Self-storage operators discuss how they prepared for Hurricane Irene, their disaster plans, and what's next for operators in the affected areas.

Amy Campbell, Senior Editor

September 2, 2011

7 Min Read
Self-Storage Industry Reacts to Hurricane Irene: Preparedness, Insurance, Keys to Dealing With Natural Disasters

As natural disasters go, Hurricane Irene will clock in as one of the countrys worst. The storm, which pummeled with Eastern Seaboard last weekend with wind and rain, is reported to have accounted for at least 43 deaths and knocked out power for 3 million people.

According to an article earlier this week in The Washington Post, Hurricane Irene will likely be one of the 10 costliest catastrophes in the nations history, totaling $7 billion to $10 billion. In addition, much of the damage might not be covered by insurance because it was caused not by winds but by flooding, which is excluded from most standard insurance policies. Some of the worst flooding struck Vermont, New Jersey and upstate New York.

Extra Space Storage Inc. owns or operates nearly 300 facilities located along Irenes path. In the days before the storm, Extra Space Storage employees spent hours preparing for the worst. The company reviewed its safety procedures with everyone from the board of directors to individual property managers, who were also charged with boarding up properties where necessary.

On Monday, all but about 15 Extra Space Storage facilities were able to open to customers. We were pretty happy about that, said Clint Halverson, senior director of corporate communication and investor relations for Extra Space Storage, a self-storage real estate investment trust. The closed facilities were among the millions of businesses and homes without electricity. One facility, in Wayne, N.J., was not accessible as the roads leading to the property were flooded. By mid-week, the power had been restored at all but four of the facilities. Some facilities also experienced flooding, downed trees and other debris.

Universal Management Co., which oversees the operation of 34 facilities, several of which were also in the storms path, also spent much of last week putting its hurricane procedures in place.  The pieces of our overall plan are set up in sequence, based on categories of storm intensity, and are placed in effect as theyre triggered when wind speeds reach targeted levels, explained David Dixon, vice president of development for Universal Management Co. and area manager for all of the companys facilities located along the East Coast. 

When generators are activated, lobby doors and elevators are deactivated, and managers evacuate the city if winds reach above maximum safe speeds, Dixon noted. Our onsite managers, together with the plan we wrote, are quite capable in emergency situations because of the training we go through and because they are excellent first responders.

One facility in particular, located in the Virginia Beach area, was prepped for the worst-case scenario, but was spared any serious damage. We taped and boarded windows, raised boxes and computer systems high off the floors, locked down hallway doors, cleaned drains, pumped water out of the retention ponds, and evacuated the managers and their children, Dixon said. Raising water-sensitive items off the floor is an easy way to avoid some losses due to flooding, as even an inch or two of floodwater is enough to ruin a facilitys computers and box inventory. Additionally, cleaning drains and pumping water out of retention ponds are easy ways to help avoid unnecessary flooding due to increased rainfall and water run-off.

Being Prepared

Fortunately, the majority of self-storage operators emerged from Hurricane Irene relatively unscathed. Still, being prepared for any kind of natural disaster should be a top priority for every facility. Having a disaster plan in place is critical, Halverson said. With so many company membersfrom executives to property managerscommunication was critical for Extra Space Storage before, during and after the storm. One thing we tried to do this week was be in daily contact with our customers, Halverson said. Customers were e-mailed updates about any damage or flooding, and when theyd be able to access the facility. Its really important to keep the flow of information going at all levels, he added. 

All but one Extra Space Storage facility had a property manager at the facility the day after the storm, another important component of the companys emergency plan. The managers assisted customers, assessed damage at the property and maintained facility security. Everyone knew what they were responsible for and they were all prepared, Halverson said.

Matthew Van Horn, vice president of Cutting Edge Self-Storage Management, found out firsthand how critical a disaster plan can be when a tornado ripped through the small town of Joplin, Mo., on May 22. While the facility the company manages only suffered some cosmetic damage, Van Horn and the facility manager followed the companys disaster plan. Preparation and organization are the two things that will help you better handle these situations, Van Horn said.

Even self-storage operators who are not located in areas prone for natural disasters should have a detailed, written disaster plan in place, advised Randy Tipton, owner of Universal Insurance Facilities Ltd., which provides specialized insurance coverage to the self-storage industry in 49 states. Facility owners need to communicate with their staff regarding plans for evacuation, personal safety and damage assessment along with business restoration, she said. This includes backing up all electronic records and keeping a copy in a safe at an off-site location. During a storm, protecting sensitive electronics like computers and DVRs with plastic sheeting can also help keep them from getting water damage, Tipton said.

Insurance Coverage

Unfortunately, much of the damage caused by Hurricane Irene may not even be covered by tradition insurance policies, leaving many homeowners and business owners facing great loss. This recent disaster is a perfect example that not all claims are covered, Tipton said. If there is coverage, the right type of policy needs to be in place, and there isnt an insurance policy that covers all losses.

This may include power failures, which is never covered, and flood damage, an excluded coverage on most policies but one that can be purchased as a standalone policy. However, few business owners buy flood insurance even though its reasonably priced. Many business owners feel its a risk theyre willing to take because they arent located in a flood zone, Tipton said. As seen by this last storm, a property didnt need to be located in a flood zone to suffer extensive flood damage.

In addition, if the powers out, a business cant operate. And a closed business cannot generate revenue. While business-income coverage can be a critical part of a business-insurance policy, Tipton noted its only triggered if property damage to the facility causes the business interruption. Many businesses that were affected by Hurricane Irene were unable to open their doors for days due to power outage, but wont have coverage because their property was not damaged, Tipton said.

Tipton suggests business owners regularly review their insurance policies with their agent to ensure they have all the coverage they need. They should also be aware of the self-storage industrys unique insurance needs. When it comes to insurance, a facility owner is best served by an industry insurance specialist, she said.

Moving Forward

Several facilities are already reaching out to their communities, offering free storage to victims of Hurricane Irene. Before the storm, U-Haul International offered 30 days of free self-storage at 13 of its facilities. Mansfield Self & RV Storage in Mansfield, Conn., is promoting the same deal, as is Universal Management and Extra Space Storage.

Many self-storage operators in the affected areas are already seeing an increase in occupancy levelsboth before and after the storm. Halverson recalls what happened in storm-ravaged Florida just a few years ago. Historically, weve seen an increase in revenue in areas that have been hit, he said. However, while catastrophic, Hurricane Irenes impact may not be as far-reaching as that of the Florida storm. Were also in a different economic situation in this country than we were then, Halverson said. What the impact will be, we dont know yet.   



About the Author(s)

Amy Campbell

Senior Editor, Inside Self Storage

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