1999 Spotlight on Top Operators
|Copyright 2014 by Virgo Publishing.|
|Posted on: 04/01/1999|
1999 Spotlight on Top Operators
This year in our August issue of Inside Self-Storage, we were pleased to identify 116 of the nation's top self-storage operators in our annual Top Operator List. At the very top of that list are 10 companies that represent superior quality in management, customer service and development. These companies demonstrate what is possible in the self-storage industry, and behind each lies a unique story of success...
1. Public Storage Inc.
Public Storage Inc., with assets of approximately $4 billion, is a fully integrated, self-administered and self-managed real estate investment trust that acquires, develops, owns and operates more than 1,400 self-storage facilities throughout the United States and Canada. The company is the largest owner and operator of self-storage in the nation, with locations in major metropolitan markets of 37 states, encompassing 700,000 storage spaces and representing approximately 80 million square feet of rentable space.
Public Storage was founded in 1972 by B. Wayne Hughes, the company's current chairman and CEO, and Kenneth V. Volk Jr. According to company president Harvey Lenkin, who has been with the company since 1978, "Our products and services are offered to consumers--we rent storage space and trucks; we sell moving and storage supplies; we have a public-storage pick-up and delivery service as an ancillary business."
Public Storage, with 20 regional offices, employs nearly 5,000 individuals. Based on the number of properties, Public Storage is approximately three times the size of its largest public competitor. The company has developed one of the most recognized brand names and trademarks in the consumer-service industry. Lenkin attributes this success to "a willingness to figure out new ways of doing things, the ability to raise large amounts of capital in a conservative and prudent manner, and a belief in a valid service offered to customers in a consistent, professional manner." Lenkin says Public Storage plans to continue to acquire and develop self-storage facilities throughout the United States. "We plan to continue to be not only the biggest, but the best in terms of what we offer our customers. The consumer is king. As a word of advice, operators should remember that."
2. Storage USA
Founded in 1985 by its current Chairman and CEO Dean Jernigan, Storage USA Inc. is a fully integrated, self-administered and self-managed real estate investment trust, engaged in the management, acquisition, development, construction and franchising of self-storage facilities. As of June 30, 1999, the company owns, manages or franchises 495 facilities containing 32.8 million square feet in 31 states and the District of Columbia. It is the second largest self-storage REIT in the United States.
From the beginning, with one storage facility located in Memphis, Tenn., the company expanded steadily over the next few years through the development, acquisition and management of self-storage facilities, virtually doubling in size every other year. On March 16, 1994, Storage USA completed its initial public offering and listed its common stock on the New York Stock Exchange. Since the initial IPO, Storage USA has grown from 73 facilities to its current size.
Storage USA recently announced an agreement in principle with Budget Truck Rentals, whereby it has the exclusive right to receive pre-qualified leads from Budget/Ryder's truck-rental prospects as well as exclusive rights within the self-storage industry to offer Budget/Ryder truck rentals at its facilities. Storage USA also launched its National Reservation Center, which handles rollover calls from facilities when the manager is not available.
The company's self-storage facilities operate under the Storage USA® name and offer low-cost, easily accessible and enclosed storage space for personal and business use, primarily on a month-to-month basis. Storage USA strives to be a rent leader in its markets through an emphasis on customer service and satisfaction, employee screening and training, incentive-based compensation for its managers, and aggressive marketing programs. Facilities offer state-of-the-art security, climate-control units and, in most locations, resident managers and 24-hour access. The company's commitment to professional management and customer service is manifested in its Total Storage Satisfaction Guarantee®--if any customer is not completely satisfied with his self-storage experience, he needs only ask the facility manager for a refund.
Over its 14 years of operations, Storage USA has sought to create shareholder value through acquisition and development, including both new construction and expansion of existing facilities. The company has been and will continue to be developing facilities in selected markets. In addition, Storage USA offers the industry's most comprehensive franchise program, with 41 franchised facilities open and operating and another 34 under development. Each Storage USA facility is computerized and linked by satellite to the company's headquarters. Through this technology, all levels of Storage USA management are provided essential operational reports to monitor and analyze the performance of each facility, district and region in the company.
At every Storage USA facility, customers are assured of receiving the best service from professionally trained and courteous staff. Every Storage USA manager and associate is trained to offer customers the highest level of service and to follow the Total Storage Satisfaction Guarantee. Each staff member is completely knowledgeable of his facility, and receives up-to-date training material on a regular basis to make sure he is fully informed of changes in the industry, as well as to his own facility.
Storage USA recognizes that, in the end, long-term success is really in the hands of the people at the properties. The reason the company keeps growing--retaining current customers and attracting new ones--is the relentless focus of its managers on providing "Total Storage Satisfaction." In short, the 1,800 people at Storage USA are its greatest strategic advantage.
3. U-Haul International Inc.
U-Haul was founded in 1945 as a practical and economical way for North American families to move their household possessions. There existed an obvious widespread need for do-it-yourself moving equipment on a one-way, nationwide basis. It was the visionary approach of U-Haul that recognized this need, acted upon it and literally created an industry.
With $5,000, L.S. Shoen, his wife, Anna Mary Carty Shoen, and their young child moved to the Carty ranch in Ridgefield, Wash. There, with the help of the family, the Shoens built the first U-Haul® trailers in the fall of 1945, using the ranch's automobile garage and milk house as the first manufacturing plant for the budding company.
U-Haul currently maintains 924 self-storage facilities, 1,127 company-owned moving and storage center locations and more than 14,584 independent dealers across North America. U-Haul self-storage facilities consist of 26,624,000 square feet of storage space in more than 307,000 units. The company also offers truck and trailer rentals, hitches, boxes and moving supplies. The company employs 14,400 full-time employees in 110 regional offices, 1,100 U-Haul centers and 14,700 independent dealers.
The name U-Haul is as familiar to consumers as Kleenex and Coca-Cola. Branding is the cornerstone of the U-Haul corporate culture and has been for more than 50 years. The company's products are designed and built specifically for household customers, and its centers are located for convenience and easy access, offering one-stop shopping for moving and storage needs. U-Haul has made a long-term commitment to its customers and shareholders to remain a leader in the moving and storage industry, with the goal to improve service, acquire new customers and earn their repeat business.
The company's growth strategy is to develop or acquire convenient neighborhood moving-and-storage centers to meet customer needs. U-Haul aims to add 34,000 storage rooms, or almost two million square feet, through acquisitions and development during the current fiscal year. The company has 40 new centers under construction in select markets and has implemented a program to add storage where space exists at existing sites. U-Haul is also actively seeking the acquisition of existing self-storage facilities that meet or can be upgraded to its standards.
As advice to new owner/developers, U-Haul suggests joining with one of the major brand names in the industry, which will ensure that they receive more public attention in the marketplace. If new owners plan to remain in the self-storage business and grow, U-Haul suggests including truck and trailer rentals in their plans, as well as the retailing of boxes, rope, tape and locks to both moving and storage customers. New owner/developers should put at least a display pad in front of their storage locations during the planning stages, and they should plan to provide sufficient signage.
4. Shurgard Storage Centers
The year was 1973. In Olympia, Wash., Chuck Barbo and his founding partner, both aspiring entrepreneurs, saw a unique business opportunity: to provide self-storage in mini-warehouses for communities whose residents have too much stuff, and for businesses that need to stow boxes of long-forgotten records and documents. Today, Shurgard Storage Centers Inc. is a New York Stock Exchange listed (SHU) real estate investment trust (REIT) and is one of the world's largest operators of storage centers. The company owns or manages more than 350 locations in more than 22 markets across the country and in Europe, totaling more than 22 million net rentable square feet.
"The company's mission is the same today as it was when we opened our first storage center more than 25 years ago--be the national leader by setting the standard for the self-storage market," says Chuck Barbo, president and CEO. "Providing a safe haven for wayward valuables requires a time-tested business plan that is fluid, innovative and turnkey, thus adapting to the constantly changing storage needs of John Q. Public and today's business professional."
Shurgard's business blueprint begins with high-quality, conveniently located and secure self-storage centers infused with exemplary customer service. From this base, Shurgard provides features and amenities that keep the company at the forefront of customer convenience, including the following:
During the last 26 years, Barbo and Shurgard have attracted numerous investors and have undergone the changes that come with growing a company. In its first 20 years, more than $600 million--all equity--was raised from more than 80,000 individual investors in 24 separate, real-estate-limited partnerships. In March 1994, a consolidation of 17 of these limited partnerships was completed and a single, publicly traded REIT was formed. On March 24, 1995, Shurgard Inc., the private company that managed Shurgard's storage centers, merged with the Shurgard REIT. This merger resulted in a fully integrated, self-administered and self-managed REIT.
Today, Shurgard continues to grow with an emphasis on development. The company's development strategy is to build high-quality stores in premium locations. Although emphasis is placed on development, selective acquisitions are also added to the portfolio.
In addition to the 22 domestic markets that Shurgard operates in the United States, the company has expanded into Western Europe. Along with its European partners, Shurgard currently has a presence in Sweden, France and Belgium. European expansion plans are also underway in The Netherlands and the United Kingdom.
Shurgard is aggressively pursuing its plan to open 30 to 35 storage centers in 1999, both domestically and in Europe. Behind this growth is the company's determination to find new markets needing upscale storage, anticipate customers' growing and changing needs, and redefine and set the standards of what storage is and can be.
"Our vision of continued growth is pretty simple: innovative ideas coming from enthusiastic individuals. We make it a point to hire quality people and we listen to them," says Barbo. "Ultimately, front-line employees spot opportunities for growth and suggest ways to offer better customer service. They are the eyes and ears of our company and have a voice in determining the future of Shurgard."
Both Barbo and Shurgard are motivated to provide the best storage opportunities for consumers today and tomorrow. And, Barbo vows to keeps his employees motivated because he knows, regardless of the global changes in the past two decades, people still have stuff, and someone still has to store it.
5. Sovran Self Storage Inc.
In 1985, through a limited partnership of which it was a general partner, Sovran's predecessor developed its first self-storage facility in Florida. On June 26, 1995, Sovran Self Storage Inc. commenced operations effective with the completion of its initial public offering of 5,890,000 shares. With the closing of the offering, Sovran purchased 62 self-storage facilities that had been owned and managed by Sovran Capital Inc. and the Sovran Partnerships. The company has since purchased 159 self-storage properties from unaffiliated third parties, increasing the total number owned to 221--all of which operate under the name "Uncle Bob's Self Storage." Since 1985, the primary business of the company has been acquiring, developing and operating self-storage facilities.
Sovran's principle officers include Robert J. Attea, chairman of the board and chief executive officer; Kenneth F. Myszka, president and chief operating officer; and David L. Rogers, chief financial officer. These principle officers have been working together in the acquisition, development and operation of self-storage facilities for more than 14 years, during which time they have developed substantial expertise in facility management.
Sovran's external growth strategy is to increase the number of facilities it owns by acquiring suitable facilities in markets in which it already has operations, or to expand in new markets by acquiring several facilities at once in those new markets. The company also intends to expand and enhance certain of its existing facilities by building additional storage buildings on presently vacant land and by installing climate control and enhanced security systems at selected sites.
A former five-and-dime that was transformed into mini-warehouses has grown into a company boasting 144 self-storage centers with more than 70,000 units, eight million square feet and 360 employees.
U-Store-It, the Self-Storage Professionals, is a wholly owned subsidiary of the Amsdell Companies, a multi-faceted real-estate development company headquartered in Middleburg Heights, Ohio. The Amsdell Company history dates back to 1928 in Oil City, Pa., where family patriarch Carl Vesper Amsdell built oil refineries and steel mills. The Amsdell sons, Robert and Barry, who worked in the company in their teen-age years, took over the firm in 1973. They entered the storage business in 1975 when they decided to purchase the site of a large former department store that had gone out of business and transform it into small warehouse spaces.
The rest, they say, is history. U-Store-It now operates three regional offices--Cleveland, Ohio; Naples, Fla.; and Milford, Conn.--and 17 district offices. One of the company's largest growth spurts was between 1994 and 1998 when the company used several sources of funding to acquire 133 properties. Future plans call for developing and acquiring additional self-storage centers nationwide.
U-Store-It's number-one selling point is its people. Despite its rapid growth, the company hasn't forgotten the importance of human interaction. Therefore, many of its facilities have resident managers. "Our vision is to have the finest self-storage centers providing the best possible service from the most professional people," says Todd Amsdell, president. "Our vision is backed by the great people who work at U-Store-It."
The company, which received an Award for Excellence from the Self-Storage Association, is also an integral part of each community in which it locates, being involved in local youth sports programs, and fire and police safety organizations. In July, the Amsdell Companies donated the use of its corporate jet for the transport of athletes to the 1999 Special Olympics World Games in the Raleigh-Durham, N.C., area. "The Amsdell Companies was thrilled to be a member of the team," says Amsdell. "U-Store-It's reputation is rooted in honesty and integrity. That's why we are the self-storage professionals."
7. Derrel's Mini Storage Inc.
For the owners of Derrel's Mini Storage Inc., the business of self-storage was a side project that became all-encompassing. "I come from a manufacturing background," explains company President Derrel Ridenour. "My dad had a metal-fabrication plant back in 1945. Around about 1960, a freeway was going to take our shop, so we bought another location to move to, yet the freeway wasn't going to be complete for several years, so we decided to build some fences and rent some space out for RVs.
Then in 1963, a mini-warehouse opened up here in Fresno with about 60,000 square feet, and it rented in about three months. We decided to keep our guys busy during our slow time by having them make doors and roofs and building components. We designed our own buildings and then made the parts."
This peripheral focus on building self-storage facilities continued for several years until about 1982, when the company shifted its full focus on building storage facilities. Derrel's still continues to manufacture its own building components. "We still manufacture our own doors and walls and have our own crews that put them up. We find our own locations and go through the planning process. We also have our own management company, but only for our own accounts."
Derrel's plans to expand by building approximately 300,000 square feet of self-storage each year, focusing primarily in California's central valley, from Sacramento to Bakersfield. The company has employed a strong radio and TV advertising campaign to target this particular area. "About 10 or 15 years ago," says Ridenour, "I decided that I had to build a storage facility within a two-mile radius of everyone who heard or saw our commercials. It was a costly, timely venture, but it really worked out well. Now we've become a brand name in the Fresno market."
Derrel's Mini Storage currently has 36 locations and 10 more under development. Ridenour attributes the company's success to "the efficiency of a family operation where the owner picks the land, where we do our own designing and manufacturing." To any new owners or operators, he suggests selecting an "A" location for your site, such as one close to a McDonald's. "Those are the ones that are going to survive," he says. "You'd also better be able to have a pretty good vacancy factor figured into your proforma. Try to build where you're able to limit your future competitors--be very selective."
8. Storage Inns Inc.
Unlike other top operators of the self-storage industry, Storage Inns Inc. is an association of independent owners, founded in 1973 by Frank C. Blumeyer. Although Blumeyer owned a few facilities of his own, he saw potential in a cooperative effort. According to Frank C. Blumeyer Jr., the founder's son and current president of the company, "Years ago, my father felt that there were too many mom-and-pop operators of self-storage--independent operators like ourselves. He thought it would be a good idea if we banded together under one name and did common advertising in the phone book, made common purchases of supplies, etc. So we adopted the name, similar to that of Holiday Inn, and began licensing individual owners, for a modest fee, to use it. And we gave them expertise on how to build, how and when to sell, that sort of thing."
There are currently 100 facilities licensed by the company and going by the name A Storage Inn. Although the Blumeyers have not solicited any new licensees in a number of years, their future plans include the fine tuning of their present operation. Because, in the past, many new operators would come to them for advice on site selection and feasibility, they were presented with multiple partnership opportunities. Of the 100 facilities now participating in the Storage Inns collective, the Blumeyers have financial interest in several, including those that they own and manage themselves. It has been a very successful venture for this family-owned business.
"The bottom line is luck, careful site selection and continued, hands-on management," says Blumeyer. "The best advice I could give anyone is to be careful in your site selection and realistic in your proforma. Anybody can make anything look good on paper, but that doesn't mean that it's necessarily going to turn out that way in reality. I could give a list as long as both my arms of people that went broke and lost their facilities because they were looking at this business through rose-colored glasses and thinking it was a sure thing--it's not."
9. Morningstar Mini Storage
He sold his Wendy's franchise to Dave Thomas in 1980, but not before he had learned a few lessons about customer satisfaction. "The philosophy I've borrowed from Dave Thomas is to take that knob on quality and turn it way up," says Stephen Benson, president of Morningstar Mini Storage. "What's a little bit different about Morningstar is that we've always done all of our own construction as a general contractor. We even do most of the subtrades as well. We are not just the operators, we are the owner, the developer, the builder and the long-term operator."
Morningstar owns and operates 57 facilities throughout North and South Carolina and employs approximately 220 staff members. The company also has a partner--Five Arrows Realty Security, which is a fund managed by the Rothschild Group of London. This allows Morningstar a $60 million line of credit with which the company plans to double its size in the next five years while still remaining in the Carolinas. "We really dominate this market," explains Benson. "Our thought is to stay close to home. It is tempting to move over to Richmond or Jacksonville or Atlanta, but we want to stay a day's drive away from home. We want to be able to know our employees by face and by name."
Morningstar is a company with some very unique policies. First, the company uses strictly masonry buildings. Its facilities have no chain-link fencing visible from the road and, according to Benson, the company has the lowest coverage per square foot, providing for lawn and flowers. "One of the business expenses we've got that no one else has is a couple of thousands of dollars for flowers twice a year at each location."
"We like our formula for success," says Benson, "and that is top-end amenities: picnic tables, restrooms, a diaper-changing station, a vending area, payphones, etc. We may not make as much money as the rest of the world, but in the long-term, we want to keep our market position secure."
The company also boasts a very unique corporate culture and a strong media diet. Morningstar produces its own TV commercials in house and employs a full-time marketing manager. The company's facility managers, chosen very selectively from a roster of applicants with more professional backgrounds, are not bridled by a strict rule book or a set of corporate policies. Instead they are given complete autonomy. Morningstar does not keep resident managers, nor does it offer an incentive program. But, according to Benson, there is virtually no turnover. "The most interesting thing about Morningstar is our unbelievable team spirit."
Employees also participate in the company's Share the Load program, where tasks such as payroll, maintaining computer databases, and ordering documents or uniforms are all handled by employees at different locations who volunteer to handle that particular responsibility. "As a result, we have a very small executive staff that can focus on the real meat of the business," says Benson. "This means I can focus on critical issues, not details."
Benson believes that, in the past, self-storage may have been a real-estate game, but is not so anymore. "It's a marketing game," he says. "The future will be very different: It will take a great deal of talent to succeed, and a lot of skill."
10. Dahn Corp.
In the 1970s, when the firm was known as C.J. Bonner Corp., Brian A. Dahn and his boss, C. J. Bonner himself, specialized in the construction of new storage facilities. Along with Public Storage, the Bonner Corp. held pioneer construction of storage sites in California. In 1988, when Bonner decided to retire from the industry, Dahn purchased the company, changing it's name to Dahn Corp. Today, he remains the president and owner of that company.
Dahn Corp. specializes in the acquisition, development and management of self-storage facilities nationwide. The company operates 68 storage facilities in nine states from one central office in Irvine, Calif., where a total of 14 employees are dedicated to making each Dahn facility a success. A core of four individuals visits each facility at least once every three weeks, meeting with on-site managers, analyzing market conditions and pursuing acquisition leads. They are supported by five administrative and accounting specialists who are familiar with each facility and manager.
Dahn Corp. has been successful because of its focus on developing and acquiring only self-storage facilities--the company does not diversify into other products. Dahn has maintained a conservative approach to site selection and financing, and its properties are held long-term. The company's ability to identify and take advantage of strong markets, while maintaining low overhead, is responsible for its success. In addition, the stability of Dahn's workforce has been a strong influence on its prosperity, with the corporate officers staying an average of 13 years with the company.
The Dahn Corp. continues to develop in the areas where it has existing facilities and will also expand through the purchase of additional sites. The company is proud of its success and will continue to operate as it has in the past, developing primarily for its own account and looking forward to future expansion.
According to Kathleen White, senior vice president, "The self-storage industry, like other types of real-estate development, can be extremely rewarding. However, it is a highly competitive industry, and it can be difficult to develop and manage the facilities." She points out that some common mistakes made by new owners/developers include building at a poor location, bad design, too much debt and improper management. "Using a conservative approach can help limit some of the many risks involved in the development process," she says.