UKs Space Maker Storage Up for Sale

The Space Maker Group, which operates 12 U.K. self-storage facilities, is up for sale for the second time in two years. Managed by PricewaterhouseCoopers, the sale is in the second round of bids. According to an article in The Independent, initial bids did not exceed £31, and management and private equity backers are believed to want an offer closer to the £63m Babcock & Brown Global Partners paid in late 2007.
Based in Chiswick, West London, the company was established in 2000 by property entrepreneurs David Hicks and Dougald McLachlan. In addition to its self-storage facilities, the company has a removals subsidiary, in Bournemouth.
Source: The Independent (London), For sale: Self-storage firm Space Maker, complete with 11 depots and £45m debt

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North Carolina Amends Self-Storage Lien Law

On June 18, the North Carolina General Assembly ratified a bill that amends the laws regulating self-storage facilities. Senate Bill 448, introduced by Sen. David Hoyle, D-Gaston, was adopted in the House in a 108:1 vote, and has been sent to the governor for approval. The bill establishes new requirements for placing liens on delinquent renters and how property may be sold to settle unpaid rent.

To read the bill in detail, visit

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Take Advantage of a Buyers Self-Storage Market

It’s a great time to be a self-storage buyer, poised to take advantage of the highest returns we’ve seen in years. There are some good facilities on the market at low prices (in terms of cap rates), and many properties are being valued unrealistically. There are even a few properties that may be available from foreclosure. Let’s explore the current real estate market, when it will be the right time to buy self-storage, and the right steps to making a good purchase.
Buying Basics

The reality is we haven’t seen this market fully unwind yet. The number of foreclosures in self-storage is very small. Lately, we’ve been working with banks and loan servicers on troubled assets and found that, for the most part, the number of problem loans is also relatively small. However, some of the REITs and larger partnerships are facing large loan expirations in the next few months.
In the past, the banker’s credo was, “Your first loss is your best loss,” meaning it was better to foreclose than to wait for a property’s value to further decline. In this early stage of the game, it appears banks and commercial mortgage-backed security servicers may be willing to make significant concessions to avoid foreclosure, keeping them from writing off the loan and recording the loss on their books.

Thus, it’s not yet clear if the foreclosure mode will produce good buys in the immediate future. The banks are unsure of values, or they may believe the government’s Troubled Assets Relief Program may be a better buyer in the end.

There are a number of sellers in the market right now. Not unlike the banks, many of them are holding out for high prices that don’t reflect the market. These sellers may be relying on old appraisals from 2007 or thinking the listing price is as low as they’ll go. Some, however, may be desperate to sell, forcing flexibility. That said, a tortuous negotiation may be at hand where the asking and sale price are determined.

For buyers to be effective in a market as unsettled as this one, they should think about the listed property they would like to own. Try to buy quality properties, not just those that are cheap. Whatever criteria you use to assess value (location, type of construction, demographics, excess land, etc.), stick to them when evaluating properties. This keeps you from buying something you don’t really want.
Closing the Deal

The next step in buying a property is meeting with a banker or mortgage broker who specializes in self-storage to ensure there is money to borrow. You can’t simply assume there will be money available for a purchase. We’re seeing short amortizations and terms, and rigorous value underwriting—12 months trailing income, 60 percent to 70 percent max loan-to-value ratios, full recourse, real net worth.

In this market, having your financing relationships tied down is probably the single most important thing you can do, for yourself and to convince the seller you have the capacity to do the deal. It will make negotiations easier and the deal close faster. Once you have this data, you can run your numbers and develop values you think are appropriate.

We’re seeing deals in cap-rate ranges anywhere from 9 percent to 11 percent, and more in some instances. Give yourself a little room because the current market is so unique and volatile that there are very few sales for which an exact cap rate is easily determined.

Choose your properties and rank them according to preference, then start calling the listing brokers for more information. When talking to a broker, tell him all you can about your experience and financial capacity and let him know you’ve studied the information and are a serious buyer.

Next, visit the property, reviewing everything available. Ask questions, and then make a formal offer in writing. Ask to meet the broker (and owner, if possible) so you can explain how you arrived at the offering price. Both will appreciate you being forthcoming about your methodology and may even see that either the market has changed or their original valuation was off the mark.

These are difficult decisions for a seller, too, as many owners have strong emotional ties to a property. Therefore, give the seller a reasonable time frame to agree to the deal, a reasonable due diligence time frame in the contract, and as short of a closing as possible to get the loan done. Very likely, the owner will counter with a higher price (this should be expected).

If you get a reasonable counter, then counter back. You may, however, decide you are too far apart on price to counter, in which case, you should say, “I really like the property and would like to buy it, but this is the price I can pay.”

Tell him you will leave the offer open for another week or two if he changes his mind. The seller may reconcile the reality of selling the property at your price or choose to not sell it at all. If he doesn’t want to sell, move on to the next property on your list. Always have a property on your list so your desire to do a deal doesn’t compromise your financial or quality goals.
Michael L. McCune is the president of the Argus Self Storage Sales Network, a national network of real estate brokers who specialize in self-storage. Argus provides brokerage, consulting and marketing services to self-storage buyers and sellers and operates, a marketing medium and information resource for facility owners. For more information, call 800.55.STORE.

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Self-Storage Site Selection: Rules and Tools

The best self-storage developers have a plethora of tools and techniques they use to locate, evaluate and develop their properties. This article will teach you some of those valuable tricks of the trade as they apply to the site-selection process. 

Before I equip you with tools to find better sites, I want to eliminate the idea that developing self-storage can be boiled down to an exact science. One of the most limiting paradigms you may encounter in this industry is the idea of “benchmarks.” While some of these benchmarks can be good tools, more often than not, they are misused. Here are a few to be cautious of:

When supply in your market is below 6.5 square feet per person, there is a good opportunity for expansion. False. This statement is one of the most misleading in the entire industry. I’ve seen markets with 12 square feet per person that could still absorb 100,000 square feet of self-storage. Conversely, there are overbuilt markets with as little as 2.5 square feet per person. Basic economics teaches us that what is important is the relationship between supply and demand. You must measure both.

You should budget $30 per square foot for a single-story development. False. Of the past 50 ground-up projects I’ve reviewed, I’ve seen maybe one or two where the actual cost to build was less than $30 per foot. There are too many variables in each project to use any type of broad benchmark for development costs. Costs unique to every project include permitting, site work, engineering, utilities, storm-water management, architectural details, construction interest, cash-flow deficit financing, start-up costs and more.

Don’t overlook the value of putting together an actual budget for your specific project. Just because the cash flows when you use a generic benchmark, like $30 per square foot, doesn’t mean it will work if construction costs are $50 per square foot.

The average project leases up at 5 percent per month. False. We do not rent percentages in this industry. We rent units. Tenants also move out regularly. Forget using a percentage growth rate in lease-up. It’s a faulty measurement.

Operation costs will be about 35 percent of gross income. Maybe. It might cost 50 percent of your gross income; it might cost 30 percent. This will be unique to every project, every business model, every micro market.

You’ve read that your market is under supplied. Maybe. Most data publicized in this industry is on a broad-market basis. You will actually serve a micro market—those residents and businesses in immediate, convenient proximity to your site.
The Rules

Now that I’ve exposed a few myths, here are three rules for identifying, evaluating and securing a great self-storage site, not just a site.

Rule No. 1: Be prepared to look many potential sites. I’ve worked with Richmond, Va.-based self-storage developer Tom Kern of Innovision Development LLC for more than three years in evaluating self-storage sites. During that time, he has developed a comprehensive database of potential self-storage locations in his target markets.

“You have to look at site selection as a process of filling your pipeline,” Kern says. “You have to evaluate multiple sites simultaneously before you can eliminate the lesser sites and focus on the good ones. Plus, there are lots of things that can hold up a great site for months, even years. The more you get in your pipeline, the better positioned you will be to be objective in evaluating sites.”

Rule No. 2: Understand the local zoning rules and approval climate for self-storage. It may be a great site, but if you can’t build storage there, you must be open to moving on. I’ve seen developers get so locked into a site that isn’t zoned for self-storage that they overlook equally strong sites. They end up spending a ton of cash and valuable time on rezoning applications only to wind up at square one at the end of the day—without a site and with less cash for the next project.

Don’t get me wrong, I’m not opposed to applying for rezoning. Great sites have been developed that way. But in the first stages of your site-selection process, know where the opportunities exist ... and where the doors are closed.

How do you learn about zoning? First, go online and check to see if your city or county has online zoning resources. Many will provide (sometimes for a nominal fee) a zoning map that details stratified zoning classes. Often self-storage is allowed only in manufacturing or industrial areas. Other municipalities have a commercial zone that allows self-storage. Some cities or counties only allow it by special-use permit or as part of a larger development.

By contacting the local zoning office in your jurisdiction (city, county, township, etc.), you should be able to quickly learn the rules for developing self-storage—where it can go, how much can be built and how to gain approvals.

Rule No. 3: Do the work. When you identify a site, know the competition. Walk in and speak to the local self-storage managers. Rent a unit. Observe the market. Too often, would-be developers rely solely on brokers to find them quality sites. “A good broker is essential to your team, but you have to be your own birddog,” Kern says, “And like any profession, you have to have the right tools to locate and evaluate sites.” 

Site-Selection Tools

Now that you have a general idea of the rules, here are the tools you’ll need to secure the best self-storage site.

Tool No. 1: Online resources. If you’re looking for sites, get familiar with the local resources that may be available on your city or county website. Cities, states and counties often have great information you can access right from your computer. If they offer a GIS-mapping resource, you can often identify zoning, acreage and property data quickly.

There are two great real estate websites you should check out: and For a basic membership fee, you can access property listings in your target market. These sites allow you to quickly focus your search by property type, ZIP code, county and other variables. Basic memberships may not provide all the data you need but will point you in the direction of listing brokers, who should provide as much info as you need for an initial review. Don’t be afraid to ask for data such as zoning, demographics, site limitations, traffic patterns, etc.

I use Google Maps to quickly identify major competitors in any given market. By searching “self-storage near 123 Main Street,” I can quickly identify approximately how many competitors are within a given distance of my potential site. From there you can often directly access competitor websites, which sometimes contain rate and availability info.

Tool No. 2: A big map. One developer I know had an 8-by-16-foot aerial map of his target market. He pointed out every competitor and residential development as well as the main traffic patterns around his site―no doubt a great resource. You can do the same thing with a big road map. Map out the competitors and zoning areas to identify specific ones where you should direct your search. Some great sites have been identified where others were not looking. Not all great sites are listed for sale.

“I look for sites in good locations that might have a little hair on them,” Kern says. “What I mean by that is a site that is not great for retail, might have some irregular qualities, maybe a ‘flag’ lot or a tract with great visibility near a power line or a railroad. They’re out there; you just have to be willing to go find them.” Having a big map that identifies zoning classifications and competitors will help direct your efforts.

Tool No. 3: The letter of intent. Your letter of intent should give you time to investigate how you will pull a deal together and specify your desired terms of purchase. It will give the seller an idea of how much you will pay, how long you need to investigate the feasibility of the site and market, and identify any contingencies that you will require in the contract.

Your letter is your first entry into the contract-negotiations phase with the seller or listing broker. It should spell out everything that’s important to you in acquiring the property. Give yourself adequate time to deal with any market investigation, feasibility analysis, valuation, environmental review, zoning, site planning and necessary approvals. It’s the vehicle to specify trigger points for contract length, extension, cancellation, earnest money handling, closing, etc. Your broker and attorney can help you draft one.

As you move toward finding your next self-storage site, keep in mind that great sites are out there, but you will have to work to find them. It is not easy, but it can be rewarding. Plus, finding the right site for your project is great for your long-term business strategy. 

Ben Burkhart is the owner of BKB Properties and, a full-service self-storage consulting and resources firm. He works with developers around the country in assessing site feasibility, market strength, marketing strategies, financial analysis, profit enhancement, site design and deal structure. To reach him, call 804.598.8742; e-mail

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Domo Arigato, Storage Roboto

Remember "Mr. Roboto," the 1983 song release by Styx? Even if you're not old enough to remember when it was as hit (I admit I am), there are enough spoofs, covers and clips of it on YouTube that even the young'uns should know what I'm talking about. Among other things, the song was a social commentary on the use of technology in the 1980s. If only Styx knew...

Today we posted two press releases to the ISS website about automated self-storage facilities that have recently opened in Florida. Both use patented technology created by Automated Self Storage Systems and Westfalia Technologies, but RoboVault (the snazzier of the two) is being marketed as a kind of self-storage Fort Knox. It incorporates high-tech security like biometric fingerprint scanning, motion and heat detectors, and photoelectric beams.

What makes these facilities unique is the system delivers the storage unit—whether it houses household goods, wine, a car or jewelry—right to the customer at the ground level. He enters the gate, inputs his PIN, and voila! The door opens, and there's his stuff.

So here's the million-dollar question (about a $22 million facility, by the way): Is this self-storage progress? Or is it the first step toward the dissolution of what has historically been a people-oriented business with a personal touch? Perhaps some of you agree with the conclusion reached by Styx: "The problem's plain to see: too much technology. Machines to save our lives. Machines dehumanize."

What's your take? Please submit your comments to the blog, or jump on over to the discussion titled "Robotic Self-Storage!" on Self-Storage Talk.

$22M Robotic Self-Storage Facility Opens in Ft. Lauderdale

RoboVault, a fully automated, high-security self-storage facility touted as the first robotic self-storage facility in the world, opened in Ft. Lauderdale, Fla., this week. Decked out with high-tech features such as fingerprint scanners and heartbeat detectors, RoboVault is the next evolution of self-storage, according to company President and CEO Marvin Chaney. The 155,000-square-foot project cost more than $22 million to build.
The facility was created with the affluent collectors in mind, intended to store art, wine, vintage and exotic cars, and other priceless items. Once customers enter the gates, they encounter a series of computerized keypads and fingerprint scans before they can go further.
An automated container-retrieval system transports and stores customers’ valuables. The facility has approximately 3,400 units in the form of safety-deposit boxes, wine-storage units and large steel containers.
RoboVault is one of several storage facilities developed by Chaney, who has more than 25 years experience in the self-storage industry. He is credited with developing and building South Florida's first high-rise storage facility in Oakland Park in 1986.

Source: (Ft. Lauderdale, Fla.), High-security $22 million storage facility opens in Fort Lauderdale

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Automated Self Storage Gets Green Building Award

The newly opened Safe & Secure Automated Self Storage facility in Coconut Creek, Fla., has received a Green Building of America Award from Real Estate & Construction Review magazine. Chosen from more than 2,500 projects, Safe & Secure will be featured in an upcoming special edition titled “Real Estate & Construction Review – Southeast Green Success Stories.” A case study about this facility will include comments from the project’s owner/developer, consultants, architects and contractors about how they built one of the Southeast’s most innovative sustainable facilities.
Safe & Secure is one of the first facilities developed by Automated Self Storage Systems LLC in partnership with Westfalia Technologies Inc. The 178,000-square-foot project uses Westfalia’s Automated Storage and Retrieval Systems technology, which was previously used only in industrial warehouse and manufacturing plants. 
The building accommodates 539 storage modules, 100 of which can be used to store vehicles. A customer drives up to the facility and accesses his module by entering his PIN code, which signals the Storage and Retrieval Machine to claim the appropriate module and present it to the customer at ground level. The building has a back-up generator system to protect it in the event of a power failure.
Safe & Secure includes numerous energy-efficient and environmentally friendly features including water-efficient landscaping, low power consumption, pressurization to reduce energy loss, reduced waste production, improved air quality, and green cleaning and pest control. The facility is currently in the process of being certified by the U.S. Green Building Council as a green building.
Based in Delray Beach, Fla., Automated Self Storage Systems is a subsidiary of real estate developer The Pugliese Co. The company has developed, constructed, managed and operated self-storage facilities throughout South Florida and New Jersey for more than 15 years.
Westfalia provides logistics software and material-handling equipment for warehouses, distribution centers and automated self-storage facilities.
The Real Estate & Construction Review has been published annually by Construction Communications since 1999. The publication is read and referenced by leaders in government, economic development and financial institutions as well as building owners, architects and contractors.

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House Demolished for Self-Storage in Herkimer, N.Y.

One hour was all it took to demolish an old house in Herkimer, N.Y., on Thursday and make way for the construction of Mohawk Self Storage. Owned by Don Foor, the four-building, 100-unit self-storage facility, will be built by Mohawk Enterprises One LLC, which expects to have the first building in place by September.
Foor owns another local self-storage facility that is at full capacity.
Bulinski Trucking, Excavating and Masonry handled demolition of the house, which has been vacant for more than five years.
Source: The Evening Telegram (Herkimer, N.Y.), Building razed to make way for new storage units

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Proposed Self-Storage Disquiets Neighbors in Rocklin

A self-storage facility to be built in Rocklin, Calif., this summer is getting less than enthusiastic response from residents, whose row of homes lies adjacent to the parcel. The Yankee Hill housing development homeowners association worked with the local planning commission to address issues such as lighting, landscaping, fencing and the nearby wetlands, but neighbors are still concerned.
The 209,862-square-foot self-storage and light industrial complex is being developed by Tom Smith of Thomastown Builders, who said he showed his site plan to homeowners before he even bought the property. Smith built another facility in the area 11 years ago, Rocklin Self Storage, with which neighbors seem pleased.
One of the issues on the table is the fact that there is only one road leading in and out of the area, and it is frequently blocked by a train. The city has agreed to create a second outlet, and Smith agreed to pay for signs and a roundabout to discourage large trucks from exiting the facility through the housing development.
In addition, neighbors adjacent to the property will be deeded at least 30 extra feet to their backyards, but some homeowners are not prepared for the additional property taxes that come with the gifted land.
Source: Rocklin Placer Herald (Calif.), All is not well in Yankee Hill

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Stolen Fire Truck Stashed in CT Self-Storage Unit

A truck that was stolen from the Essex Fire Engine Co. #1 station on May 22 was found sticking out of a self-storage unit in Farmington, Conn., two days later. The 2006 emergency pickup was undamaged. Its discovery was reported to Farmington police by the self-storage owner, who also reported one of his own cars missing, a 2006 Honda Odyssey.
Police have charged Kevin Tucker, 45, of Plainville, Conn., with first-degree larceny, third-degree larceny and theft of a license plate. Additional charges are expected once the investigation is complete. Tucker allegedly stole the truck after running out of gas. He is being held on $45,000 bond until his next court appearance July 8.
Source: Valley Courier, Stolen Fire Truck Returned Unharmed

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