Nine years of hard work and an uncanny business savvy propelled Carl A. Svensen and Lasse Hoydal from simply building their own self-storage facilities to being owners in a company with 20 facilities across Europe. Svensen worked part-time at a self-storage facility while a graduate student at SeattleUniversity. He immediately realized the potential for self-storage in his homeland, Norway.
"I was with a friend of mine at a self-storage site in Seattle and, later that day, we began to discuss the possibility of doing this in Europe," he says. "My friend was none other than Michael Fogelberg, now the president of Shurgard in Northern Europe."
The two were fellow students, and today are responsible for the introduction of self-storage to more than 10 European countries. Svensen and Fogelberg immediately began market research for the feasibility of European projects and quickly realized how new the concept was throughout Denmark, Norway and Sweden. The pair contacted Charles Barbo, chairman of Shurgard, which conveniently had its headquarters a few blocks from Svensen's Seattle apartment.
"We hung around Shurgard's office and visited its sites all the time," Svensen says. "We probably had more than 1,000 photos, and several notebooks full of information when we went back to Europe." Svensen's immersion in self-storage even included a part-time job at another self-storage site while finishing his master's in business administration.
"We got totally brainwashed," he explains. "The people we met at Shurgard told us how wonderful a business this was, and after a while, we could not understand why anyone would want to do anything else." Fogelberg even got his father, Ake, working for Shurgard in Europe. Today, he is chairman of the company.
"When I got back to Scandinavia, I contacted Lasse Hoydal, another friend from the university in Seattle," Svensen says. "I talked him into joining the company, and I think he has not regretted that he did."
Doing It All
In 1993, the partners started European Mini-Storage S.A., which at the time was one of only three self-storage companies in continental Europe. The first sites the young founders established were small, and their lack of capital meant they had to be involved in all aspects of the business. "We almost broke our backs building units at night, while working as managers renting them during the day," says Svensen. It was the only way to expand, since they could not get any financing. But doing it this way, the partners had a debt-free company and very good understanding of all sides of the business.
"In the beginning, nobody knew the concept, and a great majority of the potential customers thought the price was way too high and did not rent," says Svensen of those early years. "When there is a totally new product available, people have no way of comparing the price, so it took a long time before we got good at selling the units on the merits and not on the price."
The seasonal demand was also unfamiliar to the partners who worked hard during the summer of 1993 to break even on their first self-storage site, almost succeeding by November. But suddenly, customers started moving out again. "We were really depressed when, by February of the next year, almost 50 percent of the customers had moved out during the first winter, and we had leased out very few new units in those months," Svensen says. It was especially tough since the partners had already signed a long-term lease for their second property.
"We were really nervous that spring. We had to get more tenants or we would go bankrupt. We were flat broke," says Svensen. Fortunately, the good spring and summer season saved the small company, which has prospered ever since. Now Svensen reports his facilities, which have an average of 600 units, usually maintain a 95 percent occupancy rate. "After a few years, the banks also started to understand the concept, and financing became easier," he says. The company was able to buy several previously leased properties, allowing it to rapidly expand.
After establishing four sites in and around Oslo, Norway, the company formed a partnership with the Selvaag Group, a private real estate and investment conglomerate, to become a large international self-storage operator. European Mini-Storage changed its name to Cron Industries, and the partnership decided to rebrand all its self-storage facilities with the new City Self-Storage name. Today, the company has 20 facilities throughout the Czech Republic, Denmark, Norway and Spain, and a minority share of a Swedish chain with three sites in Stockholm.
According to Svensen, the volume of stores will be more than doubled in the next two to three years. "We have worked for several months on a new financial structure, and are now almost ready to jump into new markets," he says.
City Self-Storage recently entered a new expansion agreement with the The Selvaag Group to strengthen its position for heavy expansion in several countries. To further show its international commitment, the headquarters was recently moved to London. The new CEO in the London office is Per Linder, a Swede who recently came from a top managerial position at Regus Office Centers.
Cron currently owns 40 percent of City Self-Storage. The group is involved in investments throughout Europe, with operations in Barcelona, Spain; Copenhagen, Denmark; London; Nice, France; Oslo and Praha, Norway; and Stockholm, Sweden.
In addition to its long-term ownership in City Self-Storage, Cron also owns a local chain of three self-storage facilities in Oslo, and has recently established EuroBox, a container-storage company. This company will open its first facility in France later this year. "We see an increased demand for storage services among the industrial users, and this is why we are diversifying into the industrial storage market by establishing container parks," Svensen asserts. "Of the different areas surveyed, France had a particularly big need for industrial storage, and this is why we are entering this market first."
Svensen owns 75 percent of Cron Industries, while Hoydal holds the rest. As chairman of Cron, Svensen sits on the board of all the daughter companies and those companies in which Cron has a strategic ownership. He also works with different operational projects for City Self-Storage. Still, his vision of where he wants his company to be is not yet fulfilled. Although Svensen has been building a self- storage chain for almost 10 years, he is still enjoying himself.
"Self-storage is an industry I really like working with. Many outsiders may think there are many other areas of the real estate market that are much more sexy and exciting than self-storage, but I think most of the people who are active in this industry disagree with this," he says. "There are not many industries where you combine real estate and retail and get to meet so many interesting people, as tenants, partners and colleagues."