ONE ON ONE

An Interview With

Joe Niemczyk and Mel Holsinger

Joe Niemczyk

Joe Niemczyk is president of Executive Self Storage Associates Inc., a Tucson,Ariz.-based consulting and management firm specializing in self-storage management,development and consulting. A graduate of the University of Northern Colorado with aBachelor of Science degree in accounting, Mr. Niemczyk served as a pubic accountant beforeentering the private sector in 1981 as an assistant controller for National Self StorageInc., a Tucson-based management company. There he became president during his tenure andoversaw the operations of almost two million square feet of storage properties throughoutthe United States. Mr. Niemczyk also established the first formal training facility forself-storage managers and spearheaded the opening of the largest and most successfuldocument-storage company in Tucson. He left National Self Storage after five and a halfyears and, together with his partner, Mel Holsinger, established Executive Self StorageAssociates.

Mr. Niemczyk currently resides in Denver with his wife, Lori, and their three children,Amanda, Tyler and Travis. He has been a frequent presenter at Inside Self-Storage expos.

Mel Holsinger

Mel Holsinger is the executive vice president of Executive Self Storage Associates. Agraduate of Black Hills State University with a degree in business administration, Mr.Holsinger began his career with International Minerals & Chemicals Corp. as an officemanager for a mining location in South Dakota. He then went on to other managementpositions with Anamax Mining Company, ASARCO and General Instruments.

Mr. Holsinger entered the self-storage industry as the controller for National SelfStorage Management, where he was involved in the company's accounting and financialfunctions. After three years with the company, in 1987, he joined with Mr. Niemczyk toform Executive Self Storage Associates, now one of the top 25 operators in the industry.As a frequent speaker at self-storage conventions, Mr. Holsinger has advised participantsin areas such as auditing, management issues and the development of successfulself-storage business plans.

Mr. Holsinger is currently a director in the Arizona Mini Storage Association and amember of the Executives Association in Tucson. He has also been involved in local RotaryClubs, the Elks, the National Association of Accountants, and several Chambers ofCommerce. He lives with his wife, Tracy, and two sons, Kyle and Joshua. The family areavid roller hockey players, black belts in tae kwon do karate and enjoy activities such ascamping, fishing and golfing.

We are honored to present an interview with Joe Niemczyk and Mel Holsinger...

Explain the evolution of Executive Self Storage and how you see the company intoday's marketplace.

Executive Self Storage Associates Inc. was incorporated in the state of Arizona on June11, 1987, and is headquartered in Tucson, Ariz. The company also maintains regionalmanagement offices located in Colorado, Utah, Tennessee and Southern California. Since itsinception, the company has managed, developed and consulted on projects in 15 states andthe U.S. Virgin Islands, consisting of more than 6,800,000 square feet of storage.

Executive Self Storage Associates Inc. has been retained by several national andinternational organizations such as Citibank, Crown Life Insurance Company, ProfessionalSavings Bank and First Security Mortgage to consult and manage various self-storageproperties located throughout the United States. In addition, the company functioned as anapproved service provider for the Resolution Trust Corporation.

Executive Self Storage Associates Inc. currently oversees the operations of 42self-storage facilities in Arizona, California, Colorado, Florida, Nevada, Tennessee,Texas and Utah. The Company's current portfolio consists of more than 2,000,000 squarefeet and 21,000 individual spaces.

The company was established by principals Joseph P. Niemczyk and Melvin L. Holsinger.Mr. Niemczyk and Mr. Holsinger were the past president and treasurer of National SelfStorage Management Inc., operating more than 2,00,000 square feet of storage. With degreesin business administration and accounting, combined with their frequent appearances asfeatured speakers at the industry's national trade conventions, they have establishedthemselves as leaders in the self-storage industry. In addition to their otheraccomplishments, the first formal resident manager training university in the country wasestablished under their direct supervision, and today still serves as the model forsimilar programs.

What are each of your roles in the company?

Joe Niemczyk is the president of the company and deals primarily with managementoperations, marketing, new-client development, and has been involved in developing severalfacilities for various clients. Mel Holsinger is the executive vice-president and dealsprimarily with the financial operations, administration acquisitions, development andclient relationships.

What is the company's objective for the upcoming year, five years, 10 years?

The current focus of ESSA is the enhancement of our existing stores in the areas ofstandardization of operations, more extensive manager training and depth in the mid-levelmanagement ranks. In the next five years, it is our intention to take our operatingmethodology into the 21st Century. We will be improving our use of computers, e-mail, theInternet and several other technologies that other industries have been using for years.In addition to our technological advances, we will obviously be expanding our operationsover the next five to 10 years. However, our methods will take a less-traditionalapproach, given the continual growth in the industry. Our strategy will be to provide avehicle for the smaller operators to receive professional management at competitive ratesand eventually help them with a possible exit strategy for their store.

What is your view on management training and what makes yours successful?

Management training is quite possibly the single most vital piece to the successpuzzle. Well-trained management cannot only produce more sales, but can also reduceexpenses, save the store from enormous legal liability, and maintain a stable customerbase, even in hard times. It is unfortunate, however, that in our industry a large portionof these vital positions are paid a wage that can only be described as disgraceful.

What are some of your marketing strategies?

It is our belief that marketing strategies are store and market specific. Althoughthere are some traditional methods of advertising and marketing, such as Yellow Pages,there are many more that should not be applied unilaterally. Therefore, the easiest way tofind out is to experiment. Just because display advertising didn't work five years agodoesn't mean that it can't be effective today. For the smaller operators, it's importantto keep the focus on the basics and remember not to be enthralled with that catchy nameyou thought up. Self-storage has great product recognition but poor name recognition.Focus on promoting your location and services because this is what the customer isconcerned with.

What are three keys to great customer service?

We do not believe that being good at customer service means that you always give in. Webelieve that great customer service begins by applying your policies equally andconsistently to all customers. Making exceptions for some customers may solve theimmediate problem, but are you prepared to make the same compromise to all your customers?If you're not, have you provided the majority of your customers with good customerservice? The solution to great service is to make sure that each customer thoroughly knowsthe policies of the store--both positive and negative--before they move in. This way therewill be no surprises, and a possible negative situation can be avoided before it starts.The vast majority of self-storage users are not looking for a free ride, only fair andconsistent treatment. The ability of the on-site personnel to be able to solve problemswith a smile and a tone of concern for the customer, whether or not you compromise, willbe the most important ingredient in your customer-service arsenal.

How do you see the self-storage environment changing in the next five years,especially in regards to mom-and-pop owners vs. multiple operators? What aboutconsolidation and acquisitions?

The mom-and-pop operations are being phased-out in unprecedented numbers. However, withthe industry still dominated by these entrepreneurs, we feel they are still going to bethe majority of owners of facilities for at least the next decade. The industry will seeincreasing numbers of consolidations and acquisitions by the REITs and public companies,and we expect to possibly see some of these companies merging as well.

Most of the mom-and-pop locations are still centered in smaller markets. We see themajor metropolitan areas as being dominated by the public and REIT companies. We see thistrend in every market we are involved in.

What are your views on the future of available financing?

Financing availability will become more difficult at some point in the near futurebecause we feel that in many markets the community is overbuilt and various facilitieswill begin to suffer extremely. While not trying to be pessimistic, we feel that the nextcycle of foreclosures will be greater than previous cycles experienced in the '80s andearly '90s.

With interest rates at an all-time low, financing is easier to obtain for both new andexisting properties. Several lenders established solely for self-storage products are nowdiversifying into other commercial areas as a result of available conduit dollars. Everyowner should at least look at the availability of funds today and, if it makes economicalsense, immediately seek out a new lender for the better rates and service now available.First Security Commercial Mortgage, for example, is an excellent lender that is veryknowledgeable about the self-storage business, and working with them over the years hasbeen very rewarding for us and some of our clients.

Since you are mainly concentrated in Arizona and Colorado, do you plan toexpand into other markets as well?

Actually we are located in numerous states. Besides Arizona and Colorado, we manageproperties in California, Nevada, Utah, Texas, Tennessee and Florida. We have been inthese markets since 1988. Additionally, we have managed properties in Connecticut, Ohio,Mississippi and Washington. We do plan to expand into other markets and are, in fact,working on several deals not in our current market areas.

How does ESSA position itself in order to stay competitive in today'smarketplace?

We pride ourselves in first taking care of our existing clients. Most of our businesshas been from referrals, and we are very proud of that. We continue to attend the InsideSelf-Storage Expos, we advertise in the Inside Self-Storage magazine and we areinvolved in various state self-storage associations. We take pride in the fact that bothof us are actively involved in each of our stores and that our management and office staffare professionals doing a great job for us in support roles.

What advice would you give to people just getting started into the self-storagebusiness? What about people who have been in it a couple of years?

For people just getting started, we highly recommend that you first seek professionalhelp. From the outside, this business looks easy but, after you have considered all themanagement, legal, financial, marketing, maintenance and other issues, you will quicklyfind out that the business is more complex than it initially appears. Professionalmanagement services will save you money in the long run, but many new owners are reluctantto invest in our services because they perceive that business as being easier to succeedin than it actually is. We know of many owners who attended several conventions andtraining seminars and feel that that's all they need. We have taken over numerousself-storage facilities that were near failure due to the lack of knowledge and skill ofthe owners. Fortunately for most, we have been able to help them turn the business around.

With respect to owners who have been in the business a few years, we advise them tolook at alternatives to their existing management structure if they are having problems intheir operations. Additionally, the question they should also ask is: Can I better utilizemy time and assets if I allow a management company to run my stores for me? We effectivelyrun your business so that you can go out and create more business without being saddled bythe day-to-day situations of management.

In general, what do you see in the future of the self-storage industry?

We see the business continuing to grow, both in terms of number of facilities as wellas the number of people using the product. We view competition being good for the consumerand good for us because it forces us to all become better managers as well as ambassadorsfor the industry. We truly enjoy what we do and have especially enjoyed the friendships wehave made over the years with the people in the industry.