In a recent series of interviews, Inside Self-Storage asked the industry real estate investment trusts REITs to comment on the advantages they bring to independent self-storage operators. Below are responses from David Doll, senior vice president and president, real estate group, Public Storage Inc.; Clint Halverson, vice president, corporate communication and investor relations, Extra Space Storage Inc.; and Chris Marr, president, chief operating officer and chief investment officer, CubeSmart. They address issues of competition, corporate reputation, community relations and more.
Most independent operators view the REITs as competition. Do you feel there are advantages you provide to independents, even when they aren’t contractually connected to you? If so, what are they?
Doll: Yes. We have a view of the national landscape, and as such often see trend (good and bad) developing in regions or states that help or hurt the industry. As an example, the REITs and other public companies have been working side by side with the national Self Storage Association to advance legislative changes that are beneficial to all owners and operators.
Halverson: Research shows that most customers cannot tell you the name of the company that they store with. They can tell you where the property is located and what color the door on their unit is. Marketing by the larger operators for product awareness is definitely a benefit to all operators. With the larger operators being public and having disclosure requirements, smaller operators can benefit from the transparency to get ideas on how to improve their operations.
Marr: Absolutely. One clear advantage of operating in the same market as a REIT is that we spend a lot of money to raise customer awareness about the availability and advantages of self-storage. This helps lift the tide for all boats.
Additionally, large operators can help bring pricing discipline to a market. A small operator is less likely to face a devastating price war when ownership of facilities within a given market is consolidated with a couple of large operators.
Can an independent operator effectively compete with your company in individual markets? Are they more successful in certain types of markets over others?
Halverson: It is definitely more difficult for a smaller, independent operator to compete with us. This goes back primarily to the technology platform that we can deliver. Self-storage used to be a game of Yellow Pages and drive-up, in which anyone could compete. Today, Yellow Pages are less than 2 percent of our business. The Internet has become the great divider in this industry, and only large operators can compete in that space. Again, we have a team of 42 people who work exclusively on Internet strategy, buying keywords and delivering ads in very targeted geographic markets. A small, independent operator simply can’t compete.