Of Two
igh interest rates, growing debt, cratering consumer confidence, and a rollercoaster stock market describe 2025 in a nutshell. This was also the reality during the Great Financial Crisis (GFC) of 2008, the most severe economic downturn since the 1929 Wall Street crash. Over the course of a year, 1.8 million small businesses went bust, leaving a trail of layoffs and economic anxiety. Government bailouts and reforms eventually steadied the ship, but plenty of people were left shaken—and determined to never get caught off guard again.
“I already had a love for the self-storage industry, and seeing its recession-resistance sealed the deal for me,” says Vestal. “This is where I wanted to be.”
Vestal’s self-storage property was being managed by Mel Holsinger and his protégé Korey Hanson, who would eventually partner up with Vestal to create Argus Professional Storage Management. But Hanson’s foray into self-storage began a little differently, when he met Holsinger at a bar. “A lot of people seem to have stories that begin this way,” Hanson says through laughter. “I’m about to graduate from college, and I ran into Mel Holsinger while waiting for a drink. We get to talking, and he begins telling me all about this self-storage management company he had in Tucson, Ariz. He asked if I was interested in working for him, and I said sure.”
Over the next several years Holsinger became his mentor, teaching him everything he knew about the self-storage industry. Together, they grew the business from just a handful of stores to a couple dozen. When they onboarded Vestal’s facility in 2010, the two men hit it off.
“We became friends, and quickly realized we had the same outlook on life and the business,” recalls Vestal. “So, we bought Mel out and formed Argus Professional Storage Management [APSM].”
“We really took it to the moon from there,” adds Hanson, “from 23 properties to over 270 properties at our peak.”
Hanson explains that choosing a REIT alternative provides several benefits. “For one, a rebrand is not required, and we have more control over how we operate each site for our clients and that’s important to many owners.”
When a facility or portfolio is onboarded with APSM, Vestal says they receive a much more comprehensive technology stack than an individual owner can provide. “It’s not uncommon for us to take over a store from an independent operator and see 15 to 25 percent revenue growth in year one using our systems. And it’s going to get even better as we continue to build out our in-house technology stack, improving the customer’s user experience.”
Hanson makes the point that the REITs provide a very good user experience driven by their internal systems. “We’re going to do the same to create a superior user experience, more transparency, and get better results for our clients,” he says. “And we’re not creating these platforms to sell them to others. This is strictly for Argus’ internal use and for the benefit of our clients.”
Speaking of clients, Vestal says that as a REIT alternative, he and Hanson are very hands-on. They give their personal cell phone numbers to their clients and are always available to answer any questions or concerns. “Both of us are routinely meeting with clients to make sure we understand their investment goals and objectives,” says Vestal. “Many become friends and partners, and we often find ourselves golfing, fishing, or just socializing with them. We’ve personally invested in some of the deals we manage too. We believe in what we are doing and support our clients at every level.”
Vestal says they are honored that several well-known self-storage executives let APSM manage their personal investment properties for them. “They know we’re self-storage guys at heart. We live and breathe self-storage; and most importantly, they know we’re honest, hardworking, and operate with a high level of integrity. They trust us, and we don’t take that for granted.”
Vestal isn’t surprised. “It’s going to be getting more and more competitive as the industry continues to consolidate. Extra Space tried the multi-brand approach when they bought Storage Express, Life Storage, and so on. But they’ve since said that they are moving away from that strategy, and it’s going to be all Extra Space-branded stores moving forward.”
Hanson doesn’t think a multi-brand strategy will work in self-storage like it does in the hospitality industry, where there can be a couple dozen brands under one umbrella, tiered based on quality, price, and amenities. While he does believe some storage brands may carve out a niche, saying, “I actually see SmartStop potentially becoming the Ritz Carlton of self-storage,” for the most part, he doesn’t think the average person is going to pay a premium for storage because it’s “nicer.” “It’s a convenience-based business and a commodity,” he says. “You don’t live in it.”
Argus Professional Storage Management placed No. 10 in MSM’s 2024 Top Operators list, boasting 269 facilities and more than 20 million rentable square feet. Today, they’re managing 238 properties, approximately 17 million square feet. Where did those properties and footage go? “Argus was part of the NSA PRO internalization,” says Vestal.
In 2019, Argus was given the opportunity to be part of self-storage REIT National Storage Affililiate Trust’s (NSA) Participating Regional Operating (PRO) structure under the Blue Sky brand. Five years later, in June 2024, NSA announced an agreement in principle for the internalization of PROs. As part of the transaction, NSA’s eight PROs, which at the time managed more than 30 percent of NSA’s 1,050 properties, would be required to transition management back to NSA’s platform.
“Being part of the NSA PRO structure was a great experience for us,” says Vestal. “We were actually the newest PRO on the block, so exiting when NSA announced the internalization was just another business deal for us, and we enjoyed our time working with NSA.”
Hanson makes it clear that APSM is growing rapidly with more than 40 new management contracts added since the NSA PRO internalization. However, they won’t just onboard any facility. “We are always looking for new clients, but we want to grow responsibly, with no conflicts of interest. We don’t want to buy someone’s property, and we don’t operate stores that compete directly with our other clients. We are firm on maintaining our client-first approach and doing business the right way.”
“We’ve been as big as 270 sites, and our current platform is built to handle more than 350 properties,” says Vestal. “We’re operating coast to coast in the U.S., and going to Canada isn’t out of the question if the right opportunity arises. In the meantime, we’re just enjoying the journey.”
Hanson believes that when you’re developing a new self-storage property or operating an existing self-storage facility, you should be able to price your product at any level you want to try to fill it up and create a business enterprise. He also says that one of the biggest benefits of owning self-storage is the month-to-month lease and the ability to adjust rents as you see fit or as the market demands. “The community and our customers need storage as a service, but everyone needs to remember that we don’t force anyone to rent from us and they can move out at any time,” says Hanson. “Unfortunately, regulation is the collateral damage of the recent pricing strategies that some of our peers have implemented. Once the government gets their hands on us, it’s going to really change the overall business.”
For those who can wait, Hanson says the best bet is to sit tight and see what happens. “Anyone thinking you’re going to lease up a new development in 12 to 18 months like we were doing in 2021 and ’22 … sorry, that’s not happening anymore, in most markets at least.”
Vestal thinks that one reason people invest, when all signs indicate they shouldn’t, is because they know development can take a long time. “It can be a year to 18 months for plans and approvals to go through the cities today, and then it’s another year or more to build it. So it’s a two-and-a-half-year to three-year process from the time you find a piece of land to the time you’re actually renting a unit, and a lot can happen in those two and a half years. And they’re hoping for the best to happen, and that the stars align, but that is a risky approach to take, as we are seeing more and more developers finding themselves with a fully approved project that does not pencil in today’s market.”
Unfortunately, things don’t always pan out. Vestal says that there are a lot of projects today that are struggling because they were built in 2021 and ’22, when rental rates were much higher. “If you underwrote your deal at the top of the market, you might be hurting now as interest rates are much higher today, and rental rates and values are much lower.”
Hanson sees other obstacles that will slow development. “Everything that’s going on with the current administration, the tax on, tax off … uncertainty is not good for the business.” Regardless of what happens, Hanson says we can expect to see steel prices rise, further hampering new development. “I suppose it will help existing self-storage facilities that are already built and occupied,” he says. “It’ll be less competition for them.”
Will there come a time when the market is so saturated that self-storage development just becomes stagnant? “There is something to that idea,” Vestal says, noting that storage demand is typically driven by submarket jobs and population growth. “At some point, there are some submarkets that will just not be able to absorb any new supply. The numbers won’t work if there’s negative population growth, no new housing, and no new jobs being created.”
Vestal and Hanson also point out that they’ve recently seen a handful of owners lose their properties to foreclosure, when in the past self-storage was the one sector least likely to ever have a property go back to the bank. “It’s unfortunate, but it’s a sign of the times,” Hanson says, adding that oftentimes the banks look to a third-party management company to deal with the property until they can stabilize it and sell it off. “These are short-term but lucrative deals for us. Banks typically have no idea how to deal with self-storage they are taking back, and because we don’t require rebranding, we offer a cost effective solution to the lender to work through a problem loan.”
“Same,” says Hanson. “It’s not really work for us. It really is our passion and our hobby wrapped into one.”
There’s just something about the industry that makes Vestal smile. “I used to go to office building conventions, and it was all men in suits and it was so stuffy. And then you go to a self-storage industry convention. Everyone is open, friendly, willing to help, and sharing their knowledge. And the richest man in the room is often the guy in the Hawaiian shirt and blue jeans.”
The passion the two have for the industry makes it hard to shut off self-storage talk. “When we’re at dinner, teeing it up, or just hanging out, we’re still talking storage,” Vestal says with a laugh. “It’s in our blood; we just love what we do.”
Will that passion be passed down? “Korey and I do have family members working at Argus. Brothers, sisters, and mothers, but no kids yet. We will see if our kids find the same enjoyment working in the self-storage industry as we do.”