Where are the borders of the land of self-storage opportunity? Do they cross “the pond,” or are they right here in our own backyard? Recently, there has been much debate over the opportunities for U.S. self-storage developers to expand into the European and Asian marketplaces.
Three years ago, I approached several of the largest U.S. storage operators with a European opportunity. A few said they had no interest in Europe. A few made trips to the United Kingdom to look at portfolios. One even negotiated very heavily to make an investment, and later ended up an unsuccessful bidder on the stock purchase. Others decided the risk profile was too great and decided to concentrate on their U.S. book of business.
In the past three years, I have been blessed to see my U.S. self-storage business grow. This is a clear indication there is still much work to be done domestically, let alone across international borders. While I sought to open a European office, and approximately 25 percent of my revenues came from European clients, I decided to concentrate my efforts in the good old United States. While I still sometimes consult with overseas owners, my focus has turned back to challenges close to home.
So where is the best storage opportunity and, more important, what is it? When they say “opportunity knocks,” it can be taken two ways. There is the knock that opens the door, and the one that knocks you over! This is particularly true when it comes to opportunities for self-storage in overseas markets. For those inclined to learn more, here are some courses to take at the ultimate School of Hard Knocks.
It is a long trip from Miami to Paris Charles de Gaulle International or London Heathrow Airport. It’s even longer from Los Angeles. The more often you make that trip over the Atlantic—unless you are sitting in business class or better—the longer it seems. If you are offended by having to sit next to another passenger who may not have bathed in the preceding 24 hours, nor will bathe in the 12 hours he sits elbow-to-elbow with you, coach is not for you!
How glamorous is the trip? While it may seem very cosmopolitan to be a traveler to Europe or Asia, the price is high. I mean, the price of the ticket is high as well as the emotional and physical demands of the trip. The next time you see passengers get off a cross-country, red-eye flight, multiply the anguish on those faces by 100—then you might understand the jet lag experienced during overseas travel.
And do not forget about time-zone issues. There is but a small window of time during which the U.S. and European business days overlap. I cannot tell you how many times I have had to set my alarm clock to wake in the middle of the night and conduct business overseas.
The prerequisite to this course is Basic Math 101. In the lower coursework, you will be tested in your skills at currency conversion; and for your final exam, you will convert each of the most popular unit sizes to metrics. Did I mention your software may no longer work? For extra credit, you can convert your potential income report to metrics, and your revenues to British pounds sterling and euros.
So you want to learn about foreign economics? Not only is the cost of travel and currency exchange expensive, making an investment in storage abroad is a big commitment. I applaud companies like Devon Self Storage that have been able to manage the distance and still make money. I am sure by now the folks at Shurgard have this travel animal tamed. Both companies know the economic impact of operations abroad. They started with a solid financial base—they were not poor boys hoping to make it big across the pond.
Not only is the cost of doing business abroad significant, but you must also measure the cost of leaving your domestic business to run on its own while you are away. I would hope your U.S. operation is ready to run on autopilot before you leave it for several weeks at a time. Taking your eye off the ball here is much easier if you have no room for improvement; that is to say, taking time off from your business is recommended only if your stores are 95 percent occupied or better, with a waiting list in some unit sizes, and rents are at least 20 percent higher than those of your competition. Until then, you still have work to do at home.
You also need a good support staff here and abroad. When you start developing a business in a foreign country, you need to know your plans are being executed while you are away.
English as a Second Language 300
This course will educate you in how to say “entitlements” in several different languages, the many meanings that word has (including those in English), and how to say “zoning” in Chinese (which depends on the dialect). I remember once referring to a salesperson as a sales counselor (meaning he used consultative sales), and my British friends wanted to know why I was talking about a psychiatrist. Apparently, there is no bridge long enough to cover that gap.
Can you say “Holy crap!” in French, German and Spanish? Get out your translator, because you are not going to believe some of the differences in developing storage in foreign lands. Take, for example, that some languages do not even have a word for self-storage. How is that for starters? I am just now getting used to saying “mini-bodegas.”
Understanding Diverse Cultures 400, Graduate-Level Course
Now we are hitting the Ivy Leagues of educational discourse. If you think the language barrier was tough, you do not want to know what finals week looks like in this course! After the frat parties are over and you are trying to get a passing grade, you learn almost everything we do in the United States is done differently elsewhere and, more important, how little respect foreigners have for our perceived arrogance.
My ego is still recovering from a beating by a Frenchman who had never heard of self-storage and was certain it would not work anywhere but America because that was the only place in the world “silly” (word substitution) enough to use it. Frenchy was also kind enough to educate me on how big his portfolio is and how small mine is. Furthermore, he was fairly certain anyone who came to France with self-storage in mind would be laughed at by the locals and leave in disgrace. Go, Shurgard!
Before you embark on this newfound education, perhaps you will want to read the thesis of others who have gone before you. To graduate cum laude, you should expect to be tutored by your foreign partners, on whom you will rely to get your degree.
RK Kliebenstein is CEO as well as a consultant and the team leader at Coast-To-Coast Storage, a self-storage consultancy firm. With a home office in South Florida and affiliate offices in Dallas-Fort Worth, Orlando, Southern California and other locations, Coast-To-Coast specializes in demand and feasibility studies. For more information, call 877.622.5508, ext.81, or e-mail firstname.lastname@example.org.