renovated, the property will be managed by self-storage real estate investment trust Extra Space Storage Inc. and branded under its name.
“This acquisition presents a unique redevelopment opportunity for Ziff. We recognize the area’s demand for quality storage and the market’s barriers to entry. We look forward to providing a new and improved facility for the Chapel Hill community,” said Christian Chamblee, chief operating officer and director of acquisitions for Ziff.
The acquisition was facilitated by Richard Amon, chief operating officer for Colliers International Group Inc., a global commercial real estate services firm.
Based in Mount Pleasant, S.C., Ziff specializes in the acquisition, development and management of commercial properties in the Southeast. Founded in 1992 by Stephen Ziff, the company owns a portfolio including 3 million square feet of self-storage, shopping centers and office buildings.
Pinnacle Storage Properties, a Houston-based firm that operates 10 Texas self-storage facilities under various names, has acquired Storage House of Texas in Garland. The 3.9-acre property at 3402 Bobtown Road is the company’s first in the Dallas-Fort Worth area. The purchase also marks the first property to be rebranded under Pinnacle’s new Storage Plus brand, according to a press release.
The 13-building facility comprises more than 55,000 rentable square feet in 480 units. Features include climate control and various security measures. It’ll serve the communities in Collin, Dallas and Rockwall Counties.
“We are excited to add Storage Plus of Garland to Pinnacle Storage’s portfolio. Storage Plus of Garland, as with all of our facilities, will offer our customers an unparalleled level of service during every phase of their storage experience,” said CEO John Manes. “We will continue to be extremely aggressive in acquiring self-storage properties and look forward to further development in the Dallas area.”
“Our newest acquisition is located in the heart of the continuously growing Dallas metroplex,” added Robby Dunn, chief investment officer. “With the opportunity to potentially expand operations at this location and to increase our footprint in the Dallas area, I am confident that Storage Plus of Garland is another great addition to our portfolio.”
The buyer and the local seller were represented in the transaction by Bill Bellomy and Michael Johnson, brokers with Bellomy & Co., a Texas-based real estate firm that focuses on the sale of self-storage, industrial, office and retail properties nationwide.
Pinnacle is a privately held real estate owner and operator focused on the acquisition, development and management of self-storage assets. Its investment strategy is to purchase under-leveraged properties in suburban and secondary markets. It currently has a location under development in Round Rock, Texas.
