Although there are many advantages to hiring a third-party management company, there are also disadvantages all owners should take into consideration before signing a contract.
Limited experience. The owners of most management companies have worked in the storage industry for a notable amount of time, but their experience is may be limited to a particular market. Management companies with broad experience are more likely to generate success in any market.
Limited accessibility. Most management companies operate within a set geographical area. If your facility is outside this area or far from the company’s other managed facilities, it may get overlooked. Also, the additional costs related to travel may not be included in the management fee. Cost-savings (and competitive advantage) from shared local marketing may also be less if a property is in a remote location compared to other sites managed by the same company. Regardless of the size and location of the management company, visit the office and meet the staff before making a decision.
Required vendors. Some management companies get discounts from their vendors and will require owners use these vendors. This can present a conflict if the owner has established vendor relationships. Carefully evaluate all vendors and contract terms presented by the management company.
Communication. Lack of communication between the facility owner and management company can result in misunderstandings relating to costs, expectations and performance. These problems can be prevented through open communication and due diligence by the facility owner.
As the self-storage industry evolves, we will continue to see the formation of many third-party management companies. Although there are many pros and cons to consider in the decision-making process, an owner can often exceed his own expectations by hiring the right partner.
Noah Springer handles the management of all strategic partnerships for Extra Space Storage. In 2007, he helped create the Extra Space Storage Joint Venture Program, in which Extra Space joined forces with local developers to develop self-storage facilities across the United States. To reach him, call 801.365.4628; e-mail email@example.com; visit www.extraspace.com.