With the increase of multimillion-dollar self-storage projects that feature state-of-the art security, software and amenities, owners of older properties struggle to compete for market share. The solution? Renovationat a reasonable cost.
Every property, regardless of age, can increase its curb appeal. It doesnt matter if its a small project or a complete renovation, an enhancement to your facilitys appearance can help increase sales. Read about the Cinderella-like transformation of U Securit Storage to learn how.
In late 2003, I received a call from a self-storage owner who had inherited a 272-unit, 26,412-square-foot facility in Conyers, Ga., from his mother several years earlier. An architect by trade, he had no industry experience and relied on the existing managers to run the business. Over time, the cash flow dwindled and delinquencies increased. He considered selling the property but was shocked to receive offers that were almost the same as what his mother had paid for the property more than 20 years ago. A friend suggested he contact a local management company. Our story begins here.
Though the 25-year-old property is on a heavily traveled road, a preliminary inspection in February 2004 revealed the following drawbacks:
- Occupancy of 68%, with 44% of customers in a delinquent status.
- A possible monthly gross $18,277, only $7,000 of which was being collected.
- Outdated computer software and hardware.
- A small 6-by-8-foot office with a desk, file cabinet and standing room only for customers.
- No retail sales.
- Oxidized, orange unit doors.
- Masonry buildings in need of paint.
- A manual gate system that was opened and closed by the onsite manager with limited access hours.
- Cracked and worn pavement.
With any site renovation, the first thing you need is a list of projects in order of importance. As we wanted to make most of our improvements from cash flow, our first priority was to improve the income.
The existing managers were replaced with one we knew would control delinquencies and be able to oversee future construction. The computer was replaced and new management software installed. By the end of 2004, delinquencies were down to 11 percent. But still only 68 percent occupied, the facility needed better curb appeal and physical renovations for increased rentals.
When remodeling on a budget, its best to start with small things first and work your way up to those items that will make an immediate impression on the public. This facilitys general appearance was drab. We tackled the unit doors first.
The doors, extremely oxidized, were in dire need of washing, which is cheaper than painting. There are several products available specifically for cleaning metal doors, but we chose a quality carwash product that gave us the same results at a lower cost. Each of the 272 doors was washed and rinsed by hand.
The project, handled by the manager on his days off and after hours for minimal extra pay, took approximately 30 days to complete. After the doors were cleaned, the curbs were painted white and the flowerbeds filled.
The New Office
As cash flow increased$25,000 during the first yearwe began to make plans for the new office. The existing office was a 6-by-8-foot connected to the resident managers apartment, with access inside the entrance gate. With no room for adding on, we had to be creative in designing our new space, which needed a showroom as well as to be visible from the street with a retail appearance.
After careful consideration, we moved two customers from their 10-by-10 units in the front building and opened these spaces onto the existing 10-by-20 behind them, which was used to store the golf cart. This gave us 400 square feet of office space. It wasnt a lot but huge compared to the 48 feet we currently were using.
We removed the existing walls, prepped the entire area with sheetrock and installed a drop ceiling. Taking advantage of the door space from the three original units, we installed double glass doors and windows in the front and a window with a sliding glass insert on the side.
With only 400 square feet to work with, it was important to design an area that would be efficient and functional:
- To create depth, the back wall was painted a deep red with the side walls a warm white.
- Navy blue countertops were installed across the front and down the side and back sections of the wall. Cabinets and a small refrigerator were installed underneath. The counter includes a tall check-writing platform for customers and two knee-hole areas, one for customer leasing activity and another on the side for a manager work space.
- A customized cabinet was installed on the back wall to house the new monitoring equipment.
- Navy blue and white VCT flooring was installed in a geometric design to make the room look larger. The floor was sealed twice for maximum scratch resistance.
- A coffee bar with cabinets sits to the left of the entrance door for customers.
- The new slat-wall system and box display has increased retail sales from $0 to an average of $250 to $300 per month for 2005 and 2006.
- Electrical outlets were placed in the front ceiling for new neon Open and Boxes signage.
- A surveillance camera was installed in the office for added security.
- Blue canopies were installed over the front windows.
With the office complete, we turned our focus to improving the entry system. The existing system included a manual gate very close to the street (it even had an old gas-station drive-over bell to announce customers). The fence enclosed not only the units, but the office as well. In front of the property, the road was being expanded to four lanes, causing us to lose part of the driveway. This actually turned out to be a plus, as we ended up with new a new driveway and curbs at the citys expense!
Because the site has very narrow drive aisles, the entrance and exit gate could not be one and the same. With just enough space between the buildings, the entrance gate was installed in the center drive aisle, creating a one-way traffic flow around the property and the exit on the opposite side.
After installing the two new gates, we were left with an unsecured area next to the office. A manual double-swing gate was installed between the building and fence to serve as secure fencing and an extra gate in case of emergency. Cameras were also installed at the entrance and exit.
To complete the new look, we painted the masonry buildings a brilliant white and created a private outside area for the manager. The only project left to accomplish is the resurfacing of the pavement.
The total cost for the project was approximately $90,000 spread out over a 24-month period and paid for entirely through cash flow. The major expenses were the new gates and cameras at $36,000 and the office at approximately $35,000 for materials and labor.
The end results of the renovation can be measured in value and customer satisfaction:
- Existing tenants are extremely pleased with the improvements and continue to provide referrals.
- Delinquencies dropped from 44 percent in February 2004 to 3 percent in March 2007.
- Occupancy increased from 68 percent at the end of 2004 to 90 percent in March 2007.
- Income increased approximately $62,000 from 2004 to 2006 through contract and street-rent management, lower delinquencies and added retail sales.
From Pumpkin to Pride
Seeing the rebirth of this property was immensely satisfying. Perhaps the best description of the experience is the testimonial of the owner, Tony Terry, who hoped to revitalize the property rather than unload it.
Terry says discovering the right management company to assist him was the beginning of a methodical resuscitation and association with a professionally creative, driven and dedicated team of people. It has been a real turnaround, thoughtfully planned around available cash flow, which has been not only surprising but very satisfying to be a part of. The phoenix is still shaking off the ashes, and my mother would be proud. It has reinforced my faith in people You just have to find the right ones.
The moral of the story: Before you decide to sell your old property at a loss or think you cant compete with the new kids on the block, look for the Cinderella side of your facility. Every property is unique, just waiting for you to unearth its full potential.
Sharon Pallas is the vice president of administration for Atlanta-based Universal Management Co. She is an area manager for eight self-storage sites and handles all special events for the company. Universal manages facilities in California, Georgia, Hawaii, Louisiana, Mississippi, Nebraska, New Jersey, North Carolina, Okalahoma, South Carolina and Virginia. It provides industry consulting and training throughout the United States and abroad. For information, visit www.universalmanagementcompany.com.