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Self-Storage Owners in Redding Feel the Impact of Economic Downturn: Good and Bad

Though the self-storage industry is often considered recession-proof, it is it still being hit by hard times. Self-storage owners in Redding, Calif., are feeling the impact of economic slowdown as tenants vacate their units. Richard Kelly, owner of AAA Mini & RV Storage for 22 years, said his occupancy rate is down to 90 percent from his usual 97 percent to 98 percent, and he won’t be surprised if it reaches as high as 80 percent before the recession is over.
 
Jim McNamee, president of the California Self Storage Association, said there are still demand drivers for storage, and the slowdown operators are seeing may be that typical of the summer months. The affect of the recession is small, he said.  
 
According to Deborah Owens, manager of Redding Mini Storage, her facility is experiencing a 70 percent occupancy rate, down from its usual 95 percent. Some customers just leave their belongings and stop paying rent, she said.
 
Charles Barker, who manages American Storage, said his vacancies have also gone up.
 
On the other hand, Andrea Fierro, manager of 4 Corners Mini Storage and Hartnell Mini Storage, said the economy hasn't negatively impacted her sites. Her company is actually adding 200 units. From her perspective, the economic downturn has helped her business.
 
Source: Nathan Morgan/Record Searchlight (Redding.com), Storage Unit Owners Hit by Economic Slowdown

Treatment for Parkinson's Successful in Mice

A new study concluded electrical stimulation of the spinal cord of rodents can reverse some of the worst symptoms of Parkinson's disease.
 
Researchers at Duke University Medical Center in Durham, N.C., developed a prosthetic device to deliver electrical stimulation to the dorsal column in the spinal cords of mice.
 
The National Parkinson Foundation estimates 1.5 million Americans have Parkinson’s disease and another 60,000 are diagnosed each year. The condition causes impairment of the affected person’s motor skills, speech and several other functions.
 

Almacen Storage President Speaks at Denver CFO Awards

Lu Córdova, president and general manager of Boulder, Colo.-based Almacen Storage Group, will present a keynote address at the Denver Business Journal’s CFO Awards. The awards are given to professionals in the Denver region for outstanding performance in their roles as corporate financial stewards. The 2008 winners will be honored at a luncheon on April 22 at the Grand Hyatt Denver Hotel, 11:30 a.m.-1:30 p.m. They will also be profiled in a special section in the Journal’s April 24 issue.
 
Cordova is also the CEO of Corlund Industries LLC, an investment holding company specializing in operations management, strategic planning, business development and capital finance. As a five-time CEO/president, he has nearly 30 years of experience in navigating companies through start-up phase to maturity and international scope.
Almacen Storage provides self-storage and small-business warehousing in resort areas of Mexico.
 
Source: Denver Business Journal, CFO of the Year Luncheon - April 22

Meet Self-Storage Owners Jim Briggs and Joann Walsh, Big & Safe Storage in Leander, Texas

Inside Self-Storage is pleased to introduce Jim Briggs and Joann Walsh, owners of Big & Safe Storage in Leander, Texas. We spoke with them at a recent self-storage conference. Let's get to know them!

How long have you been in the industry? One year.

What did you do before self-storage? Joann is a court reporter; Jim is a certified public accountant and student financial-aid expert.

Hobbies: Joann makes time for cooking and gardening. Jim holds a pilot's license and enjoys flying. Together they travel and go boating on Lake Champlain, Vermont. "We love the outdoors."

Favorite sports teams:Dallas Cowboys, San Antonio Spurs, New England Patriots

Favorite meal: They both like Mexican and Italian food, but Jim's first favorite is steak with a special sauce that Joann cooks up: "It melts in your mouth."

Best Movies:Dances With Wolves, Butch Cassidy and the Sundance Kid

Music: Jim likes Jazz. Joann likes country and acoustic music.

If you could have a second home, where would it be?Wyoming or Montana.

If stranded on a desert island, what three items would you most like to have? Says Joann: "Sunscreen and water." "Cookies," adds Jim. "I like cookies."

Thinking back to your childhood, what did you want to be when you grew up?  Jim imagined being a helicopter pilot. Joann wanted to be a stewardess.

On a scale from one to 10, how happy are you in self-storage? "That's an easy 10."

Getting the Most Out of a Self-Storage Feasibility Study

A great deal has been written about what makes for a suitable self-storage site location. The key variables are visibility and convenience of location within a market. In determining the feasibility of any site are three foundational questions nearly every self-storage feasibility needs to address:

  • Is there sufficient demand to support development?
  • Does the site have the appropriate characteristics to support a successful location in the market?
  • Does the proposed development make sense from an economic standpoint?

The answers to these questions go beyond location and market economics and rests squarely on design and unit mix.

To be of the utmost value, a thorough feasibility study takes what has been learned about the site, market and competition, then develops it for specific market and operational strategies, proposed unit mix and amenities. What features will attract tenants in the proposed market? How can you best position the property to take advantage of its strengths and minimize weaknesses?

The opportunity to use the insights gained during the feasibility study as an effective planning tool for the development and operation of your facility is immeasurable. Such planning will pay off in great dividends during the many years your facility is in business.

Learning From Your Competitors

In the competition-analysis portion of the feasibility study, review the competitors’ unit mix and occupancies by unit type. Pay attention to rental rates of units. Units in short supply are likely the ones in demand; likewise, discounted units are probably those that are harder to rent to potential tenants.

What amenities and facility features are missing in the market? Can extended hours of operation set you apart? Do all the facilities in the market have lighting inside units? Are there multi-story facilities with poor loading and accessibility? Do they offer the use of a truck? Once you evaluate the competition, develop an action plan to make your site succeed.

Phasing Plan

While not always included in every feasibility study, make sure you have an opportunity to consider developing your facility in phases. It’s always difficult to create the perfect unit mix for a new facility. Phasing enables operators to make adjustments to meet current and future market demand.

A phasing plan also works for developers that want to build all at once. For example, they can build a “shell” and leave a portion of the rental spaces’ doors and partitions undeveloped for future configuration.

Make sure the initial phase of the development has a varied unit mix. If all or most of your 5-by-5 or 10-by-30 units are in the second phase, you will be turning away customers for those sizes until you move to your next phase. The phasing plan should also consider how you can complete the subsequent phases without disruption to facility operations with future construction activities.

A Financial Pro Forma

Completing a financial pro forma that shows a great investment yield is a great experience; however, yields on paper do not pay the bills. If a large percentage of your space never gets rented it may have been better to build a smaller facility more tailored to the market. Planning your facility in a way that perhaps does not look as good on paper but has a real opportunity to produce solid results is where you need to be.

Some developers look at site design from the standpoint of how they can get the most rentable square footage as well as the most dollars per square foot in rent without paying enough attention to the customer experience. Often this approach results in poor unit mixes and facilities lacking amenities that draw customers.

Some operators fail to see how vacancies are a direct consequence of inappropriate unit mixes and poor accessibility to units. In other words, vacancy problems can be explained by having too few or too many of a particular rental space size.

Multi-story facilities may also have to compromise on unit mix since it can be difficult to rent hard-to-reach units not on the ground floor or with drive-up access. If you do proceed with a multi-story project carefully consider how your building and space plan allows for customer loading zones and elevator accessibility.

Consider creating two financial pro formas: one with a development scenario for single-story construction; the other for multi-story construction. Some developers have found multi-story facilities are actually less financially advantageous in certain instances because they have higher construction costs per square foot and may require discounted rents to attract tenants to rent units above ground level. Building wider single-story buildings as an alternative and getting a high concentration of building footprint on the ground level provides the developer with an opportunity to create interior spaces with climate control.

With all that’s at stake, it pays to engage the services of an experienced self-storage consultant to look at your project from many different points of view and provide an objective assessment to enable you to succeed in the real world. The feasibility study is your foundation. Make it a strong one.

Jeffrey Supnick is president of Supnick Real Estate Co. and is a 25-year veteran of the self-storage industry. During his career, Supnick has been responsible for the development of more than 30 self-storage sites. Supnick Real Estate Co. is a full-service firm devoted exclusively to self-storage brokerage, feasibility studies, consulting and property management services. For more information, call 856.722.1414; e-mail [email protected]; visit www.supnick.com.

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Monster Marketing

I'm a big advocate of exploiting holidays and special events as self-storage marketing opportunities, and today I learned about another clever promotion being executed by a self-storage facility in Eustis, Fla. Monster Self Storage is hosting a "Monster Egg Hunt," a collaborative project with local art leagues that combines an Easter egg hunt and art exhibit to raise funds for school art departments.

Community artists and students from Eustis Middle and High Schools have been invited to submit entries of giant eggs made from all sorts of mediums.On April 4, community members will gather for an egg hunt and to help judges choose winners in multiple prize categories. Set up as a carnival affair, the event will raise funds through the sale of concessions and raffle tickets. Prizes have been donated by local businesses. Attendees can even participate in a Peep-eating contest (you know, those marshmallowy treats coated in sugar).

I love this kind of thing. There are few better ways to build inroads to your community than to host a special event that entwines fun with fundraising. Not only might the event draw potential customers, but your facility enters the spotlight as a neighborhood outreach center. Even if people don't rent with you immediately, they will remember who you are and likely refer you to others. Even the media can't resist public-service support for events of this nature. And let's face it ... the best kind of advertising is word-of-mouth, which is free.

My family of in-laws is visiting from Oregon this weekend, and the article about Monster Self Storage inspired me to organize a new activity: an Easter egg hunt for my 10-year-old nephew. I figure plastic eggs filled with peanut butter cups and jelly beans are good for at least an hour of distraction! And when he crashes from all that sugar, there'll be peace.

I want to hear about your spring special events. For example, Store Self Storage in Palm Beach Gardens, Fla., just hosted a spring dress drive to collect prom dresses for underprivileged teen-agers. Chime into the blog and share your monster marketing ideas.

Fort Wayne Self-Storage Facility Passes Zoning Appeals

On Thursday, the Fort Wayne (Ind.) Board of Zoning Appeals approved a 101,400-square-foot self-storage complex to be built on the Northeast side of the city by Fort Wayne Storage LLC. Despite opposition from Parkview Health, whose attorney argued the project would lower neighborhood property values, board president Carl Harz said having development on the site would make surrounding sites more attractive; and other neighbors such as Midwest America Federal Credit Union wrote letters supporting the project.
 
Fort Wayne Storage owns three other local self-storage facilities and plans to invest more than $5 million in this project, using brick and stucco on the facades facing neighbors. A 4-foot mound topped with 6-foot trees will shield residential neighbors to the south.
 
The City Council must still make the make the final decision on whether to rezone the site for commercial use.
 
Source: Fort Wayne Journal Gazette, Storage units win zoning board OK

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Public Storage CEO Received $17M in 2008 Compensation

Ronald L. Havner Jr., the chief executive of Public Storage Inc., received compensation of nearly $17 million in 2008, more than seven times his 2007 amount, with most of the increase coming in the form of two bonuses, according to a recent regulatory filing. Havner, 51, is also the president and vice chairman of the Glendale, Calif.-based self-storage real estate investment trust.
 
In 2008, Havner's base salary was $952,543, a 10 percent increase from 2007. He then received a "special bonus" of more than $6.3 million, related to the March 2008 sale of 51 percent of a European subsidiary, and a separate performance-based bonus of $9.7 million. Havner also received $9,200 in the form of company contributions to his retirement plan. He received no stock-option awards in 2008, down from $582,660 the previous year.
 
In 2008, Public Storage's funds from operations rose to $5.07 per share, from $4.97 per share the previous year. Revenue slipped 4 percent to $1.75 billion. The company's stock gained about 8 percent in 2008, but has fallen about 26 percent so far in 2009.
 
Source: Associated Press, Public Storage CEO got '08 pay package worth $17M

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Two Cars Collide at North Hampton Self-Storage

A two-vehicle collision at North Hampton (N.H.) Self-Storage sent a person from each vehicle to area hospitals on Wednesday. A red Saturn sedan pulled into Lafayette Road and struck a black Jeep traveling northbound. The Saturn ran into the storage facility’s fence, while the jeep came to rest in the roadway.
 
Source: Seacoastonline.com, Two-vehicle accident sends two people to the hospital

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Monster Self Storage Seeks Monster Eggs for Holiday Hunt

Monster Self Storage of Eustis, Fla., is seeking monster eggs for a holiday hunt to take place at its facility on April 4. The company is collaborating with Eustis Art League and Mount Dora Art League to host a joint Easter egg hunt and art exhibit to raise money for the art departments of local public schools. The event will take place from 11 a.m. to 3 p.m.
 
Local artists as well as students from Eustis Middle and High Schools are being asked to make the giant eggs out of mediums such as paper mache and clay. They can be decorated as traditional Easter eggs or “monster” eggs. Prize categories for all entries include a "people's choice," "humorous," "monstrous" and "otherwise marvelous," with the winners decided by a panel of judges. Separate prize categories for high school entries are "people's choice," "creativity," "use of materials" and "execution of technique." Contest prizes have been donated by local businesses.
 
The Monster Egg Hunt will raise money through concessions and raffle prizes. In addition, Monster Self Storage will donate $1,000 to the schools.
 
All entries must be received by April 2. Info: www.monsterstorage.net
 
Source: DailyCommercial.com, Giant Eggs Will Roll April 4

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