Nevada City Self Storage has maintained its roots as a family-run business—right down to the name. Three Joe Days operate the facility, and even live together on the 59 acres at the end of Joe Day Ranch Road in Nevada City, Nev.

The eldest, 84-year-old Joe Edward Day, is the supervisor emeritus of the operation. Son Joseph Carlton Day, 51, handles the day-to-day management with son, Joseph Solis Day, 19, helping out when home from college.

The family name began with Joseph Stewart Day and continued with Joseph William Day, both of whom are now deceased.

The property has been in the family since 1914. Family members built the self-storage units 20 years ago.

Despite competition, Nevada City Self Storage has remained busy over the two decades, renting to families moving, college students and even contractors.

Source:  The Union,  Nevada City Self Storage: Five Generations of Joe Days

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A-1 Self Storage, an operator of self-storage facilities throughout California, announced that it will provide financial support to Milestone House, which provides a nurturing home environment for at-risk girls ages 13 to 17.

Through its residential-treatment programs, Milestone House provides the counseling and educational therapy services the girls need to live productively and independently. Many of the home’s residents are victims of abandonment, abuse, molestation and neglect. As a result, some suffer emotional, behavioral and learning problems. 

Founded in 1992, Milestone House is a 501(c)(3) non-profit organization in Oceanside, Calif. 

A-1 Self Storage has 17 locations in the greater San Diego County area and more than 40 locations across California. It is the self-storage division of the Caster Cos., a third-generation, family-owned company headquartered in Southern California since 1959.

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Surveillance video taken July 8 at Champion Self Storage in Pine Hills, Fla., shows two people breaking into several self-storage units and stealing property.

According to the Orange County Sheriff’s Office, the two suspects removed two concrete slabs from a divider fence, then cut a chain-link fence to gain access into the facility. Electronics and tire rims were among the stolen items, according to investigators.

The burglary happened between 2 a.m. and 3 a.m. The facility is located at 5301 N. Pine Hills Road. Anyone with information should call the Crimeline at 800.423.8477.

Sources:   Orlando Sentinel,  Deputies Seek Help Identifying Storage-Center Thieves
MyFox Orlando,  Thieves Hit Orlando Storage Facility

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In basketball, rebounding is always an important component to winning. Rebounding also occurs in real estate, as capital markets and economic conditions vary. In 2010, self-storage is rebounding from the declines of the prior two years.

“Market activity is definitely increasing, driven by special servicers and banks divesting of problem properties,” said Steve Hrysko, vice president of the CB Richard Ellis Self-Storage Advisory Group. Indeed, an analysis of the first quarter of 2010 indicates an increase of nearly 20 percent in transaction volume over the same period last year. In addition, most observers expect market activity to increase throughout the remainder of this year.

For self-storage, rebounding may be too strong a term because of the stability of the asset class. The National Self-Storage Trends chart below shows stability in the early part of the last decade, and then a dramatic rise from 2002 through 2007. In all categories measured, including average price per square foot, total sales volume, net operating income (NOI) and cap rates, the asset class showed strong increases. Even during the recession of 2008-09, these variables declined but were relatively stable.   
  

 
New Acquisitions

The increase in transaction volume suggests many players believe the market has bottomed out, and it’s a good time to strike. “Many believe now’s the time to get back into the market, before it’s too late,” said Greg Wells of the Cassidy Turley/BRE Commercial self-storage group. “A year ago, major buyers were not actively in the market. Now public and private money, and national and regional operators, are all back in the acquisition game.”

For example, Public Storage acquired a 30-property portfolio from A-American Self-Storage for close to $190 million. The deal included 28 properties in South California and two in Chicago, reportedly at a sub-8 percent cap rate on a trailing 12 months NOI. Another 54-property portfolio is on the market by A-American Self Storage, with six qualified investment groups seeking the assets. This is the first strong portfolio activity since early 2008. There’s also a 14-property portfolio being listed and another 20-plus property portfolio preparing to go to market.

New investors and veteran players have come to the self-storage asset class. Crossover investors new to the industry are descried as those invested in apartments but like the higher returns and lower loss ratios of self-storage. Veteran players include nationwide companies such as Strategic Storage Trust, W.P. Carey, the real estate investment trusts, and smaller regional companies such as Equity Based Services.

For single-asset owners or small ownership entities, concerns over refinancing in the future are driving interest in selling now. Even assets operating on a stabilized basis may be facing a capital call for more equity to refinance existing debt. Some owners are opting to cash out equity now rather than face putting more equity into a property, even if the property has strong cash flow.
 
Plans for the Next Game

Self-storage has proven to be recession-resistant, especially when compared to other asset classes in this economic recession and capital-markets depression. So what’s the plan for the next game?
In general, the outlook is bullish for self-storage. Owners with strong balance sheets will continue to enjoy cash-flow returns. Banks and commercial mortgage-backed security (CMBS) lenders with problem properties are choosing re-trade over foreclosure.

As an example, there’s a deal under contract in South California that has assumable CMBS financing to a qualified buyer, but with only a 10 percent down payment. The property was stabilized, but the owner could not pay down more equity to the debt. The lender sold the property instead, and the borrower pulled out remaining equity.

Capital chases yield, and equity capital is seeking storage in this asset class. Cap rates are declining slowly as values remain below replacement cost with little new construction. Cash flows are generally stable, with recessionary related declines now stabilizing and a general view of more optimism regarding the future. The summer rental activity will be the key metric of investor confidence for the balance of the year.

While some market observers worry about problem assets flooding the market, there’s little evidence that’s likely to occur. Typically, less than 1 percent of self-storage assets have been on a lender “watch list,” and less than 10 percent of these loans have gone to special servicers. Even if special assets double or triple in the next few years, there’s equity waiting to acquire the assets or debt.

The self-storage market is rebounding ahead of other real estate asset classes. This is another market determinant that indicates the strength and durability of self-storage cash flow. As equity is returning, market conditions are improving. Many believe 2010 will be the rebound year for self-storage.
 
R. Christian Sonne is senior managing director of Cushman & Wakefield’s Self-Storage Industry Group, a nationwide real estate consulting team of 12 professionals specializing in appraisal and market study of the self-storage asset class. To reach him, e-mail [email protected].

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A zoning permit for the construction of a self-storage facility in Dorset, Va., was reinstated earlier this month by the state’s Environmental Court.

The original zoning permit was issued May 21, 2009 following approval of a site plan that includes three buildings and 72 self-storage units. Neighbors opposed the development by Bradley Tyler and appealed the decision to then Dorset Zoning Administrator Joseph Bamford. The neighbors contended the proposed development didn’t fit the use of “retail sales/rentals” as defined by the bylaws, according to the Environmental Court decision.

At an Aug. 31, 2009 public hearing the zoning board of adjustment (ZBA) issued a written decision voiding the permit. Tyler voiced concerns about the validity of the ZBA’s decision, which led the neighbors to appeal to the Environmental Court on Sept. 29, 2009. They claimed if the ZBA’s decision was invalid, then the permit was also.

Tyler filed a cross-appeal the next day, claiming the ZBA’s decision was invalid because it wasn’t reached by a majority of the nine-member ZBA. During the vote, four members said the facility didn’t constitute a permissible use in the Village Commercial District, three felt it was a permissible use and two did not vote, according to the decision.

The Environmental Court rejected the neighbors’ argument that permissible retail uses have to operate as a store or shop to meet the bylaw’s definition of retail. 

The neighbors opposing the project can appeal the decision to the state Supreme Court.
 
Source:  The Manchester Journal,  Tyler Self Storage Permit Reinstated

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Self-storage owner Sanders Dallas III lives in Winston-Salem, N.C., but has jumped into the political fray in nearby High Point, organizing a group of local business owners after he lost an eminent domain battle with the city.

Dallas isn’t eligible to run for office in High Point because he resides in another city. As a business owner in High Point—where he runs a real estate business and self-storage operation—he’s been spurred into action. Dallas recently lost a battle with the city over a proposed intersection that would cut through one of his properties.

Dallas organized a group of 40 prominent business people that has encouraged candidates to run against High Point incumbents, including Mayor Becky Smothers and city council members Latimer Alexander and Chris Whitley. The group, which has no formal name, has regular meetings to discuss ways to improve business in High Point.

Some members of the city council, however, said Dallas’ political interest is based on the eminent domain case.  

The city recently took a right-of-way across Dallas' property by eminent domain for an intersection at Eastchester Drive/Deep River Road, which is already under construction. The development cuts across a 3-acre property Dallas owns.

The city rejected a proposal by Dallas which asked the city to fill in his property with topsoil, making it buildable. According to High Point City Attorney Fred Baggett, the city, in a mediated agreement, paid Dallas $250,000 for the right-of-way, but the topsoil would have cost between $500,000 and $700,000.

Dallas said he has no political aspirations, and rejected any suggestions that he's motivated by the eminent domain case. His only goal is to improve the local economy in High Point.

Source:  RhinoTimes,  High Point Politics May Have New ‘Kingmaker’

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Strategic Storage Trust Inc., a publicly registered non-traded real estate investment trust targeting the self-storage market, acquired an approximately 1,040-unit self-storage facility in Davie, Fla., the company’s sixth acquisition in the Florida market. The site will be rebranded under the SmartStop Self Storage trade name.

The property, located at 3401 South State Road 7, contains approximately 122,700 rentable square feet on just over 8 acres. The 13 single-story buildings are less than three miles west of Fort Lauderdale-Hollywood International Airport (FLL) and Interstate 95, and less than a mile east of the Florida Turnpike.

The property includes a manager's office with a two-story residential apartment and climate-controlled and non-climate-controlled units. The occupancy is 78 percent.

Charles "Chico" LeClaire and Mike Mele of Marcus & Millichap Marcus & Millichap Real Estate Investment Services brokered the transaction.

Strategic Storage Trust Inc. currently owns four other self-storage facilities in Florida:

• 1396 Capital Circle N.E. in Tallahassee. The facility has 23 buildings with 1,550 units.
• 16400 State Road 84 in Weston. The four-story building has 650 units. 
• 15 McClure Drive in Gulf Breeze. Includes eight single-story buildings with 700 units.
• 4761 Gulf Breeze Parkway in Gulf Breeze:  The four single-story buildings have 290 units.
• 4950 N. Dixie Highway in Oakland Park: A four-story building with 1,600 units. 

Since the launch of Strategic Storage Trust Inc. two years ago, the company’s portfolio of wholly-owned properties has expanded to include properties in 14 states. The company’s sponsor is Strategic Capital Holdings, which manages a growing portfolio of over 6.3 million square feet of commercial properties.

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When you hear terms like “specialized services,” “custom homes” or “tailored clothing,” you probably think “expensive.” The good news is when it comes to self-storage insurance, specialized can actually be affordable. The daily tasks that are the norm for your storage business also create unique exposures for your operation, which is why you should consider specialized insurance to protect your asset.

Every business faces types of risk that are uncommon to other small businesses. Dry cleaners have different exposures than self-storage facilities, just like medical offices have different needs than tanning salons. If every business had the same insurance policy, it would be expensive and likely have major exclusions. There just doesn’t seem to be a way to fit all risks on a policy at a premium people can afford. An insurance program designed specifically for your business often provides more focused coverage and the most affordable premium.

First Line of Defense: Your Lease

Self-storage owners and operators act in a capacity similar to landlords. You don’t take possession of your tenants’ goods. Since there’s no bailment—care, custody and control—tenants store their property at their own risk. To that end, your lease agreement is your most important line of defense.

Your lease should clearly state that tenants are storing at their own risk and are responsible for insuring their stored property. It’s highly recommended to offer tenant insurance when the customer signs the contract. If the he declines to purchase tenant insurance, continually remind him of the importance of this coverage.

In addition, there are two specialized insurance coverages you, the operator, should consider carrying to protect your business: customers’ goods legal liability and sale and disposal.

Customers’ Goods Legal Liability Coverage

Even the best-managed facilities can suffer claims. As important as it is to have a carefully crafted lease, as an owner, you can still get sued for damage to goods stored at the property. This is where the first type of specialized coverages comes into play: customers’ goods legal liability (CGLL).

Here’s a prime example of why CGLL is crucial to have on your policy. If a customer’s property is damaged by water because you didn’t properly maintain your roof (or another maintenance issue), he may feel you were negligent, contact his lawyer, and file a suit against your facility. If you’re found legally liable for damage to a tenant’s property, your CGLL coverage might respond. It could also provide defense costs, even if a claim is found to be groundless, false or fraudulent. This coverage is well worth the premium just for legal defense alone.

Sale and Disposal Insurance

Sooner or later, every self-storage owner will be faced with the unenviable task of evicting a tenant for failure to pay his rent, reclaiming the storage space, and removing or disposing of the tenant’s property. This is where the second type of specialized coverage comes into play: sale and disposal legal liability. This coverage can provide protection against the act of wrongfully removing, selling or disposing of a customer’s property.

If state-specific lien laws are not exactly followed, self-storage operators are left vulnerable to potential claims. If you or your managers are involved in the sale and disposal process, you must be aware of your state’s law. Consult with an attorney about preparing a written procedure that outlines the exact steps for disposing of a delinquent tenant’s property, and read and follow all state statues.

Talk With Your Insurance Agent

While many business owners are looking for ways to save money, one place you shouldn’t skimp is your self-storage insurance. You have too much at stake to not consider all your insurance-coverage options. If a tenant sues your company for damages caused by your business, the cost of the lawsuit—including court and attorney fees, plus a possible settlement—could be astronomical if you don’t have liability insurance.

The specialty coverages mentioned above are not typically available through most traditional business-insurance carriers, but can be secured through insurers specializing in the self-storage industry. Your agent should be qualified to help you evaluate all the commercial coverages available in the market, and can recommend coverages specifically for your self-storage facility.

Randy Tipton is the owner of Universal Insurance Facilities Ltd., which has provided specialized insurance coverage to the self-storage industry for more than 12 years. Universal has clients in 49 states, with agents trained specifically in self-storage. For more information, call 800.844.2101; e-mail [email protected]; visit www.universalinsuranceltd.com.

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StorageLand LLC, a provider of third-party management and consulting services to the self-storage industry, will present a free webinar for self-storage facility operators on July 21 titled “Considerations in Selecting the Right Management Software.” The online seminar is open to anyone looking to change or purchase software for their self-storage operation.
 
There are more than 20 management-software applications available for self-storage operations, each with a unique features and functionality. The presentation will outline the considerations a facility operator should make when selecting software to best fit his business needs.
 
The event will take place at 1 p.m. MT. Registration can be completed at https://www1.gotomeeting.com/register/262777641.
 
StorageLand is owned and operated by Michael T. Bishop, who founded the company in 2006. StorageLand actively manages the daily operation of 14 self-storage facilities, totaling more than 3 million rentable square feet. The company also works with other startup and established projects.
 
Bishop’s experience includes 10 years in the technology/Internet sector, including a position as a project manager at Hewlett Packard. Bishop previously founded two Internet-based companies, and has used his software knowledge to advise self-storage operators in selecting and maximizing their management software. Bishop is also president of the Idaho Self Storage association and a commercial real estate advisor for Sperry Van Ness.

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