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She companys mission is clear: To be a quality supplier and installer of building products to the self-storage, industrial and commercial markets, says Chris Woodward, president and owner of SS-20 Building Systems Inc. The Bradenton, Fla.- based supplier believes business is earned by delivering outstanding quality and service on each and every job.

Woodward, who has 27 years of experience with metal buildings, has developed a pre-engineered, structural-steel building system for several industries, including self-storage. We realized early on there had to be a better and faster way to build a multistory building for the self-storage market, he says. Since its founding in 1995, the company has completed projects totaling millions of square feet throughout the United States.

Building With Beams n Tubes

SS-20s patented freestanding system is based on a 10-by-10-foot grid system of stackable tube columns. The revolutionary building design improves quality and shortens erection time, as once the first-floor design is complete, no additional layout is requiredit is repeated for each subsequent floor. Heres how it works:

In most cases, poured-in-place anchor bolts are not necessary, so the project begins with a clean slab. First-floor slabs are laid out and chalked for column locations, then drilled for wedge anchors. Columns are set on the slabs and the wedge anchors installed. The crew then sets the second-floor mezzanine beams as well as any necessary cross-bracing. Next, the exterior pour angle is installed, and the floor decking is laid. The columns extend through the deck to the finish elevation of the second floor, making it an easy pour for the masonry contractor. Once the second floor is poured, the crew installs the second-floor columns, which are simply dropped into the lower columns to a predetermined depth. Following completion of the final floor, the system accepts standard roof deck or purlins and a standing-seam roof system.

Since divider partitions are not required with the SS-20 system, floors are wide open for other trades to work, which speeds construction. Earlier completion means reduced financing charges and an earlier revenue stream, adding value to the project.

Steeling Against Tough Times

When choosing a building system for a client, SS-20 concentrates on the overall cost of construction, not just the cost of steel. However, the 2004 surge in steel prices impacted all U.S. metal builders. Last year was the toughest we have ever had to endure, says Woodward. Fortunately, because of the companys relationship with its suppliers, it was able to manage the increase in price and decrease in availability. SS-20 purchased steel in advance to ensure orders were covered and customers would not be inconvenienced.

Our customers would tell you SS-20 treated them very fairly during an extremely difficult time, Woodward says. Every single project we had on the books before the increase hit was honored and completed.

Service Is the Key

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Constructing the building is the easy part, Woodward says. The self-storage industry is growing at a rapid pace, and the biggest challenge is acquiring land for growth. He adds that there are even areas trying to minimize self-storage expansion by making the permitting process longer and more expensive. In the end, the companies that will land the jobs are those that offer outstanding product and service.

Regardless of the positions for which they are hired, all new SS-20 employees begin in the field with project training, learning how important it is for a product to be delivered correctly and on time. One of the primary things they are taught is how to handle problems. None of us is naive enough to think there are not going to sometimes be problems. Whats important is how we address them, Woodward says. If a problem is dealt with properly and in a timely fashion, the customer will not remember the issue but how quickly it was resolved.

SS-20 customers build one to 12 projects a year. The company plans to grow at a reasonable rate so it can continue to deliver quality product with good service, Woodward says. We are not interested in being the biggest; we are interested in being the best. Moderate growth allows you to take care of your customers and is rewarding to both parties.

For more information, call 941.746.8170; visit www.ss20bldg.com.

To build or not to build is the biggest question facing todays self-storage developer. When considering a plan, he has to examine a number of critical issues to ensure a viable and profitable project. Some considerations are whether the area can support more storage, how to find the best location, and what to pay for land.

Market Saturation

In todays self-storage market, its more important than ever to conduct thorough research before building . You have to do preliminary work to see how well competitors in the proposed market are faring . Your best bet is to hire a professional to evaluate the areas untapped potential. It will cost you, but it will be to your advantage.

If you discover that existing self-storage projectseven older sitesare running with more than 90 percent occupancy, you may have uncovered a viable market. On the other hand, if you find that high-quality sites older than two years are still sitting at 70 percent occupancy, the area may be saturated.

Site Location and Zoning

Once you find a good market, you need to accomplish the most difficult task of all: finding a visible site on which the city will allow you to build. Visibility is extremely important. Customers often choose a self-storage facility after driving by rather than searching through the Yellow Pages. Therefore, its essential to have a site on a well-traveled road. If youre stuck with a less noticeable location, youll need to compensate by offering better amenities such as high-tech security and climate control.

The permitting and approvals process is always a challenge. To begin, find out what land is available with the proper zoning. You can purchase a zoning book for the county, which lists the status of every parcel. Many great sites have been found using this method, even when they were not originally for sale.

If you approach the local authorities with plans for the correctly zoned land, you greatly increase your chances of getting support. If you find yourself in a situation where you need to secure a zone change, youll need to do a lot of work. A zone change is a scary, lengthy process with no guarantee of a successful outcome. If you pursue it, consider hiring a local professional who specializes in getting plans through the city. If you make no headway after the first few official meetings, you may need to move on to another location.

Land Cost

How much you should pay for land is a difficult question to answer, as it involves many factors. The first is what youll be able to charge for rental rates. Second, consider how many netrentable square feet you will have. This is where you have to determine if youre going to offer all drive-up access or go multistory. Third, determine how much it will cost to build the project. A basic facility might only cost $20 to $25 per square foot to build, while an upscale site could cost as much as $45 per square foot. Finally, think about how you will run the property. Will you have resident managers? Will you hire a property-management company?

Take a look at the following Investment Calculator. It uses a simple formula that helps determine whether a potential project will be profitable. By plugging in items like land cost, rental rate, development cost and management expenses, you can estimate potential income and a breakeven point. The calculator subtracts annual debt service and total operating expenses from total gross income to determine annual cash flow. Obviously, gross income changes as occupancy rates change.

Note: To determine the average rental rate, first establish the going rate on a 10-by-10. For our example, Ive assumed a 10-by-10 will rent for $75, or 75 cents per square foot per month. Multiply that by 12, and you get an average rental rate of $9 per square foot per year.

INVESTMENT CALCULATOR
Land Cost	$750,000
Net-Rentable Square Feet	63,000
Development Cost Per Square Foot	$31
Total Development Cost (Including Land)	$2,703,000
Average Rental Rate	$9 per square foot per year
Gross Income	$567,000 per year (Rentable Square Feet x Average Rental Rate)
Gross Operating Expenses	Between 23% and 35% of Gross Annual Income at 100% Occupancy
Annual Operating Expenses	$164,430 (Gross Income x Average Gross Operating Expenses of 29%)
Annual Debt Service	$188,607
Assumption for Debt Service	Borrowing 75% of Total Development Cost @ 7% interest for 20 years
Cash Flow @ 100% Occupancy	213,963
Cash Flow @ 90% Occupancy	157,263
Cash Flow @ 80% Occupancy	100,563
Cash Flow @ 70% Occupancy	43,863
Cash Flow @ 60% Occupancy	-12,837
Breakeven Point	62.3% Occupancy

The investment calculator helps determine if a projects land cost is within limits. It also provides a guideline for how much you can spend per square foot to build a project and still make a profit. A breakeven point at 60 percent occupancy or lower indicates a viable project.

Its best to build a single-story project with as many drive-up units as possible. However, its sometimes necessary to build a multistory project on a smaller parcel. The cost to build a multilevel site is usually higher because of the necessity for elevators, stairs, interior corridors, etc. These projects are also more difficult to market, as some customers are averse to hauling their goods to upper floors. For these reasons, you must be extremely confident in the sites viability before committing to a project. Evaluating the components of a successful self-storage site isnt easy. I hope these guidelines help you make the critical decision of whether to build.

Jamie Lindau is the sales manager of Trachte Building Systems, one of the largest national suppliers of self-storage buildings. He oversees 10 regional managers who sell buildings throughout the United States and abroad. Over the past 20 years, Lindau has worked with more than 700 self-storage owners with the acquisition, layout, feasibility, building design and purchase of their sites. He is also the joint owner of an 850-unit, 95,000-square-feet facility in Lauderhill, Fla. For more information, visit www.trachte.com.

On a per-square-foot basis, retail sales can be a significant portion of a facilitys income, so when it comes to developing and building a new self-storage site, include retail space in your plans. Whether youre building from the ground up or remodeling an older facility, take time to consider your reception area. Instead of thinking of it as an office, think of it as a store. This will help you envision the possibilities.

First, visit one or more self-storage sites and evaluate their stores. Is the service desk positioned to give staff a clear view of the door and merchandise? Is the lighting bright without being blinding? Is the flooring clean and easy to maintain? Are the colors cheerful and warm? Use your critique as a basis for planning a store that includes all the elements you like.

Next, consider the merchandise you want to display. If you already own a self-storage business, this is your chance to allot additional space for all the goods you couldnt previously accommodate. Consult your supplier catalogs to choose logical line extensions. If you carry shipping supplies, consider special cartons, tape, protective materials, and even decorative boxes and mailers for shipping gifts. For moving supplies, consider tarps, bungee cords, bubblewrap, labels, tape, packing peanuts, etc. The list of items people will buy is almost endless.

If youre not sure what to carry, a plan-o-gram simplifies the decision-making process. Every experienced supplier offers plan-o-grams based on real-world sales experience to ensure that what you stock is what consumers will buy. Moreover, he understands that merchandising should include permanent displays that make it simple to restock and order your faster moving items.

Determine the footprint (dimensions) of the displays youll need and add them to your office layout. If this task seems too time-consuming, ask your supplier to assemble a floor plan for you. Then you can fine-tune it and add it to your preparations.

Finally, when you have decided what to sell, its time to choose your merchandising program. Your chosen supplier of products and displays should also offer signs, posters and other materials that remind customers what they need while adding color and interest to your store. These will make your store look friendly and professional.

There you have it: With a little thought and some help from your retail supplier, you can use your own construction and development to create a good-looking, high-earning retail business.

Roy Katz is president of Supply Side, which distributes packaging, moving and storage supplies and more. The company has developed merchandising programs for many leading companies such as Storage USA, the U.S. Postal Service, Kinkos, Mail Boxes Etc. and The UPS Stores. For more information, visit www.suplyside.com.

More and more self-storage operators are considering the addition of records storage as a value-added service to their existing business. The most important ingredient is planning the space to accommodate the new venture. There are four options:

Option 1: Adapt Existing Space

The most common option is to adapt space you already have, increasing the value of existing property. Records storage is a natural fit because it is easily added with very little capital. Take a look at your unit mix. Is there a particular size that is under-rented? Consider converting unused units for records storage.

Records storage works best in 10-by-10 or larger units with 8-foot or higher ceilings. Units smaller than 10-by-10 should only be used if you can combine adjacent units by removing interior partition walls. Use of contiguous units is always better than random placement throughout the facility; it generally adds 10 percent to 20 percent of revenue to the space.

Because records storage is based on cubic rather than square footage, the higher the ceiling the better. If you have access to a row of 20 10-by-10s with 8-foot ceilings, you have 16,000 cubic feet of space to accommodate approximately 8,000 box positions, which is an excellent starting point. Another great option is to convert unused boat and RV storage units, which tend to have higher ceilings than regular storage.

Option 2: New Space and RS Lite

The developer of a new project has an ideal opportunity to add records storage to his business plan from the very beginning. If youre not sure records storage is for you, explore the possibility of records-storage (RS) lite, which operates out of standard units. The space can then be used for self-storage if you decide against storing records. (For more information on RS lite, read my past columns in the archive at www.insideselfstorage.com.)

Start with pads designed for adjacent 10-by-10 or larger units, simply leaving out the interior partitions. As your records business grows, you can move boxes to a larger facility and retrofit these units to standard storage space. Adapt the property based on your success so you only use the space you need.

Option 3: New Space and Traditional RS

The fundamental difference between RS lite and traditional records management are simply this: a dedicated building and salesperson. The optimum records-storage building is 10,000 square feet with a 30-foot ceiling. This will yield an average effective volume of 135,000 billable box positions after about three years of sales, assuming you use a full-time sales representative.

In actuality, you can use RS lite and traditional records management at the same facility. Some developers begin by using RS lite to accommodate walk-in clients and move toward the traditional method as their volume increases to 30,000 billable boxes.

Option 4: Multiple Storefronts in a Single Market

This model is designed for you adventurers out there. It provides the highest yield potential in records storage, but presumes you have three ingredients:

• Multiple self-storage facilities within a 25-mile marketplace. The more sites you have the better, but five or more is best.
• Small-business packages designed to capture 10 percent to 20 percent of walk-in traffic.
• A trained office staff that is generously compensated for their sales efforts.

Initially, storage can be handled using converted units at each individual site with management handled from a single office. As volume surpasses 35,000 billable boxes, all records storage is transferred to a dedicated building in a central location.

No matter which option you choose, planning for records storage from the beginning of your project will help ensure maximize revenue from this amazing ancillary opportunity.

Cary F. McGovern is the principal of FileMan Records Management, which offers full-service assistance for commercial records-storage startups and sales training in commercial records-management operations. For help with feasibility determination, operational implementation or marketing support, call 877.FILEMAN; e-mail [email protected]; visit www.fileman.com.

After a developer has worked with his real estate consultant and market analyst to find the right parcel in the right location at the right price (with good market conditions), the architect and design team are brought into the picture. The next step of the development process begins with a few key questions:

1. Are the government land-use approvals possible?

2. Will the development code or zoning ordinance allow intense use of the land?

3. Can the building and fire-code requirements for construction, safety exiting and emergency access be met?

4. Can a functional design with the necessary amount of building area be achieved?

Although these critical questions are closely related, a closer look reveals a reliable methodology that can be used to achieve success in site planning and building design.

Land-Use Approvals

The land-use approval process is different in each jurisdiction and is based on whether a project is acceptable to a community from the perspective of land use. The process can be highly political and is a complete subject matter onto itself. In this article, Ill focus on the nonpolitical issues that guide the physical form and function of multistory development, with the assumption that land-use approvals are obtained or obtainable.

Development-Code Requirements

Every jurisdiction has restrictions that guide property development. These guidelines can be in the form of a zoning ordinance or general development code. The purpose of these rules is to give the city or county some sort of control over property development, hopefully resulting in an orderly or consistent appearance in the communitys physical environment. The specifics of these codes dictate a buildings size, mass and form. They primarily address floor-area ratio, lot coverage, building height, building setbacks and parking requirements.

Floor-Area Ratio.

The maximum allowable floor-area ratio (FAR) is the most important factor determining what can be built on a site. FAR is the relationship between a buildings total square footage, including all levels, divided by the size of the parcel. For example, a 40,000-square-foot building on an 80,000-square-foot lot has a FAR of 0.5. In most urban areas, a typical limit may be 1.0 to 1.5, possibly more. A 1.5 FAR would allow a 65,340 square-foot-building on a 1-acre lot or a 130,680-square-foot building on a 2- acre lot, both of which provide an acceptable level of site utilization.

Although some jurisdictions dont limit the FAR, most do. FAR restrictions are generally rooted in a communitys general plan. Because theyre intended to control the density of the built environment, its often difficult to obtain a FAR that exceeds stated allowable limits.

Lot Coverage.

Similarly, most jurisdictions limit how much of a site can be covered by a building. This is known as maximum lot coverage, the relationship between the building footprint and the size of the site. The footprint is the first-floor area of a building in square feet. Lot coverage does not limit FAR, meaning the firstfloor footprint can vertically extend through one or more stories of construction.

The most common lot-coverage restriction falls in the range of 50 percent to 75 percent, allowing fairly intense site utilization. For example, an 80,000 square foot parcel with a 50 percent maximum lot coverage allows a building with a 40,000-square-foot footprint.

Building Height.

Another restriction on development is maximum building height, how high the building can extend above ground. Urban areas generally allow tall buildings, so this component is not much of an obstacle in those markets. Typical building height might be 50 to 75 feet where restricted, and much higher where high-rise development is common. There are several examples of 10-story self-storage buildings in downtown city areas.

Building Setbacks.

Setbacks limit how close a building can be placed to a parcels property lines. Specific setbacks are designated for the front yard, which faces the street, and the side and rear yards, which make up the parcels other sides. Urban areas generally have nominal requirements, especially where large buildings are close together and to the street. Nevertheless, this restriction must be carefully assessed, as even setbacks of just 5 or 10 feet can use up a large portion of a small parcel.

Parking Requirements.

Most government agencies in urban communities understand the nature of the self-storage business and that it requires minimal parking. However, some development codes still group self-storage with more intense commercial or industrial land uses. This results in parking requirements that greatly exceed the need, as well as an inefficient site design and smaller building footprints. The developer or architect must have a firm grasp of the actual parking and loading requirements of self-storage. A parking variance may be necessary to bring the requirement down to a reasonable level.

Building and Fire-Code Requirements

In addition to meeting development-code requirements, a building must satisfy the demands of local building and fire codes. Although most of these are technical in nature and beyond the scope of this article, its helpful to understand their intent.

Building Areas.

Building areas are limited based on types of construction and distance to property lines. Generally speaking, the more fire-resistant a building is, the larger it can be. Similarly, the more room there is on a site, the more relaxed the rules become. Large buildings may require fire-separation walls, which compartmentalize a building for the purpose of slowing or stopping the spread of fire.

Fire Exits.

The building code tightly monitors requirements for the safe exiting of tenants during a fire. There must be stairs to safely guide occupants to the ground in an emergency. A minimum of two sets of stairs is required per floor, spaced reasonably far apart. Elevators cannot be used as fire exits.

Fire Sprinklers.

Sprinkler systems are universally required on large multistory buildings, along with extensive smoke-detection and fire-alarm systems.

Emergency Site Access.

Fire departments require access to a siteor an adjacent sitefor fire-fighting purposes. Fire lanes, generally a minimum of 20 feet wide, are required to allow truck access, as well as the appropriate turning radiuses. Taller buildings may need wider lanes to accommodate ladder angles.

Space and Operational Requirements

After meeting the requirements of development, building and fire codes, the design team is ready to begin site planning. The next challenges are site and building access and the overall floor plan.

Site Access.

The sites driveway locations must accommodate large vans and trucks typically used by self-storage tenants. Access should be visibly clear for all drivers. New customers should be able to quickly and easily locate the parking area and office without disturbing other tenants who may be loading or unloading goods. Some accommodation should be made for parking large vehicles outside the gate-secured area. Established tenants should be able to enter the facility without delay.

Building Access.

Elevator placement is the most important component of building access in a multistory project. Unlike their drive-up counterparts, multistory projects lack the luxury of widely dispersed units. To keep tenants from getting in one anothers way, elevator areas should be easily accessible. Larger projects definitely require more than one elevator to eliminate crowded conditions and reduce the travel distance to all units.

Building access will also involve security. Some multistory facilities may not have gates due to lack of space. In those cases, the line of security is the building itself, so special consideration must be given to code access on first-floor hallways and elevators.

Floor-Plan Design.

Once site and building access are addressed, the building has taken its final form. An efficient floor-by-floor design should follow, meeting the unit-mix target as efficiently as possible. General floor-plan considerations include:

• Elevator and stair placement.
• Hallway layout (to facilitate access to all units).
• Placement of large units (close to elevators) and small units (at the extremities).
• Office placement (to allow security monitoring and tenant assistance).
• Office design (to convey security and facilitate financial transactions).
• Placement of fire-rated components.

While the basics of intense site utilization may be challenging, there is a method for achieving success. Self-storage developers have been rewarded with great returns from their multistory projects. This makes the challenge worthwhile.

Ariel Valli is the president of Aliso Viejo, Calif.- based Valli Architectural Group, which provides architectural-design services for self-storage and land-use entitlements. The company also offers construction documents for self-storage development in the Western United States. For more information, call 949.349.1777; e-mail [email protected].

The lien sale is a necessary evil of self-storage operation. Eventually, every owner is faced with the task of evicting a tenant for failure to pay rent and reclaiming the storage space. The most common way to do this is to place a lien against the tenants property and hold an auction.

A lien sale can be a minefield of liability. While most states give storage operators leverage against delinquent tenants, if lien-law procedures are not followed to the letterif there is an error in any step of the sale-and-disposal processan operator leaves himself vulnerable to lawsuits claiming loss or damage of stored goods. Even when the process is handled correctly, it isnt uncommon for an unhappy tenant to file a claim charging negligence.

Storage owners put themselves at risk by being uninformed about their states lien laws. With the exception of Alaska, the District of Columbia, Montana, Nevada and West Virginia, all states have laws detailing the rights of tenant and owner. But even those familiar with state statues canand domake mistakes, says Jeffrey Greenberger of Katz, Greenberger & Norton LLP in Cincinnati. If youre not a lawyer, its hard to read some of these statutes, he says. Theyre not long, theyre not complicated, but they all have hyper-technical issues. Its not really complex, but its hard enough that people can mess it up.

The Letter of the Law

Many lawsuits are the result of minor errors, such as transposing the numbers on an address or storage unit. Most statutes require that multiple letters of notification be mailed to tenants with delinquent accounts, and that the storage operator publish legal notice in a general-circulation newspaper in the judicial district where the sale will be held. These protocols vary from state to state and must be followed precisely.

The good news is litigation can usually be avoided. Greenberger recommends consulting with an attorney familiar with self-storage law and having him prepare a written procedure that outlines the steps for disposing of tenants goods. Read and follow all state laws to the letter. Always check and double-check names and addresses; and dont make any changes to information on the rental agreementeven if there appear to be obvious misspellingsunless you get a signed change-of-address card.

Eye Witness

Document every step of the inventory and auction process in photographs and writing. Greenberger strongly advises that these steps be carried out in the presence of witnesses. If youre not the sole facility owner, there are steps you should not take alone, he says.

The cutting of the lock and videotaping of the contents should be done by two people. Maybe bring in the individual who handles your public sales. You can have him cut the locks for you or watch you cut the locks while he runs the video camera. This way you have an independent, nonaffiliated person to say, I was there, and this is what I saw in the unit.

Insurance Coverage

In the event of a lawsuit relating to the disposal of tenant goods, youll have to prove the process conformed to state statutes. If theres any reason to question the validity of an auction, do not proceed. Many owners prefer to let tenants retrieve their property at no charge rather than face potential liability.

In any case, make sure you have adequate insurance. Sale-and-disposal legal liability is an essential coverage for all storage owners. It provides protection against conversion, the act of wrongfully taking, selling, using or destroying the goods of another party. Due to the diversity of stored goods and the wide range of property values, the penalty for conversion can be extremely high. Specialty coverage pays the defense costs of any lawsuit brought against a facility for the sale or disposal of property. In addition, if a court finds the facility liable, insurance will pay the claim.

Sale-and-disposal legal liability is not generally available through regular business-insurance carriers and cannot be added to a standard business policy. However, it can be secured through insurers that specialize in self-storage.

In the event that a lien suit is brought against you, notify your insurance carrier as soon as possible. It needs to be involved to settle the issue promptlywaiting could result in a lapse in coverage. After all, you have insurance so the carrier can handle claims on your behalf, and you can continue day-to-day facility operation.

John Roark is part of Universal Insurance Facilities Ltd., which offers a comprehensive package of coverages specifically designed to meet the needs of the self-storage industry. For more information, a free copy of your states lien laws, or a quick, no-obligation quote, call 800.844.2101; e-mail [email protected]; visit www.universalinsuranceltd.com.

Building a car wash is a long, tedious, expensive project. Each type of wash carries its own set of requirements, whether its a self-serve, self-serve with automatic, automatic, or conveyor tunnel (exterior or full-serve). Utility, site layout, traffic and production demands play major roles in developing a successful site. Therefore, preplanning and execution are paramount to making the numbers work and managing your budget, resources and bottom line.

Your construction format will be controlled by three major factors:

• The type of wash you want to build.

A project will require a stick build format or a manufactured building. The more sophisticated the business, the more it will lend itself to the former.

The surrounding community.

Every area has its own building requirements. In general, planners look for conformity to adjacent projects and how well the wash fits into the neighborhoods master plan.

The site itself.

Each project is unique. The more requirements there are for site preparation, soil conditions, utility placement, driveways, street location, etc., the higher the costs of the finished facility.

Getting Started

Preplanning is critical. Once you have chosen a site and the type of car wash you desire, the real work begins. Assuming you will be financing the project, youll have to assemble an extensive business and financial plan. A key ingredient will be a list of cost estimates for the project, including everything required from conception to washing your first vehicle.

Now you have to choose your team: an equipment manufacturer, distributor, architect and other preconstruction professionals. Complex projects will definitely require an architect, who will do a lot more than just draw the building. Depending on your skill and involvement, he will also assist you with the local planning board, city engineer, contractors, subcontractors and others to get your site approved. He can also help you manage the project once construction begins. Ask about the architects services and costs up front.

If your project is a simple one, you may be able to use a pre-manufactured building product. In this case, youll find the building and equipment supplier will play a major role in finding suitable contractors to ready the site for your structure.

The Right Representation

Regardless of the scope of the project, building a car wash is an involved process requiring focus and energy. The key to a successful, low-stress experience begins with your commitment. For your own protection, you must be involved every step of the way.

If you are fortunate enough to have construction experience, youll find your day-to-day dedication will be ongoing from the first shovel. If you dont have that knowledge, the key lies in choosing a representative who will watch your dollars as if they were his own. Unfortunately, very few people in the building trades know anything about car washes. As a result, you may wind up paying for their learning curve. To minimize this risk, select the right equipment distributor.

Most car-wash distributors have assisted with and built many facilities. Their recommendations for contractors and architects will be very helpful. Once your site design is complete, youll submit bid requests to at least three general contractors and subcontractors. This keeps everyone honest and allows you to evaluate their responses. Insist on references and call them.

Interview all your candidates in front of another set of eyes and earsyour supplier, architect, partner, etc. Ask tough questions and demand answers. Pin everyone down to understand their commitment. Know where your distributors responsibilities end and the various installers and contractors take over.

Finally, establish a risk-reward program for your general contractor related to time and budget goals. Your financing will be based on the project costs you submitted to the lender. Overruns resulting from misinformation or mismanagement dont sit will with financial institutions.

The majority of them will not provide extra funds for going over budget. As a result, you must keep everything in control or be prepared to dig into your own pockets. Building a car wash can be stressful. The best way to minimize hassle is careful planning. Do your homework, get the best team possible, and stay totally involved in the entire process.

Fred Grauer is the vice president, distributor network, for MarkVII Equipment LLC, a car-wash equipment manufacturer in Arvada, Colo. He has made a lifelong career of designing, selling, building and operating car washes. He can be reached at [email protected].

The two most useful tools in a self-storage developers repertoire are a rational, critical feasibility analysis (RCFA) and luck. While Lady Luck is immensely helpful, her presence is highly unpredictable. Though there are rumors that she tends to hang out with good feasibility analyses, the sightings of RCFAs are so rare, the relationship remains statistically obscure.

This article takes a critical look at what should be included in an RCFA as it relates to projected demand and pricing. This is not to say cost and timing are not important, but they are generally less subjective. Errors in estimating project costs also tend to be less frequent and life-threatening as missing the market entirely.

The Past Is Past

In the early days of self-storage, demand for the product was so deep it was like the Field of Dreams: Build it, and they will come. But things have changed. Now, some 40,000 facilities dot our fair land, and competition is fiercer than ever.

According to an annual investor survey conducted by Chris Sonne of Self Storage Economics, the No. 1 concern of self-storage investors is the building of too many new facilities. Ray Wilson of Self Storage Data Services Inc. has also opined in several industry forums that the unabsorbed demand for storage has taken root in most parts of the country. By Wilsons calculations, theres one storage unit for every 10 households in America. It appears the new tag line for self-storage is Build it, and where will they come from?

Thus, an RCFA has become a critical tool for the developer considering a self-storage project. The emphasis has switched from properly papering the loan application to finding out if the property will really work and assessing the downside risk. Please note my carefully chosen wordingit is intended to differentiate the nature of feasibility studies.

But I Got the Money!

Sadly, there are many developers who equate getting the money with having proved the feasibility of a project. They suffer from two very serious misconceptions: 1) lenders know something about self-storage; and 2) lenders are doing you a favor by lending you cash. Only in the rarest circumstance is the first true, and the second is never truelenders love to rent money! The fact that you got financed doesnt mean your project is viable. It may just mean your banker is a good salesperson. Remember, lenders on new projects arent as particular because they have recourse to your other assets.

Whats the Right Answer?

First and foremost, a feasibility analysis should be unbiased. Being businesspeople (and simply human), many who conduct feasibility studies want to please their clients. Consequently, their reports often reflect the customers prejudices, not the actual market or the projects ability to compete in it.

When shopping for an analyst, the first thing you should do is ask how many of his last 10 studies were negative. Im not sure what the right answer should be, but more than two or three should indicate his credibility. In my past life as a developer of office buildings, I would offer analysts a 15 percent bonus for a negative report. In feasibility studies, there are two equally right answers: yes and no. Maybe is also a no!

A Word About Numbers

There are many self-storage statistics floating around out there. Several organizations publish numbers for nearly every facet of the industry. The problem is these studies are based on mail surveys of facilities that volunteer the information. Since the sample sizes are relatively small, the information is applicable to only very broad market characteristics. Also, because the sources are voluntary, the sample may not meet the standards of randomness generally necessary in this type of study.

While the numbers look precise, they are often manufactured. For example, one source quotes total national square footage of storage as 1.46 billion. That number is the average size of the surveyed facilities (37,590 square feet) multiplied by the number of facilities listed in a purchased database (38,817). While the formula is mathematically correct and the average size appears reasonable for an urban area, I suspect rural properties are underrepresented. Therefore, total square footage may be significantly overestimated in the survey. No one knows for certain, but its certainly food for thought.

If total square footage is overstated, national square footage of demand per person (4.94 square feet, according to our source) could also be exaggerated. Thus, if youre expecting to rent almost 5 square feet of storage per capita, you may be way off your mark. Ive recently reviewed some feasibility studies in which national per-capita numbers were used as a basis to gauge local storage demand. If your feasibility report does this, youd better find our pal Lady Luck, because youre going to need her.

Another problem with industry statistics is theyre only marginally useful when looking at a small trade area. The variability of local market characteristics such as population density, income levels, percentage of renters vs. homeowners, prevalence of basements, etc., render comparisons to national or state information unreliable.

What Should an RCFA Contain?

Self-storage is a local business and, barring unusual circumstances, the trade area usually falls within a 3- to 4-mile radius. The demographic attributes that define a neighborhood will also define demand. Some analysts use sophisticated regression analyses to estimate demand. For example, they look at several similar markets and use mathematical algorithms to determine the variables that most affect actual absorption and in what proportion. Not surprisingly, studies show that population, number of renters and income levels are key indicators.

However, a regression analysis is a lot of work and requires expert judgments to define the market. Is this level of sophistication worthwhile? In the past it wasnt because demand was overwhelming. Now its foolish not to use the best tools at hand. The task of balancing supply and demand is too treacherous.

Are the statistics created by these mathematical methods correct? Theyre the same techniques used by the pollsters to predict elections. Your odds of getting the numbers right are about the same for a correct prediction, except your time frames are longer, which introduces more risk. Modern methods of calculating demand require complex math but are proven to better your odds, regardless of all the variables. They always require an element of experience, professionalism, intelligence and judgment.

How to Buy a Feasibility Study

When it comes to purchasing a feasibility study, many people bid out the process. If you want the cheapest price, this is the way to go. However, its not a good idea for two reasons. First, good RCFAs usually dont cost much more than bad ones. Sometimes they even cost less, though their value is significantly higher. Second, youre basing a huge investment on this information, so you want to be comfortable with and certain of the analysts abilities.

The price of a good feasibility report is minimal compared to the overall cost of the project, and it can make a huge difference. When you commission an RCFA, get recommendations from people who have used the analyst and completed their projects. Ask about their overall experiences. You should also interview your candidate analysts. What they say should be detailed and make sense. Finally, request blacked out sample reports. Review them to see if they are valuable or present a lot of off the Internet information. Some analysts try to dazzle you with volume, so look for quality, not quantity of data.

The Back Stop

After youve purchased a great RCFA and have the report in hand, theres another important thing to do: Verify it. Take the report to the building and planning departments and confirm that all competing projects with permits or pending plans are noted.

Next, visit each of the competitors in the area and compare your proposed project in terms of visibility, location, traffic, amenities, pricing and occupancy. If you find the information you collect is different from that contained in the report, thats a red flag. Things to pay particular attention to are rents and occupancy. Does the report suggest you should collect higher rents than your competitors? Have rents been declining or concessions increasing? Have occupancies been declining, or are average occupancies below 85 percent? If you encounter problems in these areas, its time to take a deep breath and rethink the project.

A Peek at the Downside

Self-storage projects are very sensitive to changes in revenue. Another critical step in the review of a feasibility report is the sensitivity analysis, which is easily done by rerunning the income pro forma and reducing the rent and occupancy by 7 percent. (Your analyst should be happy to provide this information.) Watch what happens to your net operating income and cash flow after debt service when you recalculate the amount of debt the project will carry. My guess is the change will cut projected cash flow by 50 percent to 60 percent.

What you are trying to learn with this test is how much error in the estimate of demand and pricing you can tolerate and still find the project risk acceptable. You may want to try other variations after youve seen results of the first test. Theres usually a lot of leverage in a self-storage project, both operating and financial, and it cuts both ways. At the end of the day, you must be satisfied that your projectionsand their relative reliabilitycorrespond with the margin of risk you are willing to take.

Only you can judge your level of comfort with a proposed project. Good RCFAs are never perfect, and even the best rely largely on the analysts judgment. Lady Luck will still play a large role in your success, but a good feasibility report will encourage her to be on your side. Remember that no is sometimes a better answer than yes.

Michael L. McCune has been actively involved in commercial real estate throughout the United States for more than 20 years. Since 1984, he has been owner and president of Argus Real Estate Inc., a real estate consulting, brokerage and development company based in Denver. In 1994, he created the Argus Self Storage Real Estate Network, now the nations largest network of independent commercial real estate brokers dedicated to buying and selling self-storage facilities. For more information, call 800.55.STORE or visit www.self-storage.com.

On days when the weather is nice, I ride my bicycle to work. Its about an 8-mile trip each way. I was recently forced to take a hiatus due to some business traveling and a week of rain. When I finally hopped on my bike again, I found I had to stop and rest along the way. I had lost some conditioning in just that short of a period of time.

Selling self-storage is no different. In fact, its a lot like playing sports. You have to be consistent to get into and stay in shape. You have to practice. Here are two key facts to remember about sales training: 1) Practicing the fundamentals makes all the difference. 2) You have to practice often.

Lets look at a sample scenario. Its the fifth of the month, and youre dealing with a bunch of late-payers who are coming in to settle their accounts and have their gate codes reactivated. Youre also trying to help a couple that rented a unit last week and are just moving in. Then youre thinking about that deferred maintenance you put off last week. Then you get a couple of walk-ins who want to rent your moving truck.

Finally, the phone rings. You answer. The caller asks, How much is your largest storage space? You quickly blurt, Our 10-by-25 is $259 per month. The caller says, Thanks. Ill call you back if I need something. Eeek! Youve lost your sales conditioning in just a day or two of intense non-sales activity and consequently shot yourself in the foot. Your sales muscles forgot all about building value and asking good questions before giving price.

Relearning the Game

Vince Lombardi, the famous (and sometimes infamous) football coach, used to start spring training with seasoned professionals by showing them a football and saying, This is a football. He started from scratch every season, working on basic blocking and tackling, throwing and catching. Why should self-storage managers be any different than the pros?

Selling self-storage is all about stalling on price, getting agreement on the main issues, building urgency and asking for the rental. You cant practice these skills enough. Some managers who have worked in the industry for years can be completely revitalized just by loosening up their selling muscles and practicing the basics. Theyll often find theyve forgotten or neglected many of their primary skills. But with a little review, they can quickly get back in shape.

On the other hand, those new to selling storage often find the basics are similar to sales and customer-service skills they developed at other jobs. They learn they can pull their weight in self-storage pretty quickly.

Know Thyself

Watch for weakening in your sales muscles. Know when youre at risk of dropping the ball or missing your block. Take an extra second before talking to a rental inquiry, and reconnect with your selling-muscle memory. Make time to practice a few basic scenarios with your staff every day. Once a week, work on more complex selling issues. The same few come up often and are worthy of review. Over time, youll also discover new or unusual sales challenges worth practicing.

Be patient with yourself and potential customers as you field rental inquiries. Ask deliberate questions and direct the conversation. None of Lombardis quarterbacks ever threw the ball without taking a moment to assess the defense and check the location of his receivers. None of his front-line players moved off the line of scrimmage without examining the situation and relating it to training routines and strategies.

Dont be the player who chucks the ball without looking or jumps at the snap without thinking. You already know how to sell storage. You have the muscles, so dont get out of condition. Practice not only makes perfect, it makes profit.

Tron Jordheim is the director of PhoneSmart, an off-site sales force that helps storage owners rent to more people through its call center, secret-shopping service, sales-training programs, and Want2Store.com facility locator. You can read what he is up to at www.self-storageblog.com. For more information, e-mail [email protected].

As OpenTech Alliance Inc. approaches its three-year anniversary, it has a lot to celebrate. In its short history, the company has emerged as a leading developer of self-service kiosks for the storage industry, with its INSOMNIAC units installed in facilities across Arizona, California, Colorado, Hawaii, Illinois, Indiana, Maine, Missouri, Ohio, New York, Texas, Washington and Canada.

OpenTechs business model encourages cooperation vs. competition within the industry. The company has built a team of Alliance Partners whose software products integrate with its kiosk units:

• Domico (Domico Software)
• Empower Software Technologies Inc. (Storage Commander)
• PTI Integrated Systems (TaskMaster)
• SMD Software Inc. (SiteLink)
• Syrasoft LLC (Storage Management System)
• eMove (Webself-storage)

OpenTech has also created an impressive advisory board of industry veterans:

• Pamela Alton, owner of Mini-Management Services
• Anne Ballard, founder and president of Universal Management Co.
• Diane Gibson, owner of Coxs Armored Mini Storage Management Inc.
• Jeffrey Greenberger, a partner with the law firm of Katz, Greenberger & Norton LLP
• Raymond McRae, vice president and director of operations for Storage Solutions
• Carol Shipley, president of United Stor-All Management LLC
• Franklin Young, director of sales and marketing for DBCi

This panel helps OpenTech set product direction and company strategy. Weve been extremely fortunate to have such great partners, advisors and forward-thinking customers, says Robert Chiti, OpenTech president and CEO.

Testimonials

The real story of OpenTechs success lies with the facilities using its products. Testimonials mean a great deal in self-storage, especially when it comes to new technology. OpenTechs customers have embraced INSOMNIAC kiosks and are reaping the benefits. Below are three of their stories. For more information about OpenTech and its kiosk products, call 480.778.9370; visit www.opentechalliance.com.

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Storage Solutions
Website: www.storagesolutions.org
Number of facilities: 40
Locations: Throughout Arizona
Number of kiosks: 2

Mesa, Ariz.-based Storage Solutions ranks No. 26 in the list of U.S. self-storage operators, based on rentable square footage managed. A year and a half ago, the company installed the first INSOMNIAC kiosk ever at its Palm Valley facility. Since then, it has continued to give OpenTech enhancement requests as well as ideas for product improvement.

In June, Storage Solutions installed an INSOMNIAC 900 at its new Fletcher Heights facility. The 900 model is OpenTechs top-of-the-line kiosk featuring a built-in fingerprint scanner, signature pad, drivers license scanner, digital camera, and check and credit-card scanner. It enables tenants to rent units, make payments, update account information, purchase locks, and view multimedia facility tours.

The company boasts another kiosk first: Fletcher Heights is the first storage facility in the world to use electronic locks on its unit doors. These locks, provided by Global Electronics Ltd., are activated by the kiosk and the facilitys management software. In cases in which a unit has been overlocked due to nonpayment, INSOMNIAC can automatically unlock the unit when the customer brings his account current using the kiosk.

Weve been really happy with INSOMNIAC, says McRae. We originally chose it because we wanted to reduce staff hours and give customers a more convenient way to make payments after hours. The kiosk has worked as advertised. Weve reduced our managers hours, saving three hours a day in staffing costs at each facility, and were making more money because INSOMNIAC enables us to take new rentals and payments when other facilities are closed.

With the help of OpenTech, Storage Solutions intends to move to unattended, fully automated sites in the near future. It has included INSOMIAC in its plans for four new facilities to be constructed this year.

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Storage Express

Website:

www.storageexpress.com
Number of facilities: 65
Locations: Indiana, Illinois, Kentucky, Tennessee and Ohio
Number of kiosks: 6

Storage Express has been operating facilities without an onsite rental office since 1992. In fact, all of the companys properties are unmanned. In the past, customers would contact a call center from an on-site courtesy phone in a rental station at the facilitys entrance to open or manage their accounts. At the companys Martinsville, Ind., facility, however, an INSOMNIAC 500 has replaced the phone. Customers can still reach the call center if they have questions, but standard functions are now handled by the kiosk.

Before the kiosk, if customers wanted to pay by cash, they had to go to a nearby Western Union agent and wire us their rent, says Jefferson Shreve, owner and president. INSOMNIAC allows them to pay on site with cash, check or credit card, so we never miss a rental. In fact, the unit took its first rental within 48 hours of installation, without any human involvement on our side.

Given its success with its first kiosk, Storage Express has ordered five more 500 models as it moves to integrate the technology at its other Midwest sites. Its also testing the 200 model, a stripped-down kiosk that only accepts payments.

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AAAAA Rent-A-Space

Website:

www.5aspace.com
Number of facilities: 15
Locations: California and Hawaii
Number of kiosks: 24

James Knuppe has been a licensed general contractor since 1960, and having pioneered the introduction of the self-storage concept in the San Francisco Bay area in 1971, he is often credited with being one of the founders of the industry. His legacy, AAAAA Rent-A-Space, owns and operates 15 self-storage properties.

The company has installed two INSOMNIAC kiosks per site at its Berkeley and Colma, Calif., facilities and its Kapolei, Hawaii, property. These mega-sites are some of the largest in the nation-Kapolei has more than 1,300 units, while the California facilities have more than 2,000 units each.

Weve thought about self-storage kiosks for a long time, says Knuppe. It wasnt until INSOMNIAC that we found a solution robust enough to handle the demands of our large facilities. Were delighted OpenTech has brought this technology to the self-storage market.

Our rollout plan was to put the kiosks in the office for the first 60 days so managers could help train customers to use them. Instead, were finding many people who come into the office go directly to the kiosk to make payments and rent units. Theyre so used to self-service ATMs in other industries that they immediately grasp the concept.

The managers at 5A have also embraced the kiosk, viewing it as an assistant that helps provide a new level of customer convenience. In one week, the Colma facility processed 206 transactions using INSOMNIAC, including rentals, payments, lock purchases, and account access and update screens. For the month of May, this amounted to 42 payments and 35 rentals.

Based on this success, 5A has ordered kiosks for its remaining facilities. Because the size of the sites, most will receive a 900 as well as a 200 model, so customers dont have to wait in line when one is being used.