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Articles from 2001 In January


Strike Back Through Repositioning

Strike Back Through Repositioning
What to do when competition is hitting you where it hurts

By RK Kliebenstein

The self-storage construction boom is on, and new facilities are popping up everywhere. There is increasing awareness in owners of older facilities that it is tough to contend with these modern, amenity-packed competitors. Here are some tools for planning a facility facelift and meeting the market challenge, also known as "repositioning."

Plan Your Work and Work Your Plan

Have you formulated a strategic plan? The first step is to identify the problem or, for the sake of semantics, let's call it a "challenge." Have you done a true survey of your competition? I am sure, like any good owner or manager, you are visiting your competition at least once every six months. (It is a good idea to take pictures so you can compare each visit to your last one.) What do you notice has changed? Has the office been painted? Is there new furniture? What about the collateral material--has it changed? Are there new brochures or business cards? Is this competitor responding to market conditions with rate increases or decreases?

What about the "new kids on the block"? Is this challenge one that you are facing head-on, or is your head buried in the sand under a layer of denial? If your competitor is a "B"-grade facility, you may have been spared--this time. But what about the location? Most new stores tend to be located in higher traffic areas with better demography. Is the new store between you and your customer base? What does your ZIP-code analysis tell you? Where are your customers coming from? Has traffic slowed down? Review your traffic reports from last year and see what the numbers tell you. Is phone traffic up or down? Is site-visit traffic up, or are things pretty much the same? How do these factors compare with occupancy levels and rate increases? How much new square footage is in the market? What does last year's square foot per capita look like compared with this year's? What about previous years?

Is climate control new to your market? Do you have climate-controlled spaces? Should you add them? Do you have room to construct a new building or are you considering the retrofit of an existing building? What are the rental-rate premiums for climate-controlled space? What is the "pay back" period for the improvement? Will your new climate-controlled space increase your value, or is this a hold against the competition?

What about amenities? Do you have individual door alarms? Are they wireless, or are you anticipating a costly upgrade? What about your surveillance cameras? Do they show colorful, crisp and clean images? Are the monitors in plain view of the customer, displayed in a high-tech environment, or is this a monitor stuck on top of a desk? Cameras are as much a marketing tool as they are a security measure, and if you are not highlighting this feature, you are leaving a marketing opportunity on the table. Do you have wireless intercoms so your tenants can call the office? Is there music being filtered through the hallways?

Take a picture of your facility as you drive up or, better yet, have a friend videotape it. How do things look? Is the signage crisp and clean? Is the landscape fresh and healthy? What is your curb appeal like? What message are you sending the customer when he drives up? Is the first impression "Wow"? Are things spotless? Are you attracting a tenant who is storing junk, or are you going after the tenant who stores valuable personal or business items in an environment similar to his own home?

How about that security gate? Do you still have the barrier arm with a manual gate that overlocks at night? Why not replace it with an access-controlled, state-of-the-art security gate?

What about your driveways? Is there a clean sealcoat on the asphalt, or are there holes in the parking lot?

How well are your buildings marked and your doors numbered? You know where building 3 is and how to find unit 7624, but do your tenants?

What about your staff? Do they meet the challenge of new competition? Is your rental manager armed with the latest facts (not assumptions)? I cannot tell you how many managers feed a line of "hooey" to their owner, pretending to know what is going on with the competition. Are their uniforms crisp, clean and neat? Are their shirts tucked in? Do your rental consultants stand when the prospect enters the door? Are they smiling? Is there a spark in their sales pitch, or are they simply order takers? Is the inventory up to date? When was the last time the manager walked the store to find surprise vacates?

What about your facility's lighting? Is the office bright, clean and cheerful? Are the hallways brightly lit and "clean as a whistle"? How about outside lighting? When was the last time a light-bulb survey was done to see how many were burnt out? Is the lighting adequate? Should additional lights be added at the doorways? If it is too dark to read in the halls and doorways, they are probably underlit. Outside, the lighting should be adequate for you to read a license plate without having to get a flashlight. Ambient light will shine on the reflective surfaces of most license plates.

What about your rental agreement? Is it up to date? Do you have a large-print version? If you live in an area of multiple languages, do you have a translated copy? Does the rental agreement reflect current lien laws and late-charge legislation? What about vehicles? Do you have a rider to your lease to perfect lien on a motor vehicle?

What about your golf cart? When was the last time it was washed and waxed? Is it safe? Are the seats clean and without tears or stains? Is your maintenance unit a vision of neat, orderly business, or is it a scene from the old television show Sanford and Son?

If you are not satisfied with the answers to the questions posed above, you have to ask yourself, "What am I doing to meet the challenge?" Is there enough time in the day to read the newspaper, but not enough to read the lease agreement or sweep the sidewalk and wash the windows? Is there enough time to watch TV, but not enough to wash the roll-up doors or paint the bollards? Has a member of your staff ever said, "They do not pay me enough to..."? Is that your excuse for letting the competitors get ahead of you?

Maybe it is time to get back to basics. If you do not have time to properly assess the condition of your property and that of your competitors, maybe you need outside help. And if you have the time to make the lists, do you also have time to execute the plan?

PLAN A: Get Professional Help

If you owned a small airplane, would you let it deteriorate? Would you maintain it yourself? Who would conduct the annual inspections? Ask these same questions about your self-storage facility, and if the answer is "outside help," there are several consulting firms that can conduct management and technology reviews of your facility. When selecting a consultant, ask him to fax you a copy of his facility checklist. Make sure he has a repositioning plan. Find out how long he plans to spend identifying problem areas. Ask yourself whether the price of the service accurately reflects the work to be done at your particular facility, or if the consultant is using a "one size fits all" approach.

PLAN B: What Are You Going to Do With the Information?

Do you have time to analyze the data the consultant provides? Can you then execute a plan of action, or do you need some training wheels to keep you on the path? Many consultants will offer to report their findings, but will they prepare a plan to fix the problems? If the scope of your consultant's work involved only the construction of a "to do" list, what is your next step? The consultant should be able to take his findings to the next level and prepare a timeline, budget, and marketing and integration plan. There should be redundant bids for major line items. Deferred maintenance may have been significant and you may want a structural check-up. Find out if your consultant performs this service as well.

PLAN C: The Execution

So you have a plan written--now what? Do you have the time and energy to supervise the work and integrate the changes into your organization? Are there specific timeframes for completion of the tasks, or are these just lists to line the birdcage? Once the improvements are made, has your Yellow Pages ad been updated to reflect the money you just spent? Has the website been brought up to date? What about fliers and brochures? How are you going to market your "new" facility? What about a grand reopening? Is your consultant planning these events for you or actually conducting them?

So Much to Do, So Little Time

If you took the time to make the necessary lists or even to recognize you are letting things fall by the wayside, then you are probably proactive enough to already be working on improvements. If you think you are untouchable by the demands of the market, you had better hope your competitors, too, are so confident they do not think they need to concern themselves with curb appeal, customer service or you, the competition. Take this advice to heart. Sometimes we can't see the forest for all the trees.

RK Kliebenstein is the president of Coast-To-Coast Storage of Boca Raton, Fla., which performs technology audits, market studies and repositioning plans for self-storage operators. For more information, call 877.622.5508.

Quality First

Quality First
Digitech International stays on the cutting edge with a simple, old-fashioned idea

By Tom Chmielewski

Digitech International's 20-plus years working in self-storage security can be summed up in one word: quality. That's how the Asheville, N.C.-based company, formerly known as Doug West & Associates, has carved out its leadership position in the industry. Each of its innovative products and service programs has been designed and redesigned until it performs well beyond customer expectations. In an industry hungry for the peace of mind security provides, it's a sound business plan.

A visit to Digitech's new headquarters reveals a beehive of activity. There, a 55-member team is exclusively focused on developing and marketing access-control and security systems for a worldwide self-storage industry. The demand for these products is not surprising. Giving customers the protection they desire affords self-storage owner/operators a distinct competitive advantage, resulting in boosted occupancy and higher rental rates.

Innovation: Part of the Corporate Culture

Although Digitech embraces the somewhat old-fashioned notion of uncompromising quality, it has always been about innovation. The company was the first to offer an all-aluminum keypad faceplate with no moving parts, use a built-in keypad intercom, supply owners with a security marketing display for greater sales power, put a covert CCTV camera inside the keypad, offer a support package of installation specifications and CAD drawings... And each innovation was the result of a relentless drive to better meet the needs of this growing industry.

"All of our products are engineered with quality in mind," asserts Jon Loftin, chief design engineer at Digitech. "Our all-metal keypads are just one example. Sure, we could make them with rubber or silicon parts, but they wouldn't last as long. They wouldn't be Digitech quality."

Quality Products and Solutions

In the early '80s, DigiGate 102 access-control software became a popular choice in self-storage security. The fact that so many of these stalwart systems remain on the job speaks for itself. Today, however, the DigiGate 700 access-control system carries the banner for Digitech. Compatible with Windows software, the package can execute a database backup, make reports, interface with accounting software, operate door alarms and video-surveillance systems, and accommodate virtually unlimited keypads operating door-locking devices, gates and even elevators.

The company's DigiGuard system solved the puzzle of the wireless door alarm. In the past, wireless alarm systems amounted to off-the-shelf home units that proved untrustworthy in a self-storage setting. What the industry needed was an effective wireless system. With its unique 900 MHz technology, powerful transmitter and innovative receiver/repeater technology, the DigiGuard system has proven eminently reliable in a typically metallic, self-storage environment. It also saves installation time over its hard-wired counterparts, whether applied to new structures or used for retrofitting existing ones.

A Way of Doing Business

Quality-management systems have become a way of life at Digitech. The company utilizes "teaming," in which a team of staffers is assigned to each customer. Technical knowledge is a requirement of all sales people, who see to it that the customer understands the entire process from initial contact, through installation, to follow-up.

During the design phase, Digitech engineers provide expert input on specs and estimates, all with the understanding that the security system is engineered to suit the facility, and not the other way around. Digitech also connects customers with its affiliated installers, and maintains the manufacturer/client relationship with a nationwide servicing network and in-house tech support.

"It's a total quality package," observes Marketing Director Steve Cooper. "Our customers know they'll get the attention they deserve. They can count on our products, as well as our toll-free technical support." Relationships are valued highly at Digitech. "It's a concept we call 'partnering,'" explains Cooper. "We strive to be effective partners to developers, architects, installation companies and customers--all those involved in the process. We encourage customers to share their vision, even before construction begins."

A Quality Future

The rapid expansion of the self-storage industry has meant unprecedented growth at Digitech. The company's new headquarters now contains an in-house engineering department and facilities for product testing. Components of Digitech products have been listed by Underwriters Laboratories Inc. and also carry the CE Mark, a comparable European registration. Today, Digitech products are providing secure access control in North America, Europe and Australia, with other markets in the planning stages.

The company's expanded facilities contain a new training center which is used to keep operators and outside contractors up to speed on product developments. Digitech has also formed a unique public/private alliance with the local college for the purpose of staff training and counseling in the area of quality management and team building.

"We're all very proud of the growth we've achieved," comments Cooper, "but it's humbling, too. We know we've come this far only because our customers believe in what we're doing. If we're going to stay on top, we have to give them the quality products and relationships they demand. That's quite a challenge." But it's a challenge Digitech appears ready to meet.

For more information, contact Steve Cooper at 800.523.9504 or visit www.digitech-intl.com.

Tom Chmielewski is a freelance writer.

One on One

One on One
with Michael Richards

Michael Richards has been involved in the storage industry for more than 20 years, and got his start in the self-storage software business in 1986. His company, Hawaii-based HI-TECH Smart Systems Inc., entered the industry with the launch of its original DOS application, Mini-StoragePlus, of which some 3,000 copies were sold over a 12-year period. In 1998, HI-TECH unveiled its Windows-based package, known as RentPlus. To date, about one-third of Mini-StoragePlus users have converted to the new package.

Inside Self-Storage recently caught up with Richards to discuss HI-TECH and its future, its ambitious reach into international markets, and the influence of the Internet on the software industry. We are now pleased to present an interview with Michael Richards...

You report that about one-third of HI-TECH's original DOS users have converted to your RentPlus Windows-based software. Is that figure rising--are more users coming around to the newer product?

It's been pretty steady over the last two years or so, as opposed to a mass rush. What we expect is for it to accelerate over the next two years, and the driving force behind that is it's simply harder to get DOS programs to run on today's equipment. Windows ME goes a long way toward eliminating DOS applications, and computers come shipped with USB ports instead of serial ports--all these things affect whether people are going to be able to run DOS.

Elaborate on some of the features offered by RentPlus.

The on-screen map is one of the main features. A map of a customer's facility becomes the main way he interacts with the software. If he wants to take a payment for a unit, he clicks on that unit on the map and chooses "payment" from the menu; if he wants to move someone in, he clicks on a vacant unit. We first came out with the map with our Version 1 software back in April 1998. It seems to be a good way for people to interact in self-storage, because we do think in terms of units. It seems to help new people get started because they learn the facility faster. Users can edit our map themselves--they can set it up, add and remove units, and use the mouse to drag them around. They don't have to come to us to alter their map, the built-in editor lets them do that for themselves.

Obviously, in self-storage, renting by the month is the most popular way to go, mostly because that's been the only way people could keep track of their paperwork. In our software, we allow you to set up rental plans. You can rent by the week, day, month or whatever it is, and the letters and late charges are still automatically going to happen on the appropriate days. It just gives the manager the chance to get more business by accommodating customers' specific needs in that way.

What features make RentPlus unique, or set it apart from other self-storage software packages?

We've always tried very hard to be a complete product, to be the only software package a facility owner needs, as opposed to having to buy several to do the same thing. We provide full accounting software, right through the balance sheet and profit-and-loss statement. We do all the check writing, reconcile the bankbook, all those kinds of things--which is unique. No one else in self-storage provides that level of accounting. Instead, they tell you to go and buy a copy of QuickBooks and export information into that. We'll do that also--we'll export into QuickBooks or any of seven other accounting systems. So if that's what a customer prefers to do, that's fine. But a lot of customers--especially the smaller companies--really like the fact that there's one package that has it all in one system.

We take security very seriously. Every user who sits down at the keyboard has his own unique password, which allows the owner to dictate which parts of the program the person is allowed to access. We also encrypt the customer's data so he can't use another program to look at that information, which is really important when you consider we're storing information such as credit-card numbers and expiration dates. Whenever our software prints a credit-card number, it's always masked so you don't see it. There is a way, with the right security level, that you can go in and get a listing of your customers and their credit cards, but you basically have to be at the owner level to do that.

A very popular option--on about half the systems we sell now--is automatic credit-card processing. This allows operators to sign their customers up to pay their bills by credit card automatically every month. A couple years ago, maybe about a quarter of our customers or less were getting that option. But now, over the last year or year and a half, it's now with at least half of the systems we sell, and I anticipate that continuing to grow to about 75 percent or 80 percent.

RentPlus also provides full inventory control, so we track boxes, locks, cost of sales, inventory on hand, and things like that. We try to always have everything needed to run a business in the program.

HI-TECH has announced plans to expand into Europe. Tell us about those plans.

We're very excited about Europe. We've just completed negotiations and have signed up Reza Chand to be our representative over there. His company is called Self-Storage Web, and he is currently representing our software in the U.K. and the rest of Europe. The marketplace over there is growing tremendously--estimates put the growth at about 100 percent per year right now. What's also very interesting about the market over there is it's not so much of a mom-and-pop industry over there. Very professionally run organizations are building over there, and they tend to have plans to become significant-sized companies with 20-plus facilities. From our point of view, the information system demands of companies of that size are higher. The users tend to be a bit more sophisticated, especially at the corporate level.

We do offer the ability to translate all of our letters and receipts into the local language. The screens are all in English, so the operators have to be English speaking, but the receipts and anything that gets printed to go to a customer goes through a translation program. The ability to do VAT (Value Added Tax) calculations is a very big part of their bookkeeping requirements over there, so we've made the software compliant with that. It also supports different currencies and date formats. One of the big things coming up Jan. 1, 2002, is the conversion to the euro, and in our software we've built in a "convert-to-euros" function so when that day comes, customers will be able to run a function that will instantly convert everything based on the conversion rate at that moment.

Your product is said to be very Internet-compatible. Explain this.

Built into the software are links that will take information and send it out via e-mail. For instance, if you're looking at a vacancy listing, there's an e-mail button the operator can press, fill in the e-mail address and send it out to the home office, bankers or owners. Any report that can be viewed on the screen can be sent out as e-mail, and reports are usually sent in Microsoft Excel or Microsoft Word format, so they're easy for anybody to read.

We also have links to websites within our software. For example, there's a link to HI-TECH's website, so if someone has a question they can, from within our program, select the option to go to our website and fill out a question form. We also have a link to the website of the Self Storage Association so people can get information on the industry. We've also put a new modification in our software to comply with the new California late laws, and the link to our website allows access to the text of the law. It's interesting because it does make information much more easily available.

Another use of the Internet is sending data to the home office via FTP, pcAnywhere or a similar direct Internet connection. That's really important because if you're a multiple-site operation, you've got to be able to get the data to the home office. This makes it easier and more reliable for people at the home office to have access to everybody's data.

How else can self-storage operators use the Internet, now and in the future?

One way is sending customers' bills over the Internet. We currently have a feature in our software that allows a statement to be brought up on screen and sent directly to a customer by e-mail. But we don't automatically send out bills via e-mail. There are questions about the legality of things like that. You can't do it as the sole notice of lien, but it's certainly a convenience to customers to get bills that way, and I suspect that will be a feature that becomes real popular over the next few years.

Another thing I think is coming will be the ability for customers to access their own account information and make payments online. Self-service is something for which the Internet is great, and we are, after all, the self-service storage business. The more we can do on the Internet, the less work it is for managers and the happier everyone will be.

Centralized call centers will also get more popular. People will be able to go on the Internet and ask for a storage facility in, say, Peoria, Ill., or they'll pick up a phone and reach a call center. Those centers, in turn, will need to communicate well with the sites so they know what units are vacant, and this means the site has to keep the call up to date as to what those vacancies are. The key thing is to have the data going between the call center and the sites.

Beyond that, one thing that's changing the face of software in general is what's called an ASP (application service provider), where the application software is on the Internet. It obviously has a lot of advantages: updates are instantaneous; you don't have to worry about backup and storage, because that's taken care of by the website managers; and you have all the data in a central location, so there's no need to gather it for a call center or anyone else. The reality is, though, that it's a pretty impractical solution unless you have reliable, high-speed Internet connection--and that's several years off for most of our business. The first companies that will jump on something like that will be multisite operations that focus on urban areas. But eventually, everyone will have it. From our point of view as software vendors, it looks to be a big boon.

HI-TECH hosts a website for the entire self-storage industry. Tell us about that.

It's called Self-Storage On-Line! and is located at www.selfstor.com. It's not for our own software products, but for the industry in general. We have a "Vendor of the Month"; we'll put up articles of interest such as the new California law; we've reprinted articles for Self-Storage Legal Review; we've got facility listings, and so forth. I've been involved in the storage business for more than 20 years, so I have general interest in the industry as well as interest from a vendor's point of view.

The players in the self-storage software business have become numerous in recent years. Are you well situated for the long term despite this, and will that affect your marketing efforts?

We have some pretty exciting things we're going to be doing in Europe over the next six to 12 months, but other than that, there's nothing really spectacular or different. We'll continue to go to the shows and offer our education seminars three to five times a year around the country.

One of the interesting things that has happened over the last few years was the emergence of two or three new software vendors that have come into the industry, introduced new products and been fairly successful with them. They were able to come out with Windows software without having to worry about backward compatibility with DOS programs or meeting the demands of existing customers. The challenge, in many ways, is much tougher for the established companies who have a large customer base. But I think in the long run, those companies that are able to do it will be better off, because we already have the organization for support. I think we've done a better job than most of the others simply because we got our Windows product out earlier and have had the benefit of a couple years of having it out in the field.

What do you see for the future of HI-TECH and for the industry in general?

I think the next couple years will see a big shift in the industry as we move from DOS to Windows. By our estimates, about 66 percent of the industry still uses DOS software, which means that only about a third have adopted Windows. If those numbers--which are, if not completely accurate, at least well in the ballpark--are true, within two years there will be another third that will switch over. That's a significant number--as many as have switched to Windows in the eight years it has been available. After that, the last third is always the toughest in any industry--they're not going to change until they have to, and then will be carried kicking and screaming. For our part, we expect to continue to enhance and develop on our Windows product. We currently plan two to three updates a year, and that will probably continue for the next few years. Looking beyond that, a web-based application will be in the works probably in three to five years, which is about the time the technology will be of age that we'll have enough demand for that type of application. We definitely intend to be in on that.

Walk the Facility

Preparing for the New Year

By Pamela Alton

The excitement of the Christmas season and New Year's has passed, and now it's time to turn our thoughts to spring and the busy summer rental rush. It will be upon us before we know it!

The weather will be getting warmer soon and you can begin planning your attack to get your facility in shape for the spring and summer. Now is the time to sit down with a pen and paper and begin planning your spring cleaning and special projects. If you are on a first-of-the-month rental cycle, then you have slower times of the month when you can plan those special projects. If you are on an anniversary date, then you might have to plan your project when you can have your relief managers come in and help you.

Walk the Facility

During these wet and cold winter months, why not begin your spring cleaning by taking a good walk around your facility and making notes of any maintenance issues? Will you need to buy new annual flowers for any flower boxes, beds or barrels? If so, what will you plant in them, and when? If you have awnings, are they in good shape? Should you order new ones? Do your facility signs look faded and worn, or are they in good condition? Are there any security issues to be addressed--breaks in the fencing or exterior lighting that needs replacing? Is your entrance or exit gate working properly? Are your downspouts in good shape--do any of them need replacing?

Walk the interior hallways if you have them. Are your hall lights on timers? Do they all work properly? If not, which need repair or replacing? Are the interior lighting, ballasts and bulbs all in good working order? What about skylights--any broken or cracked ones that should be replaced?

Do a thorough lock check. Pull each and every lock. Are they fastened securely? Do you have security stickers on every lock with the unit number written on the sticker? Do you have any double tenant locks--is that against your company policy and should you notify the tenant to remove the second lock? How are the door hasps and hinges--do any of them need replacing? Open each and every vacant unit. Are they all swept clean? Do they contain rodent poison? Do you have a notice of illegal items posted along with your facility rules and regulations? Be sure to look up and see if there are cobwebs that need to be swept. How do your roll-up doors look? Do they need to be swept down, or gently hosed off if they are exterior doors?

Maintenance Shop and Office

How is the "shop" at your facility? Do you need new supplies--light bulbs, rodent poison, brooms, dustpans or tools? Is your golf cart up to par--how is the paint, batteries or charger? What about the upholstery--is it torn and worn out? Should you get it replaced? Is it time to clean it up and have it ready to have prospective tenants riding on it? Do you have a sign displayed on it that states, "Rider rides at own risk"? Why not display on the dash the locks that you sell?

Look at your office with fresh eyes. Can you see outside or are your windows dirty? What about those blinds or drapes--is it time to have them replaced or cleaned? Does your office "flow" or should you move the file cabinets, desks, chairs and computer? Do you have your merchandise displayed properly? Should you order more items? How is the carpeting or flooring in the office--is it time to have it cleaned or replaced? Do you have adequate lighting? Does the office need painting? Do you need new accessories--plants, pictures or desk lamps? Is your office cluttered? If so, is it time to "de-trash" the counters, tops of file cabinets, etc.?

Marketing Plan

What sort of marketing will you be doing this spring? Easter is coming up and it could be a good time to plan for a canned-food drive or Easter-basket drawing to new tenants. How do the facility flags and banners look--do you need to order new ones? Are your facility price sheets, mail-outs or literature up to date? Do you have enough leases, office letterhead and envelopes on hand, or do you need to order more?

By taking a few minutes now to sit down, make a list and plan an attack you will be done with your spring cleaning before you know it. Your facility will be neat, clean and ready for the upcoming summer rush. You, your tenants and your owner will appreciate your hard efforts to make your facility the neatest and cleanest around. Good luck, and have a healthy, happy and prosperous new year!

Pamela Alton is the owner of Mini-Management®, a nationwide manager-placement service. Mini-Management also offers full-service and "operations-only" facility management, training manuals, inspections and audits, feasibility studies, consulting and training seminars. For more information, call 800.646.4648.

Inside Self-Storage Magazine 02/2001: Orlando, Fla.

Orlando, Fla.
The Booming East Side

By RK Kliebenstein

Editor's note: The Market Profile, a new addition to Inside Self-Storage, will focus each month on the state of self-storage development in a unique geographical area. Suggestions for "hot spots" to be examined should be sent to [email protected].

I have seen very few markets like Orlando, Fla. I recently had occasion to study the city's east side. Typically, in a three- to five-mile radius of a market I find 10 to 12 competitors, with three or four new sites in the works. Surprisingly, my radius search of Orlando found 22 competitors, and I quit logging potential new sites at the 34 mark.

One fact is certain about Orlando: There are some great competitors in the market. All of the major players have set up shop--Public Storage, Storage USA (which is just getting its feet wet), Shurgard, Personal Mini Storage and Stor-All. A few years back, I visited a conversion Mike Carter Construction was doing there for Public Storage. Market sophistication was increasing with each new store design. Since then, the multistory, climate-controlled, state-of-the-art facility has become commonplace. Let's see what a few of the Orlando locals have to say about the market...

Mike Mikkelson, a development partner with Shurgard, comments:

Orlando is experiencing a softness in occupancies. Our year-to-date occupancy report shows we are down from an average of 83 percent to 73 percent from the previous year. I attribute this to a tremendous increase in new facilities constructed over the past several years. I don't know what is motivating developers to continue flooding this market with product. The new projects are being absorbed at slower-than-projected levels, and sometimes at lower rates than projected. We've seen some new facilities sit at 50 percent to 55 percent from year one to year two, while other new ones have been opened for more than three years and have not surpassed the 75 percent to 80 percent mark.

I also spoke with Marc M. Smith of Shader Brothers Corp., which operates as Personal Mini Storage among other names. Shader Brothers manages 30 locations in Florida, with 24 in the Greater Orlando area, and has developed four locations in the last three years. Smith has lived in the Orlando area for 12 years and his wife, Laurie, is an Orlando native. They both understand this market very well. According to Smith:

Occupancies are softer than they have been in the past. Increased competition has definitely hurt overall occupancies and has restricted rental-rate increases in most of the Greater Orlando market. We continue to see development of new projects, which, in my mind, means occupancy growth and increased rents per square foot are going to be many months away. As to eastern Orlando, Smith says, There has been a high concentration of population growth, as well as self-storage development. Some of the softest submarkets in the Greater Orlando market are in eastern Orange County.

Carl Cunningham, a local Orlando developer, shares Smith's sentiments.

As a whole, the market is still expanding. There is rapid growth in a number of areas (primarily east and west). Certain areas are being overbuilt, such as the University of Central Florida (UCF) and Kissimmee area. There have been five new projects in the UCF area in the last three to five months. The Kissimmee area is experiencing occupancy in the mid to low 80th percentile down from the high 80s to low 90s. It seems people (developers) are not spending enough time at the local municipalities checking with planning, zoning and building departments to determine what is in the pipeline for new projects.

Larry Anderson of Stor-All has been developing in Orlando for the last three years. He shares his views:

Stor-All has always tried to select locations in niche markets--gaps where there is limited competition. Our first project in Orlando, on Goldenrod, was not an "A" location, but we purchased a project with entitlements in place, which gave us speed to market. From there, we chose a site in Longwood that has superior exposure compared to the competitors. We looked near Kirk Road, but there was too much activity at that location. We chose a site in Oviedo that is several miles from competition in either direction, and in close proximity to the mall and big box retailers. We are very excited about our UCF location, with its proximity to shopping, apartments and the university. We may be the only self-storage facility on University Drive--exactly the kind of niche location Stor-All seeks. We have looked at several other opportunities, but feel we are going to hold with what we have (unless something really spectacular comes along).

Overall, my assessment is that Orlando--particularly eastern Orlando--appears overbuilt. I looked for pockets of opportunity and simply did not see many "A" sites available. There is a lot of population growth, and it seems the supply is slightly outpacing the demand. Look for more favorable market conditions in the next few years if building slows down a little.

RK Kliebenstein of Coast-To-Coast Storage, Boca Raton, Fla., provides feasibility studies and market analyses for self-storage projects, in addition to financing and consulting with self-storage owners. A well-known author and speaker to the industry, Mr. Kliebenstein will be sharing his market expertise with Inside Self Storage readers. He may be contacted at 561.367.9241.

Review Your Agreement

The Pitfalls of 'Borrowing' Lease Agreements

By Jeffrey Greenberger

Editor's Note: This column provides general insight into the legal aspects of self-storage and should not be substituted for the advice of your own attorney.

As a new addition to Inside Self-Storage, this column will focus on legal issues I see every day as a practicing attorney representing self-storage owners and facilities. I will focus on issues emerging in the industry nationwide, state or regional trends, and the challenges my clients reveal to me from their day-to-day operations. I welcome your e-mails, letters or phone calls with questions or suggestions for other topics you would like to see covered.

This first column is devoted to all of you who have "borrowed" your lease, or even one or two lease clauses, from another operator or facility. The question is, how do you know that the person from whom you "borrowed" knew what he was doing when he drafted (or worse, borrowed) his lease? When lease terms and clauses are borrowed, it's like the childhood game "Telephone," in which the original message becomes more and more jumbled as it gets passed along from person to person.

Most of the leases that come to me for review have at least one or two provisions that, upon careful analysis, make absolutely no sense. Or they contain typographical errors that create some kind of ambiguity that hurt or destroy the lease's original intent. Ambiguity can certainly affect your ability to enforce a lease. If ambiguity exists in an important paragraph of your lease, such as payment of rent, default or remedies upon default, it can cause serious problems. Let's take an example from a provision of a lease I was given recently:

Defaults; Lessor Remedies: If Lessee breaches any term or condition of this Agreement, Lessor, in addition to such other rights it may have under this Agreement, shall have the right to terminate this Agreement. If Lessee fails to pay any rent or other charges when due, Lessee may: (i) remove Lessee's lock and access the space; (ii) overlock the space to prevent Lessee access until all amounts outstanding are paid in full; (iii) inventory and/or take possession of the property located in the space; (iv) sell the property stored in the space as permitted by law; or (v) pursue any and all remedies available, at law or equity, including a forcible entry and detainer action against Lessee.

Obviously, the problem with this provision is that somebody mistyped one word--"Lessee" instead of "Lessor" in the second sentence (in bold). Thus, your tenant has the right to remove his own lock and access the space, overlock the space, and inventory, take possession and sell the property stored in the space. With literal enforcement of this provision, the operator would have none of those rights. While you may think this is a simple typographical error and any court would understand you meant to take these rights for yourself, that is not necessarily the case.

A common rule of contractual interpretation is that ambiguity in a contract is resolved in the favor of the person who did not draft the contract--in this case, the tenant. Thus, the court could claim this provision ambiguous and resolve in favor of the tenant. In the worst case scenario, the court could say the provision is not ambiguous at all; the landlord does not have the right to overlock or sell the property. Either way, the result is the same--the landlord loses!

If you make an error like this, it could put your business in serious jeopardy. Some states' self-storage statutes permit the right to overlock and lien the property only if it is provided for in the lease agreement. With this small, single error in your agreement, you might forfeit your right to overlock and sell the possessions stored on the premises. A lengthy lease-modification process would then begin, requiring you to give month-to-month tenants 30 days notice of the change. Tenants still under a lease would not be affected by the change until the end of their term. Any attempt to make the change would certainly call attention to your mistake.

This particular lease clause was an expensive mistake for the person who came to see me after an attorney representing one of his tenants, whose property he sold at auction, reviewed the rental agreement. This error loomed as a possible class-action lawsuit by all tenants who had their property sold at lien sale by this facility any time during the last 10 years. The settlement was far greater than the legal fees any owner could ever spend on having their lease reviewed and revised.

Review Your Agreement

Industry experts always encourage operators to make an annual review of occupancy rates, rental rates, competition, etc., to ensure they are competitive in the market and keeping up with current trends. The same should be done for your rental agreement. Once a year, at a minimum, you should review your lease to ensure several things: 1) the policies you enforce at your facility are clearly stated in your rental agreement, so your tenants know what to expect from you as well as what you expect from them; 2) you understand what each and every term of your rental agreement says and means; 3) there are no ambiguities either in language or terms in your agreement; and 4) that you have not borrowed duplicative provisions that say the same thing in slightly different ways.

I see leases all the time that were prepared from a form book or by an attorney, but the landlord liked another default or provision from someone else's lease so much he cut and pasted it into his own. Now the lease has, for example, two default provisions providing two inconsistent remedies. Guess in whose favor the ambiguity will be resolved?

Also be certain the terms used throughout the lease are consistent. If you are referred to at the beginning of the lease as "landlord," you should not also refer to yourself in other parts of the lease as "lessor" or "owner." Similarly, tenants should not be inconsistently or interchangeably referred to as "tenant," "lessee" and "renter" throughout the agreement. Finally, make certain the facility itself and the particular unit being rented are referred to consistently throughout the lease, each by its own identifying term.

Your best peace of mind will come from an annual review of your lease by a competent attorney. You should especially consider having your lease reviewed if: 1) you have modified any of the provisions in your lease since it was written by an attorney or service; 2) you have recently borrowed or substituted a provision in your lease agreement; or 3) you have changed operation policies. The cost of reviewing or modifying the lease will be a fraction of the cost of the first settlement (if the case can even be settled) in the event an inconsistency or ambiguity in your agreement is construed against you.

Remember, if you can't understand what a provision in your lease says, you should not expect a court, which doesn't know anything about the industry, to understand it for you. Further, if there is ambiguity present in the agreement, the court is obligated to make an interpretation in favor of the non-drafting party--in this case, your tenant. There is no reason a self-storage rental agreement cannot be written in plain, easy-to-understand English. If yours is not, or if there are provisions you are unsure about, make a slightly late New Year's resolution to have that lease reviewed. If changes are necessary, distribute new leases to your tenants at the beginning of the next month or as soon as their term expires.

I look forward to seeing you at the Inside Self-Storage Expo in Las Vegas, where I will be conducting a seminar on late-fee litigation and legislation, as well as a roundtable session on lease agreements and clauses. Please feel free to come to me at these events with any questions or suggestions you have.

Jeffrey Greenberger practices with the law firm of Katz, Greenberger & Norton LLP in Cincinnati, which represents owners and operators of commercial real estate, including self-storage. Mr. Greenberger, licensed to practice law in Ohio and Kentucky, is the legal counsel for the Ohio Self Storage Owners Society and the Kentucky Self Storage Association, as well as a regular presenter at Inside Self-Storage Expos. Questions, comments or suggestions for future topics can be sent to Jeffrey Greenberger c/o Katz, Greenberger & Norton LLP, 105 E. Fourth St., Suite 400, Cincinnati, Ohio 45202; call 513.721.5151; e-mail [email protected].

Inside Self-Storage Magazine 02/2001: Online Self-Storage

Online Self-Storage

By RK Kliebenstein

Editor's note: The opinions of this column are the express convictions of the author. Inside Self-Storage does not endorse individual products or services of industry suppliers.

From computer bits and bytes to Xeon processors, from automatic-payment processing to world-class training for your managers, Tech Talk brings you the latest in technological products and services for self-storage. Designed as a means for first-generation stores to compete with newer, state-of-the-art facilities, this column will give you the tools to beat the competition.

New Lease-Up Tool

One of the latest trends among the major self-storage operators (such as U-Haul, Shurgard, Storage USA and Public Storage) is the race to perfect the renting of storage space via the Internet. Modeling after successful websites such as Sabre, which serves as a reservation system for the airline industry, and Internet portals such as Travelocity, which actually allows passengers to book reservations online, the self-storage giants recognize the value in allowing customers to rent online.

There are huge upfront expenses involved in developing this technology. Some companies have used the online rental feature to lure independent self-storage operators into lucrative management contracts and gain access to online rentals. Online directory services such as Storage Net can get the customer to your door via the Internet, but they do not allow a prospective customer to actually rent a unit and pay by credit card.

What Is the Concept?

At the Self Storage Association conference in Denver at the end of September, a company called Online Self Storage debuted a program that represents a quantum leap in the ability of independent operators, regional players and even national firms to embrace this technology at low cost. Onlineselfstorage.com is an electronic marketplace for the self-storage industry, bringing facility owners together with online customers.

This interactive Internet marketplace allows facility owners to electronically post available inventory, advertise promotions, provide updated pricing information and give important details about their facility, including location, amenities and unique features. Customers that prefer shopping online will be able to make informed decisions regarding their storage-space needs, obtain information about specific facilities, and make reservations or payments from the convenience of their home or office.

What Does This Do for the Storage Customer?

For customers who demand the convenience and power of online shopping, the service provides a large selection of available storage inventory, allowing them to choose the best location, price and amenities. Unlike conventional shopping through Yellow Pages or online searches through the websites of individual facilities, Online Self Storage provides an interactive shopping experience that culminates in the reservation and purchase of the best available space. Some of the site's features include: online bookings, quick- and detailed-search capabilities, geocoding and mapping, specials and discounts, customer education, space calculator and customer profile.

What Does This Mean for Owners?

For self-storage owners, the service provides an electronic marketplace where they can post up-to-date information on available inventory, specials and other aspects of their facility. Owners will also be able to accept electronic credit-card reservations and ongoing payments online. Special features for owners include: participation options, instantaneous sales transactions, inventory control, facility-management features, Internet specials and promotions, reservation and payment management, and online banner advertising.

What if You Already Have a Website?

Online Self Storage integrates into a facility's existing website, registering online rentals as a part of the company. The service offers embedded websites a "competition free" session. Figure 1 indicates the flow web users experience, depending on how onlineselfstorage.com is accessed. This process is "seamless" to the prospective self-storage tenant.

What Are Potential Drawbacks?

One of the current challenges of this system is that the spaces an owner offers for online booking must be manually conveyed or "uploaded" into the reservation system. Online Self Storage is developing application interfaces that will automate this process, but this feature is currently not available.

The only other drawback is that you do not "own" the customer once he is in the Online Self Storage reservation system; that is to say, you are still competing with other storage properties. This risk is somewhat mitigated by the search system. We know self-storage is location-sensitive, that the storage customer wants to store within close proximity to his home or business, and that he will likely choose a self-storage facility first by location, then by price and availability. If your product is priced properly and you are giving proper descriptions and features online, you have the best opportunity to capture the prospective customer.

Is It Expensive?

Initial discussions with the developer about pricing indicate the start-up cost may be a one-time fee less than $500, with per-rental charges around $10.

A Final Thought

Access to a reservation system of this sophistication level is a definite boon for the self-storage operator. The cost of developing such a system is prohibitive. By sharing it with other operators, an owner can have almost all of the features with very little downside. This product is of such low risk, every facility with space available to rent should consider participating.

For more information, call 877.301.4635, or contact the author at 561.367.9241.

RK Kliebenstein of Coast-to-Coast Storage is an industrywide author and public speaker on technology and tools to help storage operators compete in this challenging marketplace. For more information on how your first- or second-generation facility can beat state-of-the-art competitors, contact Coast-To-Coast Storage toll-free at 877.622.5508.

FIGURE 1
Customer Enters
www.onlineselfstorage.com
Searches for facility
Searches for unit
Reserves unit
Pays online
Customer returns to
www.onlineselfstorage.com
Customer Enters
www.yourwebsite.com 
Searches for unit
Reserves unit
Pays online
Customer returns to
www.yourwebsite.com

So Money

So Money

mon*ey \ 'm&-nE\ adj. : involving or reliable in a crucial situation; valuable; top shelf

Conceptualized, written and coproduced by Jon Favreau in 1996, Swingers made quite a stir with its cast of Hollywood retro-Rat Pack ruffians--and the colorful vocabulary it inspired. When the film's lovelorn protagonist gets "shaqed" by his best "baby," even reassurances from his chums that he is "so money" isn't enough to snap him out of his funk. What cure does his "wing man" conjure up to help chase away those broken-heart blues? "Vegas, baby, Vegas!"

This being the official issue of our annual Vegas expo, we've pulled out all the stops. In addition to our yearly real-estate review and a bang-up set of features, we've added four new columns to this month's line-up. Jeffrey Greenberger of Katz, Greenberger & Norton LLP brings us Legal Perspectives, which will focus every other month on a distinct legal issue, such as rental agreements and clauses, late-fee litigation, auctions, etc. From Behind the Counter is a bi-monthly column addressing the challenges managers face in the course of day-to-day operations. It comes to us from David Fleming who, along with his wife, Tina, manages Premier Self-Storage in Amherst, N.Y. RK Kliebenstein's Market Profile puts a magnifying class to unique self-storage markets, analyzing their success and potential. Finally, TechTalk highlights the latest in technological products and services intended for self-storage. Whether yours is an older facility trying to keep informed of new developments or a newcomer, knowledge of the latest advances will help you maintain a competitive edge.

Also this month, meet Victoria (and her two secrets). Statistics identify the average self-storage customer as a married, 34-year-old mother of two children--Victoria. Martin Knuppe explains the importance of designing and enhancing your facility to please this particular customer, how to attract her and her "thousands" of friends, and add more money to your bottom line in the process. Along similar lines, Tammy Ross advises on "Getting and Keeping Customers," staying head and shoulders above your competition.

Finally, the object of "Monopoly" is to become the wealthiest player through buying, renting and selling property. The self-storage real-estate game is no different. Mike McCune's annual review, will help you understand the key issues and "pass GO." Bill Alter identifies specific factors that go into determining the highest possible value for a property--and where to place the most emphasis to maximize your facility's merit.

But if you lose at "Monopoly," never fear. There's always Vegas. So leave your broken hearts at home, boys and girls. This show is so money.

See you there,

Teri L. Lanza
Editor
[email protected]



For a complete list of references click here

Victoria's (Self-Storage) Secret

Victoria's (Self-Storage) Secret
Positioning your facility to attract "Victoria," the core of your customer base

By Martin Knuppe


Developing in high-end communities has caused a substantial increase in construction costs.

Several years ago, I came to the disturbing realization that despite the success of many of us in the self-storage industry, we too often fly by the seat of our pants. Though we may have made all the right moves, we don't necessarily understand why. In no area is this more crucial than gaining insight into our customers and how to take significant, detailed steps to better address their needs.

It reminds me of the typical man stumbling into a Victoria's Secret store. He charges into the store on a mission. He knows (or at least he thinks he knows) exactly what he's looking for. After about 10 minutes of wandering around like lost boys at Disneyland, and after waving off sales assistance three times, he reluctantly flags down a clerk. "I could use a little help," he confesses. The sight of it is sadder than a sinner in the priest's confessional.

The questions begin: "Are you looking for anything in particular?" Thinking "Yes!" he finds himself saying "No." Nice going. "And what size is your wife?" Gesturing with his hands, he blurts out, "I'm not really sure." Now he realizes he's in deep trouble. He's in a store full of women being peppered with questions, the answers to which he has absolutely no idea. And his favorite weapons of defense--yelling, raising his voice and generally acting like a child--would only make matters worse. Like a condemned man, he endures; and one half-hour later he slithers out of the store with a tiny pink bag in his hand and 124 bucks charged to his VISA. (Author's disclaimer: Any resemblance to individuals living or deceased is purely fictional--and much too painful to contemplate.)


Well-placed, highly visible security cameras help Victoria feel safe.

It occurs to me that, like the guy in the store, most of us go about our business with little idea who exactly comprises the core of our customer base--the quintessential self-storage customer. More important, we have even less idea how to go about the crucial business of addressing that client's needs, whether in major ways (through project design, for example) or small enhancements. Toward that end, I offer this perspective.

But first let's look at why. Why expend effort trying to understand and satisfy an elusive customer who, in reality, may not even exist? Why invest money making upgrades and adding enhancements? One well-rehearsed argument goes something like this: "I built it cheap 30 years ago and it's still spitting out money. Why should I spend good money fixing what's not broken?" Then there's this argument: "Why paint it, maintain it and market it? After all, it's just storage." This is kind of like saying, "Why feed it? It's just a golden goose." The bottom line is ... the bottom line! Put simply, the most compelling reason to maintain, enhance and upgrade our facilities is that we will make more money by doing so. Let me illustrate.

A Tale of Two Owners


Adhering to local design standards has had the pleasant side-effect of "pleasing Victoria."

Take two owners. Owner A has a 15-year-old facility on the north side of town. It consists of 30,000 square feet and 300 10-by-10 units, each renting for $60 dollars a month. At 90 percent occupancy, his monthly gross income (without processing fees and extras) is $16,200.

By wild coincidence, owner B also has a 15-year-old facility, but on the south side of town. It, too, is 30,000 square feet and boasts the identical occupancy rate in its 300 units. But suppose owner B is able to get 7 percent more for his units because of facility enhancements. A simple chart makes the bottom-line rationale clear:

Let me make four observations: 1) the enhanced facility (owner B) reaps more monthly cash flow; 2) owner B becomes steadily wealthier (based on his yearly gross income); owner B pays back his $25,000 maintenance investment quickly; and 4) owner B increases his value by more than four times his $25,000 investment. Notice that what we are talking about is not just cash flow--as nice as that proposition sounds--but more net worth. In other words, by maintaining and enhancing your facility, not only do you bring in more monthly income, but you also become more steadily wealthy. If you find yourself in need of further convincing, perhaps you should also examine why you're in business.

There's another little bonus owner B derives, which is not readily displayed via the chart. Not only does he bring in more cash flow and increase his net worth at a faster clip, but which owner would you guess attracts the higher grade of customer? In a market with a limited pool of buyers, as you lower your price, you increase your potential number of consumers. Sure. But this being the case, owner A not only makes less money, he becomes the "magnet" for every late-pay, credit risk in town. By being the "low-cost" leader, he also becomes the Pied Piper for many of the marginal clients in his area.

Design and Appearance


Color-coded signs identifying buildings and unit numbers prevents tenants from feeling lost, confused and frustrated.

What does a married, 34-year-old mother of two children (high school age or younger) have to do with this? Statistically speaking, she is the customer the storage industry strives to please--at least in the residential market. As close as we can identify, on a nationwide basis, she is "the face" of the average rental customer. Call her "Victoria"--because she has a secret (actually two).

The first secret is that it's Victoria who decides to clean up the attic, garage, spare bedroom, etc. She is the one who, having driven by a local self-storage facility, now goes to her phone directory and shops prices for storage units much in the manner of comparing retail ads. She then visits the facility of her choice. Finally, she is the one who makes the decision to buy or not to buy. Her husband is relegated to giving the yea or nay, and wrestling the stuff out of the garage, room, closet, etc., and into the unit.

The message: Remember Victoria when making important decisions about the features of your facility or you're dead where you stand.

Whether enhancing an existing facility or designing new, there are two things we had best keep in mind about Victoria: She likes her surroundings to be clean, and she insists upon feeling safe. Violate either of these laws, even on an occasional basis, and she won't return. What's the big deal about losing Victoria? Well, there are thousands of other potential customers just like her. Lose her and you risk losing them all. That's Victoria's second secret. In reality, Victoria and her "friends" are closer to being Ghengis Khan and his Mongol horde. Mistreat them and they'll wreak havoc over your countryside--and they all ride together.


Courtesy spaces--whether for handicapped visitors or moms with small children--should be clearly marked.

Cleanliness is a high priority for the Victorias in our markets. They're environmentally aware, notice their surroundings and want them to be presentable and orderly. Victoria wants the places where she buys groceries, purchases her clothes and stores her belongings to make sense. If you observe the other places where she does business, odds are they exhibit a sense of order and cleanliness. Look closely and you will observe this even in the frenzied success of large merchandisers such as Home Depot and Wal-Mart. That is one reason they continue to be successful.

Victoria also insists upon feeling safe. If there is any key to understanding Victoria, it is this insistence upon security at all times. And note that it is not so much being safe and secure, but feeling such. This can prove to be a difficult and expensive distinction to understand. It's not enough to place a couple of signs in the driveway that read "Surveillance Cameras in Use," or to tell a white lie, "We've never had any problems." She has to feel safe. In reality, your facility can have a flawless crime record and yet fail the "feel safe" test. One well-placed, highly visible camera can do wonders in this regard.

Another aspect related to feeling safe is that Victoria doesn't like feeling lost. She doesn't like wandering down poorly lit halls trying to find her unit. When she gets lost or disoriented, she doesn't feel secure, and that's a major violation in her book. Understanding of this fact should inform our entire design process, with wider, simpler hallways, etc. (More on this point later.)


All exits and other doorways should be easy and quick to locate.

In terms of new facility construction, pleasing Victoria has been an unexpected bonus. As local communities have heightened their approval standards, we are all familiar with the related unpleasantries. Our preference for developing in high-end communities has witnessed our construction costs going from the mid-$20 range per square foot (excluding land cost) to more than $40 per square foot. At the same time, locales have become more architecturally demanding.

Upon completion of our newest facilities, my company noticed an unexpectedly pleasant side effect. Victoria and her Mongol horde flocked to them--and no wonder. The extra dollars we were "encouraged" to spend by local design standards steered us toward extremely Victoria-friendly facilities. In order to gain design and community approvals, we also inadvertently designed the types of clean, secure environments she likes to frequent. I call it the "Victoria Effect." The next time you go to design a new project or upgrade an existing facility, look more to the shopping centers where Victorias shop rather than to your competitor down the street.

The "Victoria Effect" is also the best explanation for why, whenever a new facility is opened in a market, it is always able to draw away new customers from the competition--even with higher prices. A newer facility, regardless of unit-size availability and higher rates, is almost always cleaner and brighter and, therefore, feels safer. Victoria loves this atmosphere and, when convinced of its value, will pay top dollar for it.

Numbers, Signage and Directionals

Once we understand the core of our market--Victoria and her thousands of close, personal friends just like her--it begins to reorient our entire way of thinking. For example, the simple observation that this customer prefers a clean, orderly and safe environment revolutionized my company's entire approach to numbers and signs throughout our facilities. It also gave birth to one of our side businesses.

We used to think numbers were for conveying information, i.e., this is unit #234. I thought signs were for telling ignorant or recalcitrant customers what not to do: Don't park here. Nothing could have been farther from the truth. After much "coaching" by the Victorias of the world, we realized the most important function of unit numbers is that they ought to facilitate leading the customer to his unit. We now spend much more time and effort numbering our facilities in consistent, simple patterns. Rational numbering schemes are especially important for facilities that operate as part of a larger chain where a tenant may use more than one location. It's all part of avoiding that "getting lost" feeling.

Another step the new or existing owner can take to please Victoria--and make more money--is to color-code his buildings. As mentioned above, unit numbers are not just informational or stand-alone placards. A majority of us already assign a number or letter to each of our facility buildings. But this falls far short and, in reality, is often ignored by tenants and management. Just listen to how your managers direct customers to their building. For us, it used to be with a grunt, "Over there," while pointing in the general direction. Now each building is color-coded and marked with a large, colored, acrylic sign (often with an image and building letter or number). All hallways and stairways are also color-coordinated. All courtesy spaces, whether code-mandated handicap zones, or convenience parking for senior citizens or "moms with young kids," are clearly marked.

You should also be using directional signage in your facilities. Bearing in mind that customers don't like to feel lost, you want to provide signage directing them to their units, particularly when it involves internal hallways. Our construction guidelines call for a directional sign at any juncture where a decision of where to turn needs to be made. For first-time renters, we have a standard practice of escorting them to their unit. The need for explicit signage also applies to exit signs within the buildings (lighted signs are best) and in the driveways.

Banish the Paint Can

Another "Victoria observation" leads us into one of my personal obsessions: banishing the paint can. Several years ago, a customer mentioned in passing that the paint drips and splatters on our driveways looked horrible. And she was right. It wasn't so much from repainting the building exteriors--that was done infrequently and by professionals. Rather it was the constant touch-up of building-corner bollards, crimped downspouts, etc.

That simple comment set in motion a new priority in our management. It can do the same for you as you seek to enhance the appearance of your property. We explored ways to reduce ongoing maintenance in our facilities, especially the paint-related kind. Rather than continuously painting building bollards whenever they are hit, we now use colored bollard caps. Made of 1/4-inch plastic and custom-colored to our facilities, these caps can take a tremendous hit and be little the worse for wear.

Downspouts crimped from customers backing into them were another of our perennial problems. Once they were straightened, out came the paint can. Now, we cut off our downspouts at 3 feet above the drive and use a plastic extender to convey the water. If the extender is hit, it has a certain amount of flex and is inexpensive and quick to replace. We are currently experimenting with concrete stain in lieu of painting our slab floors. Floors--particularly well-traveled hallways--are in need of some protective coating. Yet most paint products bubble up over time, unless applied under ideal circumstances. Concrete stain seals the pours of the concrete and prevents spilled oils, etc., from penetrating the floor surface.

Victoria may be a demanding customer, but she is loyal to the end. Providing you acknowledge her basic requirements--cleanliness, orderliness and a sense of security--she and her thousands of friends will have no need to look for a more "respectful" place to do business.

Martin Knuppe has been in the self-storage business for 20 years. He is founder and president of The CastWater Corp., which owns, develops and consults in the self-storage industry. The MiniSource, a CastWater company, sells complete finish packages (numbers, signs, protective products) to "Victoria-friendly" self-storage facilities nationwide. Mr. Knuppe is also a frequent contributor to industry publications and seminars. For more information, call 925.462.4029.

Owner A
Facility status No improvements
Average rent $60/month
Market premium 0%
Occupancy 90%
Monthly gross income $16,200
Yearly Gross $194,400
Payback on 25k maintenance investment ? years
Average operating expenses 25%
Facility value w/ 10 cap rate $1,458,000
Facility value w/ 9.25 cap rate $1,576,216

Owner B
Facility status Several improvements
Average rent $64.20/month
Market premium 7%
Occupancy 90%
Monthly gross income $17,334
Yearly Gross $208,008
Payback on 25k maintenance investment 1 year, 8 months
Average operating expenses 25%
Facility value w/ 10 cap rate $1,560,006
Facility value w/ 9.25 cap rate $1,686,551

Checklist of Finishing Touches

  • Pressure-wash facility
  • Paint wood, block or stucco when necessary
  • Straighten dented portions of metal siding; replace if needed
  • Pressure-wash drives
  • Replace numbers
  • Re-examine numbering scheme (Does it accommodate expansion? Does it work with the alarm system?)
  • Add facility signs (The most common are "No entry," "No Parking" and "No Smoking")
  • Add building signs
  • Color-code each building
  • Sign and number each hallway
  • Sign and number each staircase
  • Add directional signs
  • Post clear directions at every hallway intersection

Eliminate 'Maintenance Painting'

  • Install building bollard covers
  • Shorten and extend downspouts
  • Use plastic and rubber colored products in lieu of concrete (i.e., parking stall blocks, speed bumps, etc.)
  • On concrete floors, try "concrete stain" rather than paint

Getting and Keeping Customers

Getting and Keeping Customers
How to stay head and shoulders above the competition

By Tammy Ross

Getting Customers

One of the most commonly asked questions in this industry is, "How do we attract customers to our stores?" The more important question is, "What makes them stay?" The answer may be much simpler than you think, although this does not mean it will be an easy task.

The first step you will need to take is to evaluate your facility and the surrounding market. Begin by viewing your property as a retail establishment where you provide a service. Get away from referring to it as a mini-warehouse, lockers or sheds. This shift in thinking should carry over into all aspects of your business plan with special attention being paid to marketing concepts and hiring. Professionally training your managers will make an enormous difference in the success of your facility.

Answers to the following questions will provide some valuable insight and assist you in creating a plan to increase your customer base and maintain your current tenants--even if a new superfacility moves in around the corner.

1. How many phone calls inquiring about storage do you receive each month? If you do not know the answer to this question, you should immediately start a phone log to record each call, the customer's name, the unit size requested, and if a unit was rented.

2. Of those calls, how many result in rentals? And where are those calls coming from?

3. Are your managers trained properly in the way you expect the phone to be answered? If you answered "yes" to this question, how do you know? The most effective way is to utilize a mystery call service to evaluate managers' performance. When you receive this information, you should immediately review it with each employee. Be sure to set monthly goals for improvement.

4. Are you competitive in your market? For example, what are your office hours? Do you offer security gates, alarms, cameras, on-site managers, moving supplies and climate-controlled units? And are you selling those features and benefits on each and every phone call?

5. What makes your facility stand out from the rest? If you do not have an answer to this question, begin thinking of something you can do to accomplish this.

6. Is the property effectively and professionally managed? If you are not currently using a management company, are you really devoting the kind of time needed to keep the facility operating on the cutting edge?

Once you've established honest answers to these questions, you can begin to formulate your plan. Determining how to proceed and executing items in the correct order will eliminate major mistakes and wasted time. For example, if you are receiving an adequate number of phone calls--let's say 100 calls per month--and you are converting just 15 of those calls into rentals, you might want to implement an aggressive phone sales training program. On the other hand, if you are converting 15 calls but only getting 20 phone inquiries, you should consider some type of outside marketing.

Remember to be wise when selecting the type of advertising to use. Know where your tenants are coming from and concentrate on that area. Television and radio ads cover a very large area and can be quite costly when all you may be looking to do is draw from a three-mile radius around your store. Creativity and simplicity in constructing your marketing strategy will help you achieve top results. Don't be afraid to admit when you have made a mistake, and don't hang on to something that isn't working.

To help you get started, consider these marketing ideas and then come up with some of your own. Be sure to talk with your property managers and get their input. They normally have great ideas.

  • Direct-mail fliers
  • Flags, banners
  • Referral programs
  • Sandwich-board signs
  • New signage
  • Commercial-tenant-only specials

Bringing in commercial tenants should be the goal of every facility. So what makes them choose you over your competition? Try accepting deliveries. Provide free billing, employee discounts, fax and copy services. Offer an incredible business-only move-in special. Once you have these tenants, keep them happy by offering pay-in-advance programs, such as pay 12 months, get the 13th month free. Consider the strengths your facility offers that no one else does. Do not be afraid to blow your own horn.

Enticing customers with move-in specials such as free locks, discounted rent or incentive gifts upon rental, along with properly trained managers, will serve their purpose of increasing your monthly rentals. But what can you do to ensure the customer stays?

Keeping Your Customers

Now that you have captured your fair share of the customer base, how do you keep them from moving out? The answer to that is not that simple. You are always going to have move-outs. You should expect approximately 10 percent of your current occupancy to vacate each month. Now you can see how important marketing and professional management is to increasing your occupancy and your income.

To maintain happy customers and ensure that dealing with their storage unit does not become a burden, you must create an enjoyable atmosphere at your facility. Start by trying one or more of the following ideas:

  • Order a pizza and have it delivered while the customer is moving in.
  • Keep cold bottles of water the manager can hand out to tenants while making the rounds on his golf cart.
  • Each time rent is paid on time, the customer gets entered into a drawing for a free month's rent.
  • Implement a customer-referral program where they receive small rent credits for referring their friends.
  • Send a postcard saying "Thanks for renting with us."

A clean, safe and properly managed facility can also help you maintain your current customers. The majority of customers visiting your facility are women. Make it a pleasant experience for them by providing intercoms throughout the property in case of emergency. Install speakers and pipe music into hallways. Use motion-sensor lighting in climate-control buildings--this will eliminate the need for them to stop and find the light switch as well as cut down on your utility bills.

Autobilling via credit and debit cards is proving to extend the life of a rental by offering a hassle-free way to pay rent. If tenants don't have to go through the process of writing and sending a check every month, chances are they'll stay longer. Knowing your market and being prepared to compete in it will be key in the success of your facility.

Tammy and Stephan Ross own and operate Cutting Edge Self-Storage Management & Consulting. Together they have more than 25 years of self-storage experience in third-party management, consulting and feasibility studies. They have managed more than 2 million square feet of storage and are currently managing facilities in Utah, Nevada, Washington, Tennessee and Florida. They can be reached at 801.273.1267 or via e-mail at [email protected].