I have just returned from my first visit to London, where I had the privilege of addressing a group of real estate investors, developers and self-storage owners at a reception hosted by Inside Self-Storage at the U.S. Embassy. During my four-day visit, I observed firsthand and discussed the explosive growth taking place in the self-storage industry across the United Kingdom and Europe.
I talked with a number of owners about the initial difficulties they are experiencing in getting the general public as well as the business community to understand the basic concept behind self-storage. I toured a 6-month-old, state-of-the-art store built and operated by Big Yellow. Leasing up at a rate in excess of 12 percent a month, the manager reported that many customers were pleasantly surprised they did not have to make a long-term commitment to the space.
These discussions and meetings brought back a number of memories from nearly 18 years ago when I first entered the world of self-storage. In addition to the need to educate the public, our industry faced the task of helping bankers understand why they should be willing to make a loan on a real estate project that was going to be empty when it opened. Similar problems are being experienced in the United Kingdom and Europe, according to the developers I met at the Embassy.
Before I began my trip, I had read how expensive everything was in London. As I walked by one real estate office, I saw signs posted in its windows for available apartments. How about a nice two-bedroom, one-bath flat for only £395 per week? That converts to $605.57 per week or $2,422.28 per month. I was told real estate agents had long ago converted monthly rent into weekly figures in an effort to make the numbers look a little better. Most apartment leases require a one-year minimum.
These rental rates reflect the cost of living in the London metro area. I also had a chance to sample the rates from 19 self-storage stores across London and Westminster. The chart below gives you an indication of the average annualized per-square-foot rates in the United Kingdom. (The exchange rate I used, which changes every day, was £1 = $1.53.)
Many of the stores have an average unit size in the 85- to 95-square-foot range, so you can see for yourself the average store-wide rental rates operators are achieving. But don't be misled; developers are paying a heavy price for their building leases or for the outright purchase of the land.
|Unit Size in Feet Square||Average Rate Per Square Foot|
I must admit this short visit left me with as many questions about development and operations in the United Kingdom and Europe as it answered. I am looking forward to the November ISS conference and tradeshow in London so I have a chance to seek out more answers. The future growth of the self-storage industry overseas is inevitable--it is just a matter of who the players will be. It is one of the best entrepreneurial opportunities in these countries, as it has been and continues to be in the United States.
Keep 'Em Flying
During a recent flight on US Airways, I witnessed an employee who understood what his job was really all about. Because of my seat location, I was able to watch Capt. Ed Clyde greet all passengers as they boarded--not just saying a pre-programmed "hello," but shaking people's hands and thanking them for flying US Airways. On one occasion, he even reached for someone's coat to hang it in the closet.
I could not resist asking him the obvious question. "Captain, what are you doing acting like a flight attendant?" He explained he had one of the best offices in corporate America: six windows that looked out on the beauty and wonder of an ever-changing landscape. "It is really something when you think about the fact that I get paid to fly airplanes. But my job is actually making sure my customers get safely from one city to another and my flight team does everything to make it as pleasurable an experience as possible. I don't get much time to meet the people I am responsible for, so I always like to greet people when I can," he explained.
The captain knew his job, having been a pilot for more than 30 years. But he understood his role was just one part of the overall customer experience. I thought about his actions and comments the entire trip. Does everyone on your team understand the part they are playing in the business while also understanding the big picture of the customer's experience? Many of us do not regularly spend the time to keep all staff members "in the loop." But it's important to provide feedback, not only on the financial side of the business, but of the details of customers' length of stay, telephone closing ratios and from where customers are coming to do business with us.
As we approach the final quarter of the year, I urge all of you owners out there to step back for a minute and look objectively at your working relationship with your entire management team. Are they involved in every aspect of the business? Are they consulted about the new Yellow Pages ad? Do you listen to their input about your website? Does your store literature reflect their participation? Capt. Clyde knew the importance of his job, but he also understood it was only one part of what had to happen to accomplish the team's objective. You may be the captain of your team, but are you all working toward the same goal? Now is a good time to find out.
Jim Chiswell is the president of Chiswell & Associates. Since 1990, his firm has provided feasibility studies, acquisition due diligence and customized manager training for the self-storage industry. In addition to contributing regularly to Inside Self-Storage, Mr. Chiswell is a frequent speaker at Inside Self-Storage Expos and various national and state association meetings. He can be reached via his company's website at www.selfstorageconsulting.com or at the Virginia corporate office at 434.589.4446; write 6 Slice Road, Lake Monticello, VA 22963.