There’s a big distinction between owning a self-storage business and operating one. Not all self-storage owners wish to oversee staff and manage day-to-day tasks such as unit rentals, marketing and facility maintenance. It’s just one of the reasons some operators hire third-party management companies. The other is the number of benefits a management company brings, particularly to a single operator in a crowded and competitive market.
Along with brand recognition and economies of scale, third-party management companies bring experience. But with so many potential partners from which to choose—each touting increased occupancy, streamlined operation, marketing savvy and more—how do you find the right fit for your business?
Owners need to know what to look for in a third-party management company, what they can expect from the partnership, and red flags that it’s time to seek a new company to oversee their operation.
Seeking a Partner
Much like hiring staff or purchasing new software, choosing a self-storage third-party management company takes research and time to ensure you make the right choice. “Not all third-party management providers are alike. They will have very different things to offer and may produce very different results,” says Carol Shipley, vice president of third-party management for CubeSmart, a self-storage real estate investment trust and a provider of self-storage management services. “Your facility is a valuable asset, and you want a third-party management company that will treat it as its own. To find that perfect partner, you have to do your homework.”
It begins with researching companies that are successful in your market. One that doesn’t even have a presence in your area may not be the best choice in the long run. Your facility could be overlooked and may not receive the attention it deserves, says Noah Springer, director of third-party management for real estate investment trust Extra Space Storage Inc., which also provides management services. “I have heard of too many management companies that have their sites in one part of the United States and a one-off location in another part. Bad idea.”
In addition to having a market presence, your choice of provider should have self-storage experience. Ask how long it's worked in the industry and for details on key personnel’s expertise in finance, marketing, human resources and other critical areas. “Any reference to what they have done should be verified,” says Mel Holsinger, owner of Tucson, Ariz.-based Professional Self Storage Management, which oversees properties in Arizona, California, Colorado and Texas. If the company says it has consistently shown a level of occupancy growth, it should be able to be back it up with facts, not just words, Holsinger says.
Jack Rogers, vice president of business development for Uncle Bob’s Management, advises owners to also look at other properties the company manages, and even visit the company’s headquarters if possible to get a feel for what happens behind the scenes. “In the end, you need to feel confident the management company is working in your best interest and can deliver on the fundamentals you deem paramount to the success of your business model.”
Owners also need to determine if the services provided line up with what they’re seeking. Today’s third-party management companies offer a variety services, from manager staffing to marketing. In general, management companies will oversee the day-to-day operation including all facility finances, employee training, marketing and advertising, lien sales, retail ordering and sales, budgets, event planning, maintenance and upkeep, and other operational tasks.
Ultimately, feeling comfortable with the partnership is the most critical factor. “This company will be handling the day-to-day operations of a very important investment. If you don’t feel comfortable voicing your opinion or communicating exactly what you want from the management company, the relationship is doomed to fail from the start,” says Matthew Van Horn, vice president of Cutting Edge Self Storage Management, a full-service management company.
An open line of communication—from the start—is the best way to ensure a long and fruitful partnership, says Anne Ballard, owner of Atlanta-based Universal Management Co., which provides full-service fee-management to clients in the Southeast. “Owners need to clearly state their goals for ownership,” she says. This includes revenue goals, upgrade plans and whether they hope to sell the property in the future or keep it as a long-term investment. “In this day and age, there’s no reason an owner should give up his store identity to achieve outstanding results,” Ballard says. “In particular, we are feet on the ground where their store is located, providing personalized service and using our industry vendors to achieve the results they need.”