U.K. self-storage operator Big Yellow Group PLC released operating-performance results for the first quarter of its 2015 fiscal year, which ended June 30. The company reported revenue of £18.6 million for its 55 wholly owned self-storage locations, up 11 percent from the same quarter a year ago and 5 percent from the previous quarter.

Occupancy for Big Yellow’s 54 wholly owned facilities that were open as of April 1, 2013, was 73 percent, compared to 68.7 percent year over year and 69.8 percent the previous quarter. Move-ins were up 6 percent during the quarter.

Net rent per square foot at its 55 locations was £26.37 for the quarter, an increase of 5.2 percent from the same period a year ago. Revenue per available square foot was £21.36, a 2.3 percent increase year over year.

"We continue to see improving demand and have delivered a solid performance in the quarter,” said James Gibson, CEO. “The first quarter is historically our strongest quarter, but we would expect to deliver further occupancy gains in the second quarter.”

In April, the company opened a 70,000-square-foot Big Yellow facility in West London and acquired a 10-property portfolio from Armadillo Self Storage through a joint venture with an Australian consortium. It has also started construction on a 60,000-square-foot facility in North London that is scheduled to open next April.

Big Yellow Group operates 78 self-storage locations in the United Kingdom under the Big Yellow Self Storage and Armadillo Self Storage brand names, with most concentrated in Greater London. Its total portfolio comprises 4.9 million square feet.

iBid4Storage.com, which offers an online marketplace for self-storage auction sellers and bidders, has launched a marketing video to educate facility operators on its services. Aimed at viewers who are interested in the online-auction process, the video presents a step-by-step visual of how the company’s platform works. The video is available for viewing on Self-Storage TV.

iBid4Storage.com uses an eBay-style format in which self-storage operators post pictures and videos of units up for auction, along with descriptions of unit contents. Potential buyers can bid on units via their computer, tablet or smartphone after they sign up for a free website account. The system allows bidders to participate in auctions outside of their immediate area and pick up the items in the days following the lien sale. The company offers interested parties the opportunity to demo its online-auction platform upon request.

Based in Toronto, Canada, iBid4Storage.com has been managing self-storage locations and involved in the storage-auction process in Canada and the United States for 20 years.

Christina Alvino, marketing manager for Guardian Storage, a self-storage operator with properties in Colorado and Pennsylvania, has been named as one of Pittsburgh’s 50 Finest for 2014, a group that will raise money to benefit the Cystic Fibrosis Foundation (CFF). The nonprofit organization funds research to support children and adults living with cystic fibrosis (CF). The 50 Finest are nominated individuals who are recognized for their professional and philanthropic endeavors in the Pittsburgh area.

“Although I don’t have a direct family connection to CF, I’ve met some wonderful people over the years who fight every day for themselves and their children. When a former honoree and close friend asked if I would accept a nomination, I was honored and humbled,” Alvino said. “From hundreds of nominations, the board and selection committee choose the top 25 men and 25 women. This year I was lucky enough to make the cut.”

CF is a genetic disease that affects the lungs and digestive system. Ten million people in the United States, or one in 30, carry the defective gene. About 1,000 new cases of CF are diagnosed each year, with more than 70 percent of patients diagnosed by age two. It is considered an orphan disease, meaning there are not enough cases for pharmaceutical companies to fund research for a cure, Alvino said.

Alvino’s individual goal is to raise $5,000, while her group’s goal is $355,000. Over the past few months, Alvino has hosted a variety of fundraisers. Her campaign page can be found at https://finest.cff.org/christina-alvinos-finest. “Every dollar for research is donated through families and programs like this one. It’s an amazing feeling and I couldn’t be more thrilled knowing that I am truly making a difference in the lives of so many individuals,” she said.

This year, Pittsburgh is celebrating the 19th anniversary of its 50 Finest list. It is the highest grossing CFF chapter in the country, Alvino said.

Headquartered in Pittsburgh, Guardian Storage operates three facilities in Colorado and 12 in Pennsylvania.

 

Brij Patel, co-founder of Fetch Storage, a business specializing in valet self-storage services in the Boston metropolitan area, believes the future of the storage industry is tied to customer convenience and itemized inventory that can be managed online. Founded in 2010, Fetch offers warehouse storage space by the cubic foot as well as pickup and delivery services. The company is working to expand its inventory-management system.

“What gets me really excited about the future of storage is that there’s all this stuff sitting in thousands of storage facilities around the country, but no one’s really tracking what’s coming in and going out. Since Fetch inventories each item, we have some basic info about what’s being stored, and we are working on an inventory system where customers will be able to tag and then quickly search what they have, using keywords and maybe even photos,” Patel, 33, told the source. “All this info and data will empower customers to make much better storage decisions, instead of forgetting about all the stuff they’ve accumulated. And instead of promoting hoarding, this accessibility promotes a sharing community, where users can maybe borrow items from one another or ask for charity donations.”

The cost for Fetch storage space starts at $1 per cubic foot per month, with discounts given for larger storage footprints. For example, using 70 cubic feet of storage, which could include some furniture and a few boxes, would cost $62 per month—an 11 percent savings, according to the company’s website. Customers may use their own boxes, purchase boxes from Fetch or rent sturdier, 3-cubic-foot bins for $4 per month.

The company offers free delivery of items as long as belongings can be delivered to the customer within one hour. Distance or retrieval of multiple items may incur charges of $25 for each additional 15 minutes beyond the first hour, according to the Fetch website. The company currently stores more than 10,000 items at a temperature-controlled warehouse a few miles outside of Boston, the source reported.

Fetch also promotes that it donates 1 percent of revenue to help “dogs in need.”

A stormwater study conducted for the city of Baxter, Minn., has revealed that the elevation of a Johnson’s Mini-Storage facility is only slightly higher than a nearby wetland. The area studied was just West of Edgewood Drive, with the wetland sitting between Woida Road and Novotny Road. The self-storage facility is at 15237 Edgewood Drive in Brainerd, Minn., where water is encroaching on the gravel drives surrounding the units and high ground-water elevation problems are causing moisture issues, according to the source.

Stormwater west of Highway 371 was thought to flow westerly, but it is trickling east through Brainerd to Gilbert Lake, the source reported. The self-storage facility is just west of the highway and southwest from the lake. Due to spring and summer rains, groundwater is sitting just below the surface, and the stormwater study showed the edge of the wetland is about 10 feet from the storage facility’s gravel drives.

The wetland was previously altered when roads were built and the wetland was filled, according to the source. The study found that a high point in a ditch was impeding water flow, causing overflow to move north and east. It also revealed an existing ditch system that used to move water through Brainerd into the lake, but the county had no record of it, according to the source.

A beaver dam is also blocking water flow and keeping levels high, according to the study.

The most cost-effective solution appears to be lowering the ditch by excavating a foot of dirt and removing the beaver dam. The ditch cleaning would enable the water to flow back into the watershed and cost about $8,300, according to Kevin Wernberg, an engineer and office manager for Widseth Smith Nolting, the engineering firm that conducted the stormwater study.

Another option would be to build a control structure and pipe or ditch system at the south end of the wetland by Johnson’s Mini-Storage that would discharge water into the wetland on the north side of Woida Road. However, a pipe system would cost around $98,000, and a ditch system was estimated to cost more than $200,000, according to the source.

Baxter city officials are considering their options and may require involvement from Brainerd and the state, the source reported.

Johnson’s Mini-Storage operates five self-storage facilities in Minnesota.

Virtus Real Estate Capital, a real estate private equity firm, recently acquired a self-storage facility in Bentonville, Ark. Bentonville Storage is the company’s third acquisition in the Northwest Arkansas storage market this year and the fourth in its joint-venture partnership with Absolute Storage Management (ASM), a Memphis, Tenn.-based self-storage operator and management company.

Built in 2002, the property at 2113 E. Central encompasses 57,750 square feet of storage space and 400 units. Amenities include security cameras, an onsite manager, vehicle storage, and moving and packing supplies. The property is near Walmart’s corporate headquarters and minutes from downtown Bentonville, according to an ASM press release. It was 98 percent occupied at the time of sale.

“Bentonville Storage will serve as the cornerstone asset in our recent efforts to move into the Northwest Arkansas self-storage market. The facility will be a key addition to the two facilities Virtus purchased in March by providing additional climate-controlled space and a variety of complimentary unit types,” said Scott Humphreys, acquisitions director for Virtus. “We’re incredibly thrilled to continue adding to our portfolio of assets with ASM.”

ASM plans to implement a new revenue-management program and a tailored approach to the direct operational management of the property, according to the company’s release. It also intends to establish greater online presence using search engine optimization.

“Bentonville Storage is a great piece of real estate, and it fits very well in our overall strategy of expanding in Northwest Arkansas,” said Michael Haugh, ASM president and a broker affiliate for the Argus Self Storage Sales Network, a national network of real estate brokers who specialize in self-storage. Haugh and fellow Argus broker Larry Goldman represented Virtus in the transaction.

Based in Austin, Texas, and founded in 2003, Virtus has acquired more than $2.3 billion of commercial real estate in more than 163 properties across the United States. The company is actively seeking additional opportunities to acquire storage properties in its target markets.

Founded in 2002, ASM is a provider of third-party management services, overseeing more than 80 properties in the Southeast United States. It has offices in Atlanta; Charlotte, N.C.; and Jackson, Miss.

Based in Denver and formed in 1994, Argus provides brokerage, consulting and marketing services to self-storage buyers and sellers and operates SelfStorage.com, a marketing medium and information resource for facility owners. The company has 36 broker affiliates covering nearly 40 markets.

By Deb Hipp

Reprinted with permission from "The Storage Facilitator" blog.

Every self-storage operator dreads auction day. An auction takes time you’d rather spend renting units, and when it’s over, you’ll probably get yelled at by someone whose stuff got sold. “There is no facility that likes to conduct storage auctions,” said auctioneer Luther Davis, co-owner of Thomas & Associates Auctioneers in Sulphur Springs, Texas.

Still, as long as there is self-storage, there will be lien sales. Here are nine tips to make yours go as smoothly as possible.

1. Be Prepared

If you’ve done your prep work, auction day should be a simple process, Davis said. Make sure you’ve sent required notices and followed lien laws. Check for last-minute payments right up until the auction begins.

2. Have Enough Staff

The manager needs to be in charge of the auction, not working on something else, said Paul Maglio, president and owner of Storage Auction Solutions in Middleton, Mass. You don’t want to tell customers to call back because you’re “busy doing an auction,” he said. That just reminds them that you have the right to sell their stuff if they don’t pay.

3. Don’t Play Auctioneer

A professional auctioneer can bring in $1,000, compared with the $50 a self-storage operator doing his own auction might make, Maglio said. Do-it-yourself auctioneers also tend to make up rules as they go because they feel like they own the stuff in the unit. “They’ll say, ‘I want this much money or I’m not selling it,’” Maglio said. “Bidders see that, and they don’t like it.”

4. Display Rules

Post auction rules at your facility and hand out copies. Here are some important ones:

• Length of time buyer has to empty and clean the unit (usually 24 to 48 hours)
• Cleaning deposit or cleaning fee
• Restrictions against using facility dumpsters
• How units are sold: typically as a whole, not item by item
• Protocol for viewing units
• Types of payment accepted
• Terms and conditions of sales
• Rules for bidding
• Return of personal items such as photographs and legal documents to the rental office

5. Attract New Tenants

Sell discounted locks on auction day. Offer bottled water. Give a half-month’s free rent to winning buyers who can’t clear out their unit in the required time. Bidders and dealers have to store their stuff, too, and 90 percent of them rent storage units, Maglio said. “I tell managers, ‘Treat them with respect, and they’ll send you business.’”

6. Control the Crowd

Have bidders sign in so you know who was visiting your property. Don’t let a bunch take over the lobby while you’re trying to run a business. “I tell them once they sign in, go to their vehicles and wait,” Maglio said.

Beware of getting too close to buyers who buddy up to you to unearth details about what’s inside the units. “When I see that, I just stop it right there,” he added.

7. Maintain Integrity of the Units

Don’t allow bidders inside units, which should be viewed from outside the open door. “If there are 20 people in there, we can’t see everything they do,” Davis said. “One of them may open up a jewelry box.”

Maglio recommends placing security tabs on units with locks that were cut before the auction. That way, it’s obvious that no one has pilfered the unit. Also, if tenants show up to pay at the last minute, they know that no one has rifled through their things.

8. Watch Out for Conspiracy

Several bidders can agree among themselves to not bid against one of them, who then buys the unit for next to nothing. Later, the group makes a killing when they split up the contents.

“We recognize what’s going on, and we stop it right away,” Maglio said. Other bidders will recognize it, too. “A lot of people will say, ‘I’m not going back to that guy. He’s not doing things right.’”

9. Remove Emotions

Auction is a “highly emotional day” for self-storage managers, Maglio said. You’re lucky if you break even on what your facility is owed. Tenants who didn’t respond to late-payment notices eventually will show up angry and frustrated. Today, though, your focus needs to stay on the sale.

Managers need to “deal with facts and not emotions,” Maglio said. “It’s their least favorable day, but it can also turn into a good day.”

Deb Hipp is a freelance writer in Kansas City, Mo. She writes for “The Storage Facilitator” blog, SpareFoot.com, SelfStorage.com and other websites, as well as her own “Tales from the Bark Side” blog. She enjoys working with animals and is involved in the Kansas City, Mo., animal-rescue community.

This past spring, during a seminar I presented at the Inside Self-Storage World Expo in Las Vegas, I asked a large group of facility owners how many of them planned to do any gambling while they were there. A few hands went up, but the majority sat still. In fact, there were a few comments such as, “I don’t like to risk my money!” That’s understandable. Most people who gamble in Las Vegas will lose, and that’s kind of the point of the economy there. It’d be difficult to keep all that neon burning if people actually won.

I then asked the same owners how many of them regularly audit their self-storage facilities. A few hands went up, and there were a few comments such as, “I don’t need to” and “It’s a waste of time.” Some even mentioned that since their manager has been with them for years, there’s really no need. That’s not understandable and is just as much a gamble as playing one of the many games in Las Vegas.

Why would otherwise smart, self-made entrepreneurs be so foolish as to never or rarely audit one of the most valuable assets they own? Why would anyone put as much effort, time, money, sweat, anxiety, credit-worthiness and sleepless nights into such a huge endeavor as developing or buying one or more self-storage facilities, and then never bother to ensure everything is operating as well as it should or could? Why risk everything to chance?

I’ve come to the conclusion that most self-storage owners have a gambling addiction. They’re taking a gamble that:

• Nothing can ever go wrong
• Their manager would never steal from or mismanage the facility
• The facility’s income is as high as it can ever be
• There are no problems with the unit mix, waived fees or discounts
• They’re in no danger of ever getting sued for doing something painfully wrong
• Their ego and personality will be enough to keep it all together
• This is such an easy business that they can’t mess it up

These owners are also addicted to danger and that hands-off management style that’s so alluring in this business. But as with any addiction, things can go wrong—from bad to worse to terrible to disastrous. The question is not if something will go wrong but when. Your turn may be just one roll of the dice away.

The good news is many disasters can be avoided by conducting regular facility audits. Let’s take a look at some things that could go wrong and how an audit can reduce these risks.

Manager Theft

While the majority of self-storage managers don’t steal and would never even consider doing so, there’ll always be a few bad apples. The discovery can be heartbreaking for an owner. I’ve never caught a manager stealing and then heard the owner say, “Yeah, I thought so.” It’s always a shock, and usually someone he never would have suspected.

Unfortunately, in many ways, the nature of the business lends itself to the occasional theft. Managers often work alone, customers sometimes pay in cash, fees are “waived” with no verification, move-in specials are widely used, and payments are deleted with no follow-up. In almost every of theft case I’ve seen, the guilty manager acknowledged that it was easy because no one was paying attention. Your manager is most likely not stealing, but do you know for sure?

Failure to Follow the Law

Many a self-storage unit is sold at auction without someone making sure every “I” gets dotted and every “T” is crossed. Maybe the address of record was incorrect, or the manager took a partial payment, or no one documented the collection efforts, or the locks were cut too soon. Maybe the problem is even in how you charge your tenants.

I recently audited a facility that’s charging more than one late-fee schedule across the tenant base, and some of the fees are higher than what’s stated in the rental agreement. Some additional fees are being charged that aren’t even mentioned in the lease. Neither the owner nor the district manager had any idea. It was a class-action lawsuit waiting to happen. How many lawsuits would it take to ruin you?

Inaccurate Inventory

Do you know for sure that every rented unit is actually occupied and every vacant unit is truly empty? Do you know for certain that those unit conversions your manager completed were done correctly? During another recent audit, I found more than 2,000 square feet of storage that didn’t exist in the facility inventory due to errors in unit conversions.

Are you OK with the number of company spaces that are in use, and do you know for what purpose they’re being used? Most of the value of your self-storage asset is in the units—the inventory. It’s kind of big deal that it be right.

Neglected Policies and Procedures

Are your policies and procedures being followed as outlined in your self-storage operations manual? This is assuming, of course, that you have such a manual. Here are some questions to consider:

• Is your lease up-to-date with current lien laws and other legalities?
• Are the leases put together properly by the staff? Complete, signed and dated?
• Are bank deposits conducted in a timely manner?
• Does every charity or complimentary unit have a signed lease?
• Are the tenant-insurance forms completed properly, or are you waiting for something to happen to find out?
• When are units being overlocked?
• When are locks on lien units cut?

There’s a reason sophisticated operators have an operations manual. They’ve figured out what works best, and then they duplicate that over and over. They’re not willing to leave everything to chance and hope the manager does it right. Hope is not a plan.

Other Important Questions to Ask

You’re very likely leaving a great deal of profit and asset value on the table due to mismanagement; but without an audit, you may never realize it. You didn’t set up your self-storage business as a nonprofit organization, so quit running it like one! Ask yourself these questions:

• When was the last time you reviewed your nonstandard-rates report to look for tenants who are paying well below the standard rate?
• Are there any “friends and family” discounts going on?
• How comfortable are you that late fees are constantly waived, rent is credited, and no one is checking to make sure there’s a valid reason?
• Are rent increases being implemented, or ignored because the manager doesn’t want to be bothered?
• Are ancillary-income opportunities being maximized, or are they wasted?
• Are there any life-safety issues on your property that you won’t know about until someone falls, gets mugged or gets hurt? Are slanted ramps painted yellow? Are all the cameras and lights working? If you ignore these types of issues and they end up negatively affecting someone, you’re in trouble.

The When, Who and What of the Audit

Audits should be conducted at least annually, though twice per year is ideal. You should also conduct an audit whenever there’s manager turnover, to ensure the new manager doesn’t unfairly inherit operational or theft issues. When you conduct audits, do it at random with no advance notice to site staff.

Audits can be conducted internally by ownership or upper management or by outside vendors. Most sophisticated operators use both resources to ensure compliance and consistency. A full operational audit should take up to a full day, depending on facility size. It should include:

• Reconciliation of the cash and petty-cash drawers
• Complete space audit
• List of deferred maintenance issues
• Review of payment and deposit records
• Review of lease and vacate files
• Review of all discounts and rent credits
• Review of any deleted payments
• Review pf any waived fees
• Review of the nonstandard rates report
• Reconciliation of moving and packing supplies totals
• Inspection of onsite manager’s apartment
• Inspection of any rental trucks
• Review of the facility's curb appeal and property condition

Breaking the Addiction

So how do you break the addiction to risk? Unfortunately, many owners only do so after something bad happens. There’s a theft or an effort to refinance or a decision to sell, and then they experience the “Oh, crap!” moment when they realize it’s too late. It’s kind of sad—too many missed opportunities, too many broken hearts, too many unrealized dreams, all because these owners were addicted to the gamble.

It’s time to break that addiction and start auditing your self-storage facility. Either learn how to do it yourself—and really do it well—or hire someone else to do it; but do it now, before it’s too late.

Bob Copper is the partner in charge at Self Storage 101, an industry consulting firm that assists facility owner/operators and managers in developing more effective and profitable operational systems. The company also aids in conducting performance reviews and providing the necessary tools to perform at higher levels in a competitive industry. To reach him, call 866.269.1311; e-mail [email protected]; visit www.selfstorage101.com.