Built in 2009, RoboVault Self Storage in Fort Lauderdale, Fla., is like no other in the world. Not only does it use cutting-edge technology and top-notch security, it offers an array of add-on profit centers that give it multiple income streams in a busy market.
Rather than go directly to their storage space, tenants use one of seven interior, climate-controlled loading bays, where their units are brought to them by means of a robotic crane. This ensures secure storage without human impact or the hassle of navigating elevators or extensive hallways.
Security is further enhanced by the facility’s construction and multi-layered access system. The building itself is steel-reinforced concrete that can resist even a Category 5 hurricane. Tenants use an access code at the entry gate. Those renting a traditional storage unit pull into the loading-bay area and present a key fob, a fingerprint and a unit code. The crane retrieves the unit, and when the customer is done, he pushes a button to “return items to storage.” Those storing a vehicle enter the lobby and make a request. Staff use the robotic crane to retrieve it, and the tenant provides a gate code to enter the bay.
Then there are Robovault’s diverse product and service offerings, which include high-end automobile storage, complete with a maintenance package; temperature- and humidity-controlled wine storage, with a lounge and tasting area; safe-deposit boxes; and fine-art storage. The combination makes the facility one of a kind in its market or any other. There are no other fully automated self-storage properties in the country with the range of amenities RoboVault provides.
An Acquisition Opportunity
We acquired RoboVault in spring 2019, and we were attracted it for several reasons. First, the property is in the Miami Metropolitan Statistical Area (MSA), the seventh most populous in the nation. It enjoys a 5-mile population of more than 237,000, which is expected to grow another 5 percent over the next five years. Plus, it has an unimpeded view from two major highways—Interstate 595 and U.S. Highway 1—which report more than 81,000 and 65,000 vehicles per day, respectively.
Former owners of the property were involved in a bankruptcy proceeding in 2012, and the lender took over the asset, using third-party management companies thereafter. As a result, expenses hadn’t been optimized. For example, despite more than $83,000 in advertising expenses in the year prior to our ownership, the core self-storage and vehicle-storage portions still had a combined occupancy of less than 70 percent, which we knew we could improve through better management.
Lastly, there was the opportunity to build out 11,000 square feet of unused climate-controlled space on the building’s interior. There’s also vacant land on the side of the facility on which we plan to build flex spaces.
In short, RoboVault presented us with the opportunity to acquire a unique trophy asset with great visibility in one of the strongest MSAs in the nation at a cost less than what the lender paid. We had the ability to grow income by stabilizing occupancy and performing a relatively low-cost expansion of the facility, coupled with easy areas from which to reduce expenses.
The host of diverse amenities this facility possesses has forced us to be more creative if we want to maximize its income potential. Here are some of the things we do to boost add-on revenue:
- Host wine-tasting events onsite and advertise at offsite tastings
- Attend high-end car shows and advertise at dealerships
- Offer a vehicle-maintenance package (a nice touch the discerning customer appreciates)
- Create YouTube videos that highlight the automated storage activity and demonstrate the robotic crane in action
- Distribute service-specific marketing collateral
- Attend local chamber of commerce events
- Sponsor charity events at the facility
- Contribute to and support local initiatives
Is all this working? Total occupancy at the end of September 2019 was 12 percent higher than the year prior. Trailing 12-month revenue was 14 percent higher than in 2018. And we haven’t even started construction of the flex spaces or performed the interior conversion.
When it comes to offering add-on profit centers, we advise other self-storage operators to proceed with caution. Just because you can add an amenity doesn’t mean you should. We don’t shy away from non-traditional revenue sources, but we also realize they don’t make sense in all markets.
For example, we’ve seen other operators introduce wine storage in an area where the median income is only $36,000. That’ll never work, and it’s a waste of money to build and operate in that case. Even in markets in which such additions are warranted, it may take far longer to lease up these components than one would anticipate.
Do your research. Does anyone else offer the service you’re considering? If so, how have they done with it? What are your market demographics? Do they support your proposed amenity? Above all, you need to determine how dependent your business plan is on add-on profit centers and allow a healthy buffer in case your projections are wrong.
Brian Cohen is co-founder and president of Andover Properties LLC, an investor, owner, operator and developer of real estate throughout the United States. Leading the firm since its founding in 2003, he helps identify acquisition targets, develops property management plans, and coordinates the sponsors’ investigation and analysis of the investment opportunity and due diligence.
Michael Wachsman joined Andover as director of acquisitions in 2015, bringing a decade of experience in real estate acquisition and asset management. His duties include identifying and analyzing potential acquisitions, conducting cash-flow analysis and due diligence, and assembling investor and financing packages for potential acquisitions. Since joining the company, he’s been involved in the acquisition and disposition of self-storage assets totaling more than $360 million.