A Longmont, Colo., man and his self-storage company, East Point LLC, have been charged with knowingly dumping a pollutant into Union Reservoir and must pay $20,000 in fines, according to the U.S. Attorney's Office in Denver. John Albert Paquette, 53, who owns East Point Mini Storage at 12121 Sugar Mill Road, knowingly dumped 1,000 gallons of raw sewage from a hose into the Oligarchy Ditch on June 20, 2012. The sewage came from the self-storage property and ultimately flowed into the reservoir, according to court documents.

Paquette, who pleaded guilty to violating the Clean Water Act on April 4, was prosecuted by assistant U.S. attorney Suneeta Hazra and sentenced to pay a $10,000 fine on Monday. His storage company was also sentenced to pay $10,000. The case was investigated by the Environmental Protection Agency Criminal Investigation division, according to the source.

"Illegally discharged sewage can sicken people, fish and wildlife. This case shows that those who try to save a buck by cutting corners will be vigorously prosecuted," said Jeffrey Martinez, special agent in charge of the EPA's criminal-enforcement program in Colorado.

Paquette could have been sentenced to pay as much as $25,000 per day of violation and might have served up to one year in prison, according to the source. The business might have paid as much as $50,000 per day of violation.

Union reservoir is used for outdoor recreation including swimming, fishing and boating.

AAA Stor-Stuff Self Storage in Lancaster, Calif., was recently sold for $2.6 million. Built in 1986, the 61,600-square-foot facility comprises 520 drive-up self-storage units and 39 uncovered vehicle-storage spaces. Situated on 4.2 acres of land, the single-story building features all-metal construction. Occupancy was approximately 65 percent at the time of sale.

The transaction was brokered by listing agent Dean Keller, president of Bancap Self Storage Group Inc., who said this was "a rare opportunity to purchase a temporarily under performing self-storage property in Los Angeles County with significant upside potential."

AAA was sold on a cash to new loan basis. The seller, a private investment firm, had purchased the mortgage on the property from a special servicing firm after it had begun the foreclosure process and listed the property for sale once the foreclosure was complete. The buyer is a private limited liability company owned by local investors who are new to the self-storage industry, according to a Bancap press release.

There have only been a handful of foreclosed storage properties listed for sale in Southern California in the past few years, according to Keller, and plenty of buyers looking to "steal" lender-owned properties. Bancap has been able to get very good prices for sellers, he said.

Bancap specializes in self-storage property sales and acquisitions. The company has completed $1 billion in self-storage sales, including man lender-owned properties, portfolio sales, and a record-setting single-property sale of more than $31 million.

SelfStorage.com, a website containing information and resources for self-storage operators and customers, has released the results of its 2013 Economic Outlook Survey of self-storage owners. The online survey indicates operators have experienced increases in gross revenue and rental traffic in the last year, while many have planned changes to their marketing strategies.

About two-thirds of respondents indicated their facilities have had gross-revenue increases of at least 5 percent in the last year, with 25 percent achieving an increase of more than 10 percent. Rental traffic in 2013 also is up compared to the last two years for a majority of respondents, with 46 percent saying their traffic was somewhat higher and 21 percent indicating it was significantly higher.

When it comes to marketing and promotions, nearly half (48 percent) of respondents said they use rental concessions only for new rentals, while 40 percent said they do not need to offer concessions to customers.

Operators also indicated they are investing more time and money on social media and online ad placements while decreasing their investment in traditional marketing channels such as newspaper advertising and Yellow Pages. Twenty-two percent of respondents said they plan to use online directories as an advertising strategy more this year and in the future, while 20 percent said they will use social-networking websites more and 16 percent will increase use of pay-per-click strategies.

Just 5 percent of respondents said they would increase their print advertising, while 11 percent said they would increase their use of Yellow Pages. In contrast, 32 percent said they would decrease their presence in Yellow Pages, and 16 percent indicated they would use less print advertising.

A majority of respondents also estimated the property value of their self-storage facilities has increased from 2011 and 2012, with 41 percent indicating moderate value increases and 20 percent estimating significant increases. Just 12 percent of respondents said their facilities had either moderately or significantly decreased in value.

The survey was conducted from May 20 to July 4. Complete findings can be viewed on SelfStorage.com. The website is a community of vendors, owners and industry insiders dedicated to sharing industry information. The site includes a facility directory, advertising opportunities, real estate listings, articles, videos, a blog and more.

Update 7/31/13 The Wollongong City Council recently voted 9-1 in favor of a special-use zoning change that should enable Kennards Self Storage of Australia to build a proposed storage facility within the Kemblawarra Business Park. The council approved self-storage as a permissible light-industrial use within the heavy-industrial zoned area.

The decision is another reversal by the council, which voted 7-6 in May to investigate other options amid strong opposition to the zoning proposal from heavy industrial businesses. City staff ultimately recommended the council approve the Kennards request, believing it to be the best option to facilitate the development of self-storage units at 249 Shellharbour Road, Port Kembla, while protecting valuable heavy industrial-zoned land for the long term, according to city documents.

We think this is the right thing and the most logical thing the council should do, although selfishly we wouldn't mind which option they chose as long as it allowed self-storage," Sam Kennard, managing director for Kennards Self Storage, said prior to the councils decision.

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Update 5/28/13 Sam Kennard, managing director for Kennards Self Storage, urged the Wollongong City Council yesterday to block a rescission motion that could curtail progress on the companys proposed new facility. Although some council members had been supportive of the self-storage project, officials voted 7-6 to investigate other options amid strong opposition from heavy industrial businesses.

Kennard argued the self-storage facility could be beneficial to local businesses, citing that occupancy from businesses in the companys existing locations comprises about 37 percent of rented space.

"The future of the Illawarra may not be in heavy industry ... Apple didn't start because land was a particular zoning," he said. "Bill Gates actually started in a garage, and I'm going to build 700 of them."

Kennard also threatened to sell the property as smaller parcels if the self-storage project is not approved.

Council member Michelle Blicavs said she feared the delay would eventually lead to a full rejection. My concern is that here is another opportunity of investment in our city that we are turning away, and I'm just concerned we're seeing a pattern, she said. Development opportunities come up, and in some cases it warrants a small change to the zoning. Things change and we need to be versatile and flexible enough to determine when a change is valid.

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Kennards Self Storage of Australia is nearing a zoning victory in the city of Wollongong that would enable the company to build a storage facility in an area zoned for heavy industrial use. Kennards purchased land in the Kemblawarra Industrial Precinct and Business Park in 2010 but has been unable to build a facility there, thanks to a zoning change three years ago that drew a distinction between warehouses and self-storage units.

The Wollongong City Council this week agreed to forward a planning proposal to approve self-storage use in IN3 Heavy Industrial zoned areas to the New South Wales Department of Planning and Infrastructure. The councils decision is opposed by a consortium of industrial operators who believe allowing self-storage into heavy industrial areas could inhibit future employment growth, since self-storage facilities typically do not require a large staff.

The council did not agree that self-storage would likely impact available land for heavy industrial operators, pointing out that three storage facilities already operate in heavy industrial areas in nearby Unanderra.

Kennards Self Storage operates 74 locations in Australia and New Zealand.

By Rachel Adams

Embarking on a new build in the self-storage industry is a huge step that takes time, planning, preparation and, often, a lot of guidance. With the U.S. economy experiencing steady growth, it's no surprise most areas in the country are heating up in terms of construction, which is enticing for industry professionals looking to expand or build for the first time. Changes in the market, however, can also lead to changes in costs and other aspects of the construction arena, which makes it more important than ever for owners to stay informed.

In this article, some of the top builders in self-storage reveal inside information about materials, construction costs, trends and engineering processes to put facility owners and investors in the best possible position before building their next project.

The Price Is Right

Materials are among the most basic components when it comes to building a new facility, but they can also be the most influential when it comes to pricing. The general consensus among builders is the costs for raw materials has remained fairly level, with price increases in insulation and doors. Raw materials have been pretty flat over the past year, though insulation just experienced a 9 percent increase," said Todd Trepke, vice president of Compass Building Systems Inc., a full-service supplier and erector of self-storage buildings.

Although prices have been stable, there could be an uptick soon on materials and labor, according to Charles Plunkett, chief executive officer and owner of Capco Steel Inc., a steel supplier and erector of metal buildings and RV and boat storage. "We are on the cusp of seeing price increases," he says.  "As things get busy, costs always get more expensive. If you're in a part of the country where construction is heating up, you can expect your costs to go up."

Design Trends

When it comes to design or engineering processes, one of the best things about self-storage is its simplicity. "Regardless of how the exterior of any of these buildings look, you could open them up and see the same design principles at work in 90 percent of the facilities today," says Caesar Wright, president of Mako Steel Inc., which designs, supplies and installs steel buildings for the self-storage industry. This, however, doesnt keep owners and builders from getting creative and finding new ways to attract tenants.

For example, Plunkett has been pumping up facility façades by using traditional materials in non-traditional ways. In a recent build, glazed cinder blocks were used as the exterior finish, along with aluminum panels to give the facility a colorful and unique look that will never fade or require paint. They used materials that have been around a long time and were used for a long time, but they took it up a notch," Plunkett says. The flat, aluminum panels were something we hadn't really done before. The glazed masonry was certainly something we hadn't done before. So these were traditional products, but one that have not been used this way in self-storage.

 
Finishing touches to the mansard roof and decorative louvers were made to a facility in Mclean, Va., before the brick and exterior insulation finishing systems were installed. The facility also has a rooftop garden. [Photos courtesy of Compass Building Systems Inc. Facility managed, but not owned, by Extra Space Storage.]

According to Nelson Hendrix, district sales manager for DBCI, a manufacturer of steel roll-up doors and other components for the self-storage industry, anything that helps differentiate a facility will draw attention. This philosophy has led to an increase in conversions and the addition of drive-through buildings. "A big trend we're noticing is the conversion of existing buildings," Hendrix says. "Drive-through accessibility for sheltered loading/unloading is another popular feature that distinguishes properties."

The increase in demand for drive-through loading/unloading bays has completely changed the engineering process, Trepke says. "Engineering has changed dramatically as more buildings have internal drive-through/parking/loading areas requiring large expanses of structural steel.

Keeping Current on Building Codes

Building codes are a particularly tricky issue to deal with throughout the construction process. While codes vary depending on the location, all states use or have adopted the International Building Code (IBC), a complete set of comprehensive, coordinated building-safety and fire-prevention codes. The majority of the difficulty in dealing with building codes is handled by builders/developers, although certain codes may affect costs and other factors of facility development.

For example, according to the IBC, self-storage facilities with four or more stories are now required to adhere to strict fire-proofing codes that will greatly increase the cost of the build. "Three floors is the max anymore unless you have an incredible market where you can afford to build a concrete structure," Plunkett says. "So it has actually changed the dynamics of self-storage such that it's forced us to build shorter facilities."

Wind- and snow-load requirements also need to be taken into consideration depending on the location of the facility. The buildings are being built stronger now than they were in the past couple years because they have changed the codes on how these buildings are engineered to meet the wind loads and snow loads of each building, says Eddie Huebner, lead account representative for A-Lert Building Systems, which designs, engineers, manufactures and installs self-storage buildings.

Energy Efficiency on the Horizon

In some areas, building codes have changed to encourage a more energy-efficient building. In regions where energy efficiency isnt required, its certainly on the horizon. One way developers are adding eco-friendly services is through solar panels, particularly at single-story facilities with a lot of roof real estate or on boat and RV carports. The benefits are many. Operators can produce solar energy to cover their own electrical costs while attracting customers looking for green-friendly businesses. In some states, businesses that generate solar power can even sell their excess energy back to the power company and make a sizeable profit.

 
This facility in Glen Bernie, Md., features drive-through units on the first floor and insulated metal-wall panels. [Photos courtesy of Compass Building Systems Inc. Facility managed, but not owned, by Extra Space Storage.]

Owners are taking advantage of the opportunity for energy efficiency by putting solar systems on top of these RV- and boat-storage roof-only buildings to run the facility, Huebner says.

Hendrix has also seen owners sway toward green options. "The obvious benefits are lowered costs and a smaller carbon footprint, which appeal to both owners and customers."

While lower operational costs is appealing to some owners, many are still unwilling to fork over the upfront costs to implement solar and other energy-efficient building methods without incentives. "From my perspective, if you don't have incentives, it's still too costly," Plunkett says. However, he does think building more energy-efficient buildings will soon play a bigger role in self-storage development. "Energy consumption is going to be more of an issue in the future. It's coming."

Resources Abound

There are many routes owners can take to initiate and complete a new build, but theres one important factor to keep in mindinformation is key. Researching materials, developers, costs and manufacturers can help to keep costs in check and mistakes from happening. Getting the right people involved early on and understanding what the costs are can save you a lot of time, energy and headaches before you get too deep into a project, Plunkett says.

There are many resources for new owners and even seasoned pros, including presentations hosted by developers, webinars and other online avenues. "Go to presentations, go to webinars about construction, get to know each and every company. Visit the manufacture plants and just ask a lot of questions," Huebner advises.

With the right guidance and ample knowledge, owners and developers will continue to push self-storage new construction to new levels. [Developers] are building a better product these days, Plunkett says. Each year, we take it up another notch."

Rachel Adams graduated from the Walter Cronkite School of Journalism and Mass Communication at Arizona State University with a bachelor's degree in journalism and a minor in Spanish. Her passion for writing and culture propelled her journey through college and has continued to inspire her endeavors with VIRGO Publishing, where she contributes to "Inside Self-Storage" and "Professional Door Dealer." Contact her with questions, comments or ideas at [email protected].

OpenTech Alliance Inc., a Phoenix-based provider of self-serve kiosks, call-center services and other technology solutions for the self-storage industry, is celebrating its 10th anniversary. The company was founded in July 2003 after Robert Chiti and former colleagues Mike Connolly and Davin Dameron conceived a self-service kiosk to bring greater automation and convenience to self-storage owners and customers. Today, the company has more than 100 employees and serves more than 2,000 self-storage locations worldwide.

"When we started OpenTech, we wanted to work in an environment of high integrity, with people we liked, doing things we believed in. Our mission is simple: make self-storage more convenient, so more people will use it, said Chiti, president and CEO. We have heard that 9 percent of Americans use self-storage; our goal is to push that percentage into the teens."

In its decade of operation, the company has diversified its products and services to now include several models of INSOMNIAC self-serve kiosks as well as a range of self-storage rental solutions including the INSOMNIAC Live! Call Center, INSOMNIAC Online Web and mobile applications, LiveAgent! software products, and the INSOMNIAC ILock Security System, all available through OpenTech's Self-Storage Cloud.

Chiti credits the companys evolution and longevity to an ecosystem of its employees, customers and partners, including vendors. We feel the vendor community has also played a big role in our success. They have embraced us, given us creditability through their support and, most of all, become personal friends, he said. Without the help and support of our peers we would not be here. It is a wonderful group of people, and they make being in self-storage a fun journey."

Chiti said OpenTech will continue to strategically grow its business through internally developed solutions, partnerships and acquisitions.

RPM Secure Self Storage in Houghton, Mich., has added mobile storage to its services. The facility is the first Michigan dealership for COWs (Container on Wheels) Mobile Storage, offering 8- and 16-foot storage containers. "I'm excited to add COWs Mobile Storage to my list of services," said Reid Susmark, owner of RPM Secure Self Storage. "Its another facet of storage, providing a service like no other in our area. It allows me to be more involved with events, businesses and people in the area. While many people around here have heard of PODS, Houghton is too small of a community to support a big franchise like that. The COWs are a perfect fit for a small town like ours.

"Reid Susmark and the folks at RPM Secure Self Storage have been a pleasure to work with and will be great ambassadors for the COWs brand," said David Nathan, vice president of rectangles at the COWs corporate office in Miami.

Started in 2009, the COWs dealership program is available in the United States and Canada, and specifically designed to add mobile-storage services to an existing moving or self-storage business.

RPM Secure Self Storage has served Houghton County for about 20 years.

By Hugh D. Odom

There are thousands of cell-tower and rooftop leases on self-storage properties throughout North America, but how many of these leases are smart? What does this mean? The answer is pretty simple, but for some reason, it has been ignored by self-storage companies of all types and sizes until now.

A smart cell-tower lease is one that looks beyond the immediate future and allows for a structure that will maximize the value of the lease, not only on day one, but throughout the entire term. At the same time, it minimizes the negative impact the agreement can have on a self-storage facility's development, disposition or even financing.

The Lease Value

So why is it important to have a smart cell-tower lease when it comes to lease value? The first question almost every self-storage owner asks when it comes to a new cell-tower lease or a lease extension is how much the rent should be. However, most of them are focusing on the amount the rent should be on day one rather than how to construct a lease that gives them value throughout its entirety, which can be upward of 30 years.

Self-storage owners rely on annual or renewal term-rent escalators to maintain lease value throughout its term. However, all these escalators really do is keep your lease on track with inflation, which means at the end of the lease, youre basically being paid the same amount you were being paid on day one.

The cell-tower companies have done a masterful job of getting property owners to agree to lease terms that are almost a fixed expense while giving themselves the ability to increase the profitability of a cell-tower site by adding subtenants or upgrading it with new technology. Simply put, the cell tower on your property could be the most valuable in your city, state or even the country and you wouldnt see one more dime over the term of the lease than what you originally agreed. If you want evidence, look at the numbers, they dont lie.

In 2012, the largest tower companies averaged more than $2 billion in revenue. This is impressive, but whats more remarkable is the extreme profit margin from this revenue. The tower companies continue to rely on property owners entering or extending leases based not only on incorrect or outdated methods of determining initial rent but, more important, agreeing to a structure that will ensure the tower companies' continual profit growth.

A Bigger Paycheck

How do you make sure you have a smart cell-tower lease when it comes to value? The answer is simple but can be difficult to implement if youre not familiar with the industry. You should have a lease that provides for rent to be determined based on value of the lease to the cell-tower company and not on the value of the property being leased.

A cell-tower lease should also be crafted to allow for re-entry points in the lease for the landlord, based on whos using your property and the utility they get from that use. You should see more rent every time a new subtenant enters the site and every time there's a site upgrade that allows the tenant or subtenant to get more value from the location.

The cell-tower companies rely on property owners viewing a cell-tower lease as a simple real estate transaction and not understanding its really a telecom transaction. That's where the value lies to them and, if youre smart, to you as well.

A Flexible Agreement

The second step in making sure you have a smart cell-tower lease is recognizing that as important as it is to get the most when it comes to rent, its just as important not to give up too much in return. Much like a good magic trick where the magician uses misdirection to perform the trick, a cell-tower company will rely on a property owner being focused on rent and not paying attention to the overall terms of the lease.

Remember, a typical cell-tower lease is binding on you, your company and your property for decades, with almost no way for you to terminate. Think about that for a moment. How many agreements will you or your company sign that will commit you to 30 or more years with no way for you to even renegotiate? Even if you enter into a bad long-term financing deal, you can refinance. Youre not so lucky with a cell-tower lease, so you better get it right the first time.

Most self-storage owners think the cell-tower lease only affects a small portion of their property and presume it cannot do them much harm. The truth is the terms of new leases and amendments to existing ones are now being structured in a manner that can have a negative impact on your property and business.

You need to review any agreement with an eye on the probabilities as well as the possibilities relating to your property and the lease. Again, were talking about an agreement thats going to last for decades. Are you 100 percent certain what your business or property is going to look like in five or 10 years, much less 30? You want a lease that provides flexibility to adapt to changing conditions.

This can include changes such as the need to relocate the cell tower, tower access or utility easements. It can mean a need to have liability, environmental, insurance and other sections of the lease that account for an ever-changing world. You want to make sure you don't enter an agreement that limits your ability to assign, sell or otherwise transfer the cell-tower lease or the parent parcel, in which the lease is a part. Believe it or not, a cell-tower lease can put you in breach of your current financing terms or limit a potential facility buyer in obtaining certain financing.

You can have a smart cell-tower lease, but you must realize that this is a telecom transaction, not a real estate transaction. The cell-tower companies want self-storage operators to look at these leases the same way they have since the late 1980s, and why not? It continues to be extremely profitable for them. A smart cell-tower lease is your way to start leveling the playing field between you and the cell-tower companies.

Hugh D. Odom is president of Vertical Consultants, a telecommunications-consulting firm currently working with approximately 1,200 self-storage facilities across North America to place telecommunications equipment and optimize existing leases. Mr. Odom has more than 15 years of legal and telecom experience, including representing AT&T as an attorney for more than 10 years. For more information, call 877.456.7552; visit www.vertical-consultants.com .

The Inside Self-Storage Store, an e-commerce website providing on-demand insight and education products for self-storage professionals, is now offering second-quarter 2013 industry reports produced by the Self Storage Industry Group (SSIG) of commercial real estate firm Cushman & Wakefield. The new products include the latest Self-Storage Performance Quarterly (SSPQ) national report as well as 50 Metropolitan Statistical Area (MSA) Reports.

The 62-page SSPQ report is priced at $750 and contains income and operational performance data from more than 7,000 facilities in the nation's 50 largest MSAs. It includes data regarding new construction trends, the use and cost of concessions, market rent, occupancy and trend analyses. Operating performance is broken out by region, and MSA data includes the most-improved market, watch list markets, median rental rates and physical occupancy, implied economic occupancy, and more.

SSPQ reports are also available as an annual subscription ($2,500) and are targeted at real estate investment trusts, large self-storage operators, and industry analysts including security analysts, lenders with a large concentration in the self-storage sector, and others who monitor industry-performance metrics.

The MSA reports are available individually for $100 and contain information regarding income, expenses, occupancy, supply, asking rental rates, concessions, and rent per available square foot within a specific MSA. Each one-page report includes an overview of market conditions, self-storage performance index, asking rental rates by unit type, rent per available square foot, physical occupancy, and more.

In addition to SSPQ and MSA reports, the ISS Store offers other Cushman & Wakefield products including monthly National Rental Activity Reports and customized Trade Area Snapshot Reports. Details can be found at www.insideselfstoragestore.com.

Cushman & Wakefield advises and represents clients on all aspects of property occupancy and investment. The firm's Valuation & Advisory Division, which includes the SSIG, is one of the largest real estate valuation and consulting organizations in the world. Founded in 1917, the company has 253 offices in 60 countries and more than 14,000 employees. It offers a complete range of services for all property types including leasing, sales and acquisitions, debt and equity financing, investment banking, corporate services, property management, facilities management, project management, consulting and appraisal.

Conceived as a central hub allowing self-storage owners, operators, developers and investors to obtain cutting-edge information and resources, the ISS Store is owned and operated by ISS, a dynamic services provider that has served the self-storage industry for more than 20 years. The brand includes ISS magazine, the Inside Self-Storage World Expo, the Self-Storage Training Institute and Self-Storage Talk, the industrys largest online community.