As I write this column, the United States is about to experience the transition of power to a new presidential administration. The future of tax codes remains in doubt, with calls from all points on the political compass for either higher or lower taxes. Newspapers and magazines across the country are closing. Manufacturing companies are in jeopardy. Vendors and operators within our industry continue to consolidate. The financial landscape for most of us has changed forever, while the word “billions” has replaced “millions,” and “trillions” is becoming part of our national lexicon.
These are clearly unchartered waters. I hear the uncertainly, concern and downright fear from some owners and their managers across the country. So I decided to write about the 3 Ps to keep us all on task in 2009.
“The capacity to view things in their true relations or relative importance” is one definition of “perspective,” according to Merriam-Webster’s Dictionary. We all need to step back from what looks like the edge of the cliff to put things into perspective and develop a new and honest view of today’s reality. As an owner, you need to look closely at what is happening in light of other real estate asset classes and returns on various financial investments. While we have seen an erosion of occupancies and our inability to maintain consistent increases in rental rates, the fundamentals of our industry remain sound.
Unlike the lodging industry, where hotel consultants like PKF Consulting of Atlanta expect lodging facilities to fill an average of just 58 percent of rooms in 2009, national self-storage REITS have been holding in the 80 percent occupancy range. We don’t have bankrupt big-box retailers like Circuit City as anchor tenants closing and putting the viability of others in jeopardy. Move-outs might exceed move-ins, but we are still renting units to new customers.
I realize this comparison doesn’t help those who opened a new facility a few months ago and are watching their working capital accounts dry up as overly optimistic lease-up projections are becoming just wishful thinking. Our perspective will need to digest what type of return a 65 or 70 percent financial occupancy will produce for us in 2009 instead of the 85 to 90 percent of prior years.
It is also vital that our outlook doesn’t overlook the critical contribution employees make to the success we are enjoying. Walt Disney said it best: “You can dream, create, design and build the most wonderful place in the world, but it requires people to make the dream a reality.”
Make sure your facility managers and everyone else involved in operations maintain an optimistic outlook. In some cases, we are loosing customers who have been tenants for years because of changes in their businesses and personal circumstances. However, we still have people stepping up to our rental counter to rent.
I turn once again to Merriam-Webster to help me define “persistence.” All four of the definitions listed below fit the circumstances we find ourselves in today. There is literally a call to action within each of these definitions:
- Go on resolutely or stubbornly in spite of opposition, importunity or warning;
- Remain unchanged or fixed in a specified character, condition or position;
- Be insistent in the repetition or pressing of an utterance (as a question or an opinion);
- To continue to exist especially past a usual, expected or normal time.
All of us must maintain persistence to get the job done: to work every telephone inquiry like it is our last; to find a way to rent a unit to everyone walking into our offices; and to look for every opportunity to talk, listen and support our existing customers.
We must resolutely insist the entire management team contributes to the site’s success. There isn’t the luxury, for example, to have a part-time employee whose work must be double checked at the end of every shift. The mantra must be: “Pull your fair share on the tug-of-rope of success or we will find someone who will.” I know it sounds cold, but some owners are talking about business survival.
Defining “patience” is, once again, my dear friend, Merriam-Webster:
- Bearing pains or trials calmly or without complaint;
- Manifesting forbearance under provocation or strain;
- Not hasty or impetuous;
- Steadfast despite opposition, difficulty or adversity.
Everything in life goes through cycles and self-storage is not immune. No one working for a living or trying to make payroll can expect to come away without a few black-and-blue marks before this is all over. Patience will pay off in the long run. When coupled with a new perspective and a willingness to be persistent, 2009 will not become Armageddon for us like it already has for so many other businesses and families.
ISS EXPO in National’s Capital
During the Christmas Holidays, my wife and I took two of our grandchildren to the new Gaylord National Hotel in the Washington, D.C., area, which happens to be the site of the Inside Self-Storage World Expo, Nov. 3-6. The hotel is spectacular with a variety of restaurants and vistas to enjoy. It’s considered to be the largest non-gaming hotel and conference centers on the Eastern Seaboard.
November will be a great time of year to visit D.C. for the ISS Expo. Plus, you’ll enjoy shops and restaurants in and out of the hotel, as well as at National Harbor, where there’s something for everyone. See for yourself: www.nationalharbor.com. For the hotel, visit www.gaylordhotels.com/gaylord-national. Most important, plan now to attend the event: www.insideselfstorageworldexpo.com. See you in November!
Jim Chiswell is the owner of Chiswell & Associates LLC. Since 1990, his firm has provided feasibility studies, acquisition due diligence and customized manager training for the self-storage industry. He has served for a number of years on the Inside Self-StorageEditorial Advisory Board, is a moderator of the Self-Storage Talk online community, and is a faculty member of the Self-Storage Training Institute. He can be reached at 434.589.4446; e-mail firstname.lastname@example.org; visit www.selfstorageconsulting.com.