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Equity Based Services Acquires Plano Self-Storage Facility

Equity Based Services Inc. (EBS) purchased Advantage Self Storage in Plano, Texas. The facility has 554 units and 71,435 net rentable square feet. It will be rebranded as American Mini Storage.

This is the first acquisition under the company’s new aggressive acquisition model. EBS plans to double its acquisition volume in the next year.

Equity for this transaction came from the EBS pool of Private Client Investors and the EBS Income Fund III. The debt for this facility was an assumed loan with a 72 percent loan-to-value mortgage from Bank of America with a fixed rate of approximately 5.6 percent, non-recourse, and with an interest-only period that ends in 2012. The loan switches to a 30-year amortization after the interest-only period.

This transaction was sourced through Angelo Tomasello, president of Locke Acquisition Group LLC, which specializes in self-storage acquisitions.

EBS is a private real estate company specializing in the acquisition and management of self-storage property. The company currently owns and operates 64 properties in 11 states.

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The U.K. Self-Storage Industry Proves Resilient in a Recession

Like all real estate-centric business markets, the U.K. self-storage sector has felt the impact of the global recession and the significant retrenchment of the housing market. However, the industry has shown positive signs and exhibits strong economic fundamentals. Indeed, it’s possible that self-storage in the United Kingdom will emerge stronger from the slump, with most operators seeking to expand.

Comparing U.K. self-storage to the larger U.S. and Australia markets, the United Kingdom has the lowest supply of storage space per capita, yet the highest population density by far. The United States has 7.4 square feet of self-storage space per capita, Australia has 1.37, and the United Kingdom only 0.44. Even still, the country’s supply and demand profile offers sound, long-term growth prospects for the industry.
 
U.K. Self-Storage Today

The U.K. self-storage sector has experienced rapid growth over the last decade. In 1996, there were an estimated 81 stores in the United Kingdom; by 2008, this number had grown to more than 750. There are more than 300 self-storage operators in the country, and while the sector remains fragmented, a handful of large multi-facility companies—such as Safestore and Big Yellow—account for approximately 45 percent of rentable space. The majority of operations are independent enterprises running five or fewer sites.

Despite the depressed economic climate, the market has proved to be highly resilient over the past 18 months. Operators and investors have been faced with the dilemma of establishing optimum balance between occupancy rates and rental growth, the key variables to ensuring strong revenue. However, the evidence to date hasn’t demonstrated the anticipated drop in these metrics.

Revenue has been healthy, with Big Yellow reporting a modest 4 percent decline in like-for-like sales in its most recent annual report. Space Maker, a mid-size operator, ended 2008 with revenue down only 3 percent from 2007. Lok’nStore, which has been the subject of much bid speculation, recently reported month-on-month increases in occupancy for the first six months of 2009, with revenue beginning to increase.

Operators see the economic downturn as an opportunity to expand and increase market share. Big Yellow and Safestore plan to open 18 stores between them in the next two years. The majority of operators intend to expand existing stores where they can, with more than 40 percent planning to open new stores in the next year, according to a recent survey. Many of these are small to medium-size operators, who recognize that land and property at historically low prices offer a powerful expansion opportunity.
 
The Evolving Customer

The expansion drive is largely a response to rising take-up in the first half of 2009, which came from a re-orientation of operators to the self-storage customer base. The housing downturn has caused the domestic market to fall away significantly, prompting operators to change their marketing strategies. They are now targeting more business customers and taking advantage of the increasing number of business startups. For example, Safestore has increased its business customer base from below 20 percent to above 30 percent.

Understanding the benefit of attracting new customers in these tough times, facility operators have specifically targeted small and medium business enterprises. Businesses seeking to reduce costs see value in using flexible and cost-effective storage space for archiving and materials storage.

Though business customers have increased, domestic users are still prevalent. There may be fewer people buying houses, but it appears homeowners are making better use of their space by moving belongings from spare rooms and lofts into self-storage, creating more useable square footage in the home. This is all part of a growing awareness of self-storage in the United Kingdom, something that, over the past few years, has been fundamental to industry expansion. The result is a sector with revenue of more than £360 million per year.
 
Optimistic Outlook

While it has not been an easy environment in which to trade over the last 18 months, there are signs of industry resilience, and the counter-cyclical nature of the business lends support for an upbeat outlook. Most operators report positive indicators including improved customer reservations, more telephone and Web inquiries, and higher Internet traffic. These, along with the prospect of an improving housing market, give cautious grounds for optimism.

Overall, the U.K. self-storage sector seems to be coping well with the economic changes of the past 24 months. The shift in marketing emphasis from domestic to business customers is not only a credit to the industry’s adaptability, but suggests self-storage is developing a more powerful platform from which to emerge from the downturn.
 
Tim Edghill is the European director of Jones Lang LaSalle Corporate Finance, a specialist real estate investment house of real estate professionals, accountants and bankers. With 18 years of experience, Mr. Edghill has been responsible for the creation and successful implementation of major disposition strategies for clients including J Sainsbury PLC, Railtrack PLC and Severn Trent PLC. He acts for numerous self-storage operators and investors. For more information, call +44 (0) 20 7399 5313; e-mail [email protected].

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ISS Blog

Self-Storage Victory Over Eminent Domain

This week a self-storage operator in Manhattan won a victory against eminent domain, but not because the court found the practice as a whole to be unconscionable. No, the reason Nicholas Sprayregen, owner of Tuck-It-Away Self Storage, walked away from the appeals court gratified in his ongoing struggle with Columbia University is because the court felt the state took an "unconstitutional" approach to declaring the coveted land as "blighted."

You see, without the neighborhood being in ruin, eminent domain would not be allowed. So last year, the state hired a real estate consultancy firm to conduct a study of the area. The conclusion? Blight. But what we now know is the firm the state hired is the very same one Columbia hired during its own research of the community.

An article in The New York Times reported that the court's majority opinion was "scathing in its appraisal of how the 'scheme was hatched,' using terms like 'sophistry' and 'idiocy' in describing how the state went about declaring the neighborhood blighted, the main prerequisite for eminent domain."

Sprayregen and one other holdout—an owner of two gas stations in the area Columbia wants for its $6.3 billion expansion—won't really prohibit the project, as the university already controls the majority of the 17-acre parcel. But this is still being considered a win on the side of self-storage and other businesses in the battle against eminent domain in the state.

“I feel unbelievable,” Sprayregen told the Times. “I was always cautiously optimistic. But I was aware we were going against 50 years of unfair cases against property owners.”

Are any of you in danger of or currently dealing with an eminent domain struggle relating to your self-storage property? If so, how are you dealing with it? What are your thoughts on eminent domain—should the government have the right to determine the "highest and best" use for a property?

Fort Knox Self Storage Offers Free Santas Closets

Fort Knox Self Storage is offering free space at its three facilities for local residents to hide their holiday gifts. Through Dec. 31, community members of Matamoras, Pa., Middletown, N.Y., and Port Jervis, N.Y., can stash their seasonal goods in climate-controlled storage space at no cost.
 
Fort Knox will give away free rental of a limited number of 5-by-5 “Santa’s Closets” and one 10-by-10 “Santa’s Workshop.” The company is also offering free toy-building assistance from its “elves” (facility employees). Space will be awarded on a first-come, first-served basis. Some restrictions apply. Interested parties should see a facility manager for details.
 
Source: Pike County Courier, Storage company will hide gifts free

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Manhattan Self-Storage Owner Victorious in Eminent Domain Case

Yesterday a New York appeals court ruled that the state could not use eminent domain on behalf of Columbia University to take land from self-storage owner Nicholas Sprayregen and the owner of two gas stations.
 
Columbia unveiled plans to build a satellite campus in 2003 and has since attempted to obtain parts of a 17-acre site in Upper Manhattan for its expansion. After Sprayregen, who owns several self-storage facilities in the Manhattanville area, refused to sell his property, Columbia sought to obtain the land through eminent domain, claiming the neighborhood in question is “blighted.”
 
Last year, after reviewing the results of a study conducted by real estate consultancy firm AKRF, the state declared the area to be ruined, the main prerequisite for eminent domain. Yesterday a panel of the Appellate Division of State Supreme Court in Manhattan annulled that decision, saying the procedure used to condemn the area was unconstitutional. AKRF was the same firm used by Columbia for its research into the neighborhood.
 
Norman Siegel, Sprayregen’s attorney, said the ruling was a major victory in a state that, just two weeks ago, awarded in favor of a Brooklyn developer in another eminent-domain case.
 
Columbia’s case will advance to the Court of Appeals. As the university still controls the majority of the 17-acre parcel in question, its $6.3 billion expansion can progress regardless of verdict. Presumably it can build around Sprayregen and the other holdout owner.
 
Sprayregen owns four Tuck-It-Away Self Storage facilities.

Source: The New York Times, Court Bars New York’s Takeover of Land for Columbia Campus

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ABF U-Pack Moving Offers Free Use of Self-Storage Containers to Charities

Relocation company ABF U-Pack Moving is offering moving trucks and self-storage containers to charitable organizations for collection of toys, food and other donations for families in need. Organizations such as Toys for Tots, The United Way and Feed America have utilized ABF equipment.

ABF moving trucks and self-storage containers, normally used in freight shipment and residential relocation, are conveniently sized, weatherproof and lockable. The equipment can be positioned in high-visibility locations as drop sites. National charitable organizations, in need of equipment for collection efforts, should contact U-Pack for availability in their area. 

 “Considering the current economic condition, we know donations are a lifeline for many families,” says Kay Lynn Clay, ABF business development manager. “During the holiday season, the people at ABF U-Pack want to do what we can to give back. Rather than paying for a rental truck, the charity can contact us, and we’ll check on available equipment in their area.”

ABF U-Pack is scheduled to place self-storage containers and moving trucks in several cities for use by local organizations. U-Pack will assist the United Way of South Texas with their annual 12 Days of Christmas project, as well as The United Way of Rio Grand Valley. Toys for Tots will be assisted in several cities, including Camp Hill, Shippensburg, and Carlisle, Penn., and Buffalo, N.Y. Donation sites and information are available on the charities’ websites for those wishing to make a contribution.

ABF U-Pack Moving has a network of 281 service centers nationwide. U-Pack specializes in do-it-yourself moving, combining the professional driver and equipment of traditional full-service moving companies with the cost-savings of truck rental.

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Safe and Secure Automated Self Storage Gives VIP Tours to FL Students

Safe and Secure Automated Self Storage of Coconut Creek LLC, the Pugliese Co.’s flagship automated facility, will host 450 fourth and fifth grade science students for a VIP behind-the-scenes tour of their facility and it’s new automation every morning Dec. 7-11.

Fifteen classes of science students from Tradewinds Elementary in Broward County, Fla., will visit the facility to meet Paul Talley, the inventor of the patent-pending technology and vice president of Automation for Automated Self Storage Systems LLC, a subsidiary of The Pugliese Co.  Students will learn about the automated self-storage system, the LEED Certification process and the facility’s selection from over 2,500 projects to receive a Green Building of America Award.

The presentation is geared to Tradewinds Elementary School’s Technology Vision for 2009,   “... to utilize technology as a tool to enrich curriculum and instruction, and deliver lessons in innovative ways,”  as well as to the school’s 2009 theme,  “To Keep Our World Clean, Tradewinds Goes Green!”

The City of Coconut Creek and Publix Super Markets are also participating in this first series of educational presentations at the facility with green products and educational information regarding the city’s new Single-Stream Recycling Program.

Safe and Secure Automated Self Storage is the first automated facility worldwide to utilize Automated Self Storage Systems technology. The facility opened in April of 2009.

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Wildomar Officials Agree: No Self-Storage on Commercial Property

On Wednesday the planning commission of Wildomar, Calif., agreed self-storage facilities should not be built on the city's commercially zoned property. On Dec. 16, the commission will present a temporary moratorium on self-storage facilities that, if adopted, will give the city two years to create a finalize ordinance to formalize the ban. The ultimate decision lies with the Wildomar City Council.
 
With three self-storage proposals on the table, the commission met this week to discuss if and where storage facilities can be built in the town, saying the facilities don’t generate any sales-tax revenue and very little property-tax revenue. The city has seven operational self-storage facilities, all on industrial-zoned land.
 
The commissioners also agreed they want to continue to allow self-storage facilities to be built in the city's industrially zoned areas. In addition, any business that is approved before will not be prohibited from completion.
 
Source: The Press-Enterprise, Wildomar Planning Commission recommends self-storage ban in certain areas

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IREM Awarded Management Contract for Riverline Self Storage in NJ

Investment Real Estate Management (IREM) was awarded the management contract for Riverline Self Storage in Cinnaminson, N.J.

IREM originally managed the startup of the facility when it opened in 2005. This facility is a two-story climate-controlled building with 242 units, with additional room for expansion.

IREM currently manages more than 45 self-storage properties for third parties in six states. The Investment Real Estate Group of Cos. provides self-storage brokerage, construction, management and consulting services to owners and investors in the Mid-Atlantic and Northeastern United States.

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BETCO Allies With BVFR to Provide Self-Storage Financing

Statesville, N.C.-based BETCO Inc., a single-source manufacturer of self-storage buildings, has formed an alliance with BVFR & Associates LLC to provide qualifying BETCO customers with favorable construction financing. Self-storage real estate developers who have been suffering from a tight credit environment over the past few years may find a financing solution through the partnership.
 
BETCO is the exclusive source of self-storage customers for BVFR, and BVFR will extend discounted fees to BETCO customers. Self-storage developers who qualify will work through BETCO’s Special Services Department to proceed with their building plans.
 
BVFR is an award-winning investment-banking and financial-solutions firm with a national client base. Since its inception in 1995, the company has specialized in structuring commercial loans and preparing applications for various loan-guarantee programs.
 
BETCO manufactures self-storage buildings, roll-up doors and hallway systems for new construction and conversions. The company also offers refurbishing of existing buildings.

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