n today’s digital age, the self-storage industry is increasingly adopting electronic leases, transforming how facilities manage tenant agreements. These digital documents, which can be reviewed and signed online, offer a range of benefits that can streamline operations and enhance customer convenience.

With any technological innovation though, there are challenges and potential drawbacks present in digital adaptation. Delving into a comprehensive analysis of both the pros and cons of electronic leases in self-storage and insight from industry professionals, we’ve highlighted information necessary for business owners and managers to make informed decisions when integrating this technology into their operations.

“I think electronic leases have made compliance easier, especially those leases that impose the duty on the prospective tenant to complete all sections of the lease and ‘approve’ or ‘accept’ the lease before they are given access to the facility to store their property. Certainly, with proper safeguards in place, it may be easier to govern the proper use and completion of an electronic lease than it was to govern the proper completion of paper leases,” says Scott Zucker, Esq., an attorney with Atlanta, Ga.-based Weissmann Zucker Euster and Katz P.C.

When a paper lease is involved, it’s easy for more human errors to occur too. “Historically, with paper, manual leases, we discovered that too often sections of the lease had been left incomplete or the agreements were not signed at all,” Zucker says. “With electronic leases, the tenant is obligated to execute the form before the lease is deemed completed, which is a great advantage for operators.” Depending on the software, requirements can be put in place to ensure a tenant can’t move forward in the agreement without signing a section.

One thing to note, however, is that once the agreement is signed by the tenant, they are legally bound to it even if they did not read each of the sections themselves. “The responsibility is on the signer,” says Anne Mari DeCoster, a self-storage consultant. “You’ve provided the lease, you’ve provided the signature place, and we’ve agreed to an electronic signature.”

To make it easier for the tenant to better understand preemptively though, DeCoster notes that there are other ways the business can inform the client. “That can be through a summary of the lease that states critical points like ‘These are our access hours and this is the late fee.’ It’s that 20-minute lease presentation that’s been done in person, but it’s shortened in a way the tenant can receive and keep a hold of.” This allows both parties an additional source to refer back to if needed.

Since the law began to recognize and accept electronic signatures, it’s also become much easier and more efficient to adopt into a business overall. “Accordingly, the advantage of electronic leases for better record-keeping is an easy one,” says Zucker. “Similarly for document management purposes, locating pertinent records is much faster and more efficient with electronic records than paper records. Of course, there can always be the risk of legal challenges to digital records, but there are systems available that can verify the authenticity of scanned documents much easier. Much of the concern over the admissibility of scanned records has lessened over the last decade, but it has not completely disappeared.”

One thing to note is that electronic leases from several years prior may take longer to retrieve, depending on the software company, because they may have been digitally archived.

While it may seem daunting in the beginning, it’s also important to know that the “learning stages” in the conversion are only temporary.

Mixon also mentioned that there have been times when documents have not been saved correctly in the past, causing them to go back to the client for updated copies. While it was a relatively easy fix, extra steps were still needed to complete the process.

With new technological innovations happening more frequently as well, it can be expected that electronic leases will continue to evolve. “In the future, I would imagine that our phones will be able to autofill the entire document or a short chat with AI will do it all for us, allowing for time savings once again,” says Ballard. “We will be prompting them to check the accuracy I am sure.”

he technology revolution is part of today’s self-storage customer experience. Tools like smart locks and cameras, property management software, and website and mobile app options are on customers’ radar screens as highlighted in the 2023 Self-Storage Almanac. At the same time, customer preferences start with the basics that always have been part of any operation.

The most fundamental customer expectation is “clean,” according to Sarah Beth Johnson, vice president of sales and development at Universal Storage Group. “Well maintained, no dust, no debris, no weeds growing,” she says. “How your facility looks represents you and represents the care you’re going to take with [the customers’] belongings.”

Other expectations include knowledgeable staff helping with finding the right unit size and providing packing tips, according to Johnson. Hainrihar adds that climate control is an increasing preference, at least as an available option, and both agree ample lighting is important.

“I always say that self-storage centers can’t have too much light,” says Hainrihar. “No one ever walked into a self-storage property and said, ‘Man it’s bright in here, isn’t it?’”

Carol Mixon of SkilCheck adds that another basic customer expectation is a quick and easy rental process that takes no longer than 15 minutes.

“A modern and attractive web portal and mobile-optimized web page or app are table stakes, as our data indicates that greater than 90 percent of all customers shop for storage deals online before they ever step foot on site,” says Mike Baillargeon, COO of Hearthfire Holdings, LLC. “This also drives our digital marketing and social media strategies, as we know that basically all of our customers are searching for the right deal online.”

Keeping the digital presence simple, informative, and authentic is important. Johnson highlights that today’s customer is in a “get-it-now society,” which is why websites managed by Universal Storage Group include the information customers find most valuable on the first page, such as hours of operation, contact information, Google reviews, photos, and the units available to rent.

But online photos can impact customer expectations. “They want your facility to look like it’s supposed to look,” says Johnson. “A lot of times people are putting stock photos on their websites and not actual photos, or they’re photoshopping the photos, and then when [customers] get there, it’s not what they saw online. The pictures online might have blue doors. And then when you get there they have green doors and that’s not the same [self- storage] site. [Customers] don’t like to be baited and switched.”

Hainrihar points out that each storage center is unique in that every market is different on the micro, local level. “We are using our website data to understand, ‘Okay, how long has this person been on there? What are they clicking on? What are they looking at?’ And that helps us understand what questions they might have or what their interests are.”

For example, if website visitors are clicking on the size guide at a high rate, he says it would provide value to visitors to include more information on what will fit into a 10-by-10 unit.

Johnson’s group goes big into data, compiling a year-end review for the Georgia Self Storage Association (GASSA) that includes a wide range of metrics such as customer demographics, length of rentals, times of day and days of week that are busiest for facilities, and more. She says having this information in hand helps with marketing and facility staffing.

Customer preferences come into play in marketing. With so many marketing channels available to businesses, it’s important to meet people where they want to be reached, whether it’s a website with a user- and mobile-friendly design and social media ads or Valpak inserts and well-placed billboards.

When people looking to rent storage units begin their web search, it’s important to make the experience similar to other retail products and services Hainrihar says, emphasizing that a self-storage rental is a low frequency use product. For Compass, this means the entire process from web search to website visit is intuitive and familiar for the website visitor.

“That’s one of those expectations that they’re not demanding from our product, but we know that that’s what they’re going to do when they go to search. We have to fit that mold so that we get the traction when the customer is looking.”

To summarize preferences, Baillargeon provides a checklist of Hearthfire Holdings’ customer needs priorities:

• Deal-breakers to rent – Convenience of location, functionality, feeling of safety and security, and ease of rental.
• Deal-breakers to continue renting – Value. Customers are constantly assessing the value of the items on which they spend their money. Inflation means each dollar doesn’t go as far, so they won’t spend money on low-value items for too long.
• Highly important but not a deal-breaker – Competitive pricing, cleanliness, access hours.
• Nice but not really moving the needle – Bluetooth lock technology and other tech elements that add significant expense to operating the store and (in the customer’s mind) drive up the cost of their monthly rent.

Hearthfire’s list of its customer priorities highlights how fundamental the hands-on physical experience (dry, clean, and secure) remains in the self-storage industry in terms of customer expectations and retention. At the same time, there’s no arguing that today’s customer also has digital expectations ranging from marketing channels and contact points to amenities that enhance the storage unit renting experience such as online rental processes, smart security features, and engagement options that include user-friendly websites and mobile apps.

And finally, meeting customer expectations is an important part of that vital business asset–the brand–says Johnson.

“If your website is not spot on, if your gate doesn’t work half the time, if your credit card processing isn’t up to par, the cleanliness of your facility—all of those things make up your brand, and your brand is what people are going to know,” she says.

People renting storage units is the key metric driving the bottom line. Knowing what people are looking for and then meeting those preferences and expectations pays dividends in any operation.

lot of marriages are put to the test at some point throughout the couples’ time together. For Josh and Melissa Huff, co-founders of Lighthouse Storage Solutions, it happened almost immediately. After dating for less than a year, the couple decided to marry in early 2020. Not only was it a big change for them, but they were also merging two families. (Josh has three daughters and Melissa has one son, all from previous marriages.)

The honeymoon was barely over when the world shut down. COVID entered the United States like a bull in a china shop, forcing the newlyweds into lockdown before the ink was even dry on the marriage license.

“It could’ve gone south very quickly,” laughs Josh. “Fortunately, that’s not what happened. In fact, it was a blessing being so close to one another and our kids during such a turbulent time.”

That wasn’t the only bright side to the situation. “It was also during quarantine that Melissa introduced me to the world of self-storage,” says Josh.

During the COVID quarantine, the couple was forced to share space in their home office. Again, this closeness was a blessing in disguise. “That’s when I started becoming interested in self-storage,” explains Josh. “I’d listen to Melissa talking about the business with clients, see the type of work she was doing … I already had years of experience in marketing, and thought, maybe there’s a place for my gifts in the self-storage world.”

He began by working on side projects for Melissa and assisting with marketing for the state associations she was overseeing. But he saw other opportunities on the horizon, so he started Lighthouse Storage Solutions. “At first the business was geared more towards self-storage vendors, but it quickly expanded to owners/operators as their needs grew, and especially as the pandemic eased,” says Josh. “A number of facilities that had been doing unprecedented levels of business suddenly found themselves struggling, so [I] began looking at ways to help them with marketing, web design, and drone photos and video.”

A month later, Melissa joined the team, making it a full-service operation to “guide owners on a clear path toward their desired destination.”

“That was an interesting dynamic,” Josh says. “I’d been working for her, and now she was working for me. But we quickly found our lanes and stayed in them to be true co-founders of the business. And it works out really well because our two skill sets don’t really overlap, so we don’t get in each other’s way!”

Josh explains that while he focuses on marketing and the customer-facing aspects of client businesses, Melissa is on the backend, offering self-storage consulting, employee training, procedure manuals, and business valuation and optimization services. She is also a prolific speaker, often taking the stage at state and national shows to discuss the industry. “I love speaking at industry events and contributing to industry publications,” says Melissa. “And I am always happy to talk with owner operators and managers about their business. Self-storage really is a passion.”

To brainstorm topics, they listen in on topics of conversation at trade shows and industry events, solicit clients for ideas, and lurk in online self-storage groups to see what people are talking about. “The hunt for the next topic is almost as fun as putting on the show itself,” says Melissa.

“I couldn’t be happier with the ways things turned out; God has truly blessed us,” says Josh. “The work is great, but working together is even better. Our jobs take us all over the country, and we always make time for fun on those travels.”

“We’re a team, in business and in life,” adds Melissa. “We celebrate every win together.”

he self-storage industry has a long history of being “old school” and a haven for the classic mom-and-pop way of running a business. However, the days of paper ledgers and manager-led personal golf cart tours have given way to a wide variety of smart and tech-forward innovations. On the surface, the pivot away from the face-to-face experience would seem to negatively affect customer service, but done well these new methods can lead to higher levels of both profitability and customer satisfaction.

This progressive company was formed because other leading property management systems were denying open access to system data. Tenant commits to ensure access to data manifests through its open API, data warehouse, and BI products.

“Open access enables independent storage operators to deploy a portfolio of best-of-breed tools to help attract and convert tenants, maximize revenue, automate operations, make business decision, and offer the best tenant experience.”

An important benefit of a cloud-based system is the ability to allow operators to seamlessly receive continued new functionality. Vendors can deploy features and fixes monthly, weekly, even daily. Operators get those enhancements with no effort on their part. Innovation and feedback can be incorporated and iterated on at unforeseen speeds.

“Tenant’s open platform makes it simple for other software services to integrate with our products, offering more capability and more choice. An open platform gives operators, and other software vendors, access to the same APIs used by Tenant.”

As we are seeing as the industry evolves, the future of storage is automation, including tenant services devoid of in-person interaction. Ironically, with the right tech this can elevate the tenant experience while reduce staffing costs. Touchless rentals, mobile phone ID verification, two-step rental and payment link, and lead response automation are impressive tools toward achieving this goal.

“The future of storage is also data-based decisions,” says Paquin. “AI is democratizing the ability to extract insights from data. With Tenant, operators own their data. Tools are being built that allow operators to use AI to identify and extract actionable insights that will give their businesses an edge in competitive markets.”

“I was privileged to lead the science behind the first revenue management implementation for the apartment industry in the late 1990s,” says Ahmet Kuyumcu, founder and CEO of Prorize, which provides AI-based pricing and revenue management technology for the self-storage industry across 24 countries on six continents. “In 2008, we conducted a proof-of-concept study with Extra Space Storage. We then partnered with another major publicly traded REIT, executing a live pilot-control study that showed a revenue increase of over four percent compared to their internal pricing system.”

“Pricing is complex and multi-faceted in highly dynamic self-storage markets,” says Kuyumcu. “Many operators struggle to respond effectively when competitors adjust prices or demand declines. They often overreact or fail to act, missing revenue opportunities. Reacting to changing market conditions becomes a guessing game without proper data and inputs. Our system is designed to address these challenges and provide optimal pricing recommendations each day.”

Setting an optimal price for a product or service in a dynamic, time-dependent fashion is a complex and challenging prospect, ideal for the domain of artificial intelligence and machine learning (AL/ML).

“We aim to provide AI/ML-based revenue management technology for mid- to large-size operators,” says Kuyumcu. “We leverage data, science, and facts to prevent customers from overreacting to market changes. When we adjust prices, our software provides detailed explanations and related reports about why rents are changing. We offer detailed information, demand forecasts, and rent recommendations, empowering them to make informed pricing decisions. Customers can either manually approve changes or establish rules for automatic approval.”

Customer feedback, experience, and accumulated knowledge of pricing best practices in the revenue management and self-storage industries inform the developing future of this tech. Market conditions change daily; keeping one step ahead can lead to double-digit incremental revenue growth. Prorize offers quarterly executive updates to show progress and allow for fine-tuning.

“You can’t create a smart space—storage or otherwise—with devices alone. Smart storage needs three layers to succeed,” says Tom Grant, vice president at Smart Space IoT Vantiva. “As a foundation, you need a robust connectivity infrastructure. Standard Wi-Fi won’t suffice. You need strong wireless signals in every corner of your property, with support for smart device-specific wireless connection technologies. Next, you need purposefully selected, effective point solutions that help address your business challenges and renter demands. Finally, you need a unified platform to efficiently manage these solutions, automate tasks, and derive data insights.”

Smart solutions help storage operators save money while earning new revenue. Storage operators can reduce labor costs by managing multiple sites from anywhere and performing routine security checks efficiently and remotely. They can mitigate damage from adverse events by responding to real-time alerts like water leak, pest, or unusual motion detection, keeping their insurance premiums and maintenance costs low. They can also reduce their energy costs by controlling HVAC systems for optimal efficiency.

“Renters are also willing to pay a premium for smart features, especially those that offer peace of mind that their belongings are safe in storage,” says Grant. “The Vantiva Peek is a first-of-its-kind, in-unit camera with motion, temperature, and humidity sensors. Renters can use it to ‘peek’ inside their unit from anywhere. It also sends real-time alerts and an image burst if it detects motion. Peek is only available from Vantiva’s storage provider partners, who earn revenue from retail camera sales and a share of the recurring monthly revenue from Peek app subscriptions.”

In addition to the new Peek, Vantiva offers a customizable Smart Storage Operations Management Platform that can be used to manage thousands of sites, unifying tech systems regardless of manufacturer or connection technology, with a software subscription for ongoing support.

“Vantiva knows the connected consumer,” Grant says. “We are the world’s leading provider of gateway technology. Our Smart Spaces team has a proven track record of delivering mass-scale value to industries including smart home, security, and telecommunications. We use that unique expertise to partner deeply with storage providers, helping them to launch, evolve, and scale smart spaces.”

With so many positive aspects, it is important to remember to be mindful of potential risks.

“A fully automated facility can make renters feel less secure,” says Grant. “This feeling is magnified when automation is allowed to lead to neglect—when pests roam [or] linger in traps for days, refuse collects in public spaces without proper disposal, or lights or mechanical systems fail and aren’t quickly repaired. Concrete and steel building materials create natural Wi-Fi and cellular dead zones. If your renters are alone with no ability to call or text for help in an emergency, they will feel justifiably unsafe.”

Having excellent site-wide network connectivity will help improve security, but relying on proven solutions is key. A robust smart space strategy can ensure a remotely managed facility remains clean, welcoming, and secure by monitoring public spaces for refuse, defacement, or vagrancy and deploying timely, appropriate responses.

Storage facilities of any size can benefit from sitewide connectivity infrastructure. While a product like this might have the most value for operators with a portfolio of at least 10 sites, even a single site can earn revenue and differentiate.

“I know there are plenty of moms and pops out there who have built operations of that scale,” says Grant. “We are just as eager to partner with these entrepreneurs as we are with corporate-owned operations. Often, they’re the sector of the marketplace with both the vision and the nimbleness to innovate.”

PRORIZE
Prorize will focus on enhancements in predicting customer demand by micro-segments, optimizing the frequency and amount of rent increases based on customer churn and market conditions, optimizing segments and displays for tiered pricing, measuring promotion effectiveness, responding to competitive price changes, managing marketing spend efficiently, estimating budgets, and enhancing the customer experience for both mobile apps and desktop versions.

VANTIVA
Vantiva’s Peek will offer self-storage operators the ability to instantly transform their rental spaces into smart units. Installed in seconds via a powerful magnet that requires no external power or wiring, The Peek camera gives renters what they really want: 24/7 visual verification that their belongings are safe, backed by real-time alerts for adverse events. Using deep market and product development expertise, the new, low-cost, all-in-one, in-unit monitoring solution is easy for facilities to offer, earning them recurring subscription revenue while differentiating them as a smart, safe facility.

icro-apartments are a fairly new construction concept in Western countries, but they have been a part of the real estate market in Tokyo since the 90s. Even though the architectural style, known as kyosho jutaku, or just jutaku, is nothing new in the region, videos of locals and foreigners touring their micro living spaces, sometimes as small as 30 feet long, have been appearing all over social media.

The trend makes more sense when you remember the city is the largest in the world and heavily dense, so the need to house an abnormally inflated number of people while offering affordable accommodations was one of the factors that led companies in the country to invest in this type of construction. Regardless of how you might feel about the trend, it is a fact that the self-storage market got its jump-start in the country around the same time the micro-apartment movement started to take hold.

This is the case of Quraz, the biggest indoor self-storage company in Japan, founded by Matt Ward, an American expat living in Tokyo who had previous experience working in the U.S. self-storage market. After some time living in the country, he noticed the need for extra space, as houses in Japan were much smaller than those in the U.S. and other parts of the world. This gave him the idea to import the self-storage business model to the country.

He was soon able to secure funding from M3 Capital, a private equity firm in 2001, and started the business under the corporate name Piedmont Storage Management, which was changed to Quraz two years later. After much growth, in September 2013, the company was acquired by Evergreen Real Estate Partners LLC, an American Real Estate Fund backed by US Institutional Capital.

Until the company opened in the country, storage was mostly made by warehouses in a service often referred to as trunk rooms. According to an article on Tokyo Cheapo’s website, the name derived from the Victorian era, when homes typically had a room for storing trunks. When warehouses started to offer this type of business, they made the connection and the name just stuck, becoming a popular way to refer to self-storage companies in the country to this day.

Quraz was responsible for importing the U.S. self-storage business model to Japan, and Ward is still considered a pioneer in the industry for completely changing what the market looked like in the country. It did, however, suffer some slight changes to better cater to the Japanese customers. A big example of that is some niche storage solutions often referred to as “hobby storage.”

The company also offers a storage model called “garage storage” in some select facilities, a service usually used by customers who have expensive sports cars or motorcycles, as the latter is considered to be at high risk of theft in the country. As of now, they offer two types of motorcycle parking: the basic plan, which resembles a garage with lines on the floor delimiting each parking spot, and a premium version, which offers a separate unit complete with a garage door where customers can store their motorcycle as well as their equipment and tools. This version, however, is also considered hobby storage.

Most self-storage businesses in the country are unmanned but don’t have the technology you would expect from Japan. “In some of our competitors’ [storage facilities], it would sometimes take several days to process the transaction through the mail, or you would have to set up an appointment, visit, etc.”

Japanese culture is very traditional, so visiting the installations before signing a contract is a usual practice. During the tour, customers will make sure the space is clean and in good conservation. They have also been accepting of the bureaucracy of having to go through the hassle of getting in touch with the company and dealing with most of the legal process being completed primarily through mail. However, the fact that the biggest company in the country is the one that keeps a staff on site does say something about this antiquated process.

A staffed facility also allows Quraz to provide some extra services, like the Quraz Shuttle, where they will send a small delivery van driven by a staff member to a customer’s home to facilitate the loading of their property. The shuttle driver then takes them to their storage facilities and helps unload their items into their unit. “The service is free for first-time users,” Spohn says.

This fully remote service was the steppingstone that led Quraz to recently take home the Technology & Innovation award from the Self Storage Association Asia (SSAA) earlier this year. “We are quite proud of that service because we had to leverage technology and integrate it with our local operations at the property,” says Spohn. “It turns out it is a service a lot of customers really value, and it’s a huge differentiator.”

The company’s investment in customer service resulted in its demographic reaching a total of 80 percent of customers looking to store personal items in units, versus only 20 percent of businesses looking for extra storage.

For Aaron Farney, CEO of Unwired Logic, a technology company specializing in the self-storage market, Japan’s technological advancements weren’t translated for the self-storage market, as companies often prefer to follow a very traditional business approach. However, he has noticed more traditional businesses updating their business models to better appeal to customers due to worldwide technology advancements.

Farney has over 30 years of professional experience working with technology in the self-storage market and believes the next big trend will be chat commerce. “[It gives customers] the ability to use an app such as LINE, Whatsapp, or Facebook to do their whole transaction,” he says. “As the demographics get younger and younger, no one wants to pick up a phone; they don’t even want to go to a website. They are going to see something on Instagram, WhatsApp, or online, and then they will want to do the whole interaction and contracting process within the app.”

To stay ahead of the curve, Unwired Logic created its own Chat Commerce for Self Storage app that launched at a 2024 SSAA event in Hong Kong. “It allows customers to find the location of a self-storage business, choose the type of unit, pay for the service, sign the contract, get the access code—all in just a few minutes,” says Farney.

This solution is a great tool for self-storage companies in the Japanese market, as the entire process is usually manual and can take weeks to be finalized. “People use this to various degrees. China uses this [method] predominantly, and we are starting to see a little bit more of this in Asia, especially Southeast Asia,” he affirms. “For instance, in Indonesia, everyone does everything through WhatsApp. We will start to see that more and more as customers start to demand to not only chat with the business in those apps but also be able to complete the entire transaction.”

Farney’s prediction was validated by a trend report published this year by the Rental Storage Association of Japan. The report said, “More people are using social media, and more customers are using mobile apps, resulting in a higher proportion of internet contracts. Approximately 35 percent of members of the association can tour facilities on the website, 65 percent can reserve rooms online, and 48 percent can make online payments. As it is now possible to make contracts online, the proportion of younger generations in their 20s to 40s using the service has increased.”

According to the same report, the current market size of the self-storage market in the country is estimated to generate a total of 80 billion yen in annual sales, with 14,500 facilities and a total of about 650,000 units. The average occupancy rate of facilities opened for over one year in the country is 85 perent. Most of these facilities are in metropolitan cities such as Tokyo and Osaka. Rural areas are a practically untapped market waiting for investment, with many vacant properties suitable for storage just waiting to be renovated, following a few color regulations that change within each city.

“The problem with outdoor storage is that sometimes they stack the containers on top of each other, depending on the facility,” says Farney, “so you might have to schedule some time for them to put it down.”

The market has seen a yearly increase of around 9 percent for the past years. “We do our own internal capacity survey [at Quraz], and we have been measuring the market size for 15 years now. Sometimes it’s 7 percent or 8 percent and sometimes it’s 10 percent or 11 percent, but over the long immediate term it’s always been 9 percent,” says Spohn.

Currently, only 1 percent of 55 million households use self-storage, but the Tokyo metropolitan area has 2.3 percent of demand, making it quite saturated. The future of the market in the country seems promising, as it is estimated to reach 100 billion yen in annual sales by 2027. “Two percent of households in Tokyo currently use self-storage,” Spohn says. “We have a long runway of growth. In the future, I believe we will be expanding perhaps a little further outside of Tokyo to accommodate more suburban demand.”

As for the future of the market in the country, Spohn believes it tends to grow, especially as more international investors join the market. “The entrance to the market of new global institutional capital will over time transform the industry with better products and services, and perhaps even better real estate evaluations for self-storage, as equity at the market increases,” says Spohn, who’s excited to have more competition join the Japanese market, as he feels it will enhance the quality of the product and service. “That will have an ongoing effect of improving the quality of storage in Japan, and I think that is going to be good for the whole industry.”

he storage industry went through a huge boom after the pandemic. A few interesting things happened that reshaped the industry.

• COVID protocols forced businesses to switch to a “contactless” model where face-to-face human interaction was as limited as possible.
• Low interest rates and strong performance in the self-storage industry led to tons of new entrants and new buyers coming into the market.

As a result, the industry saw lots of new, first-time operators taking over storage facilities and shifting them over to a remotely managed operation. This new style of remote management has become all the buzz over the last few years, growing rapidly in popularity.

It makes a ton of sense on paper. Instead of placing a full-time on-site manager at your storage facility for 40 hours a week, owners rely on technology, automation, and outsourcing to help run the facility. Customers now interact with a call center and a website portal instead of an on-site manager. Man-hours are cut down significantly from 40 hours a week, with minimal labor required just for simple tasks like unit turnovers and overlocking units.

The benefits to owners can be significant by going down this route. They save money by reducing the payroll expense of a full-time on-site manager. And they can run their facilities more efficiently by sharing management resources across several properties at once.

Remote management also helped make lots of new buyers feel comfortable with owning and operating a facility outside of where they lived, since the facility could be operated remotely. And remote management makes it more economically feasible to operate smaller properties, where the revenue typically isn’t high enough to support the cost of a full-time on-site manager.

As the practice of remote management becomes more and more common, it can sometimes feel like a no brainer to folks looking in from the outside. What is there not to love?

What does not get discussed enough, however, is just how hard remote management can really be when put into practice. Think about it. How can you ensure a property is running smoothly and is kept clean, well-maintained, and secure when you have no eyes and ears at the property?

So many little things can slip through the cracks when you don’t have a manager present:

• Is the property well lit?
• Have any exterior lights gone out?
• Are people dumping trash?
• Are the drive aisles being swept?
• Are there points of entry on your fence or gate that can be used by thieves to break in?
• Are customers running electric cables in and out of units and abusing the utilities of the facility?

This is not to say that remote management is bad or impossible. Our company, Iron Storage, owns and operates over 25 locations, all of which are remotely managed.

These are smaller locations, where the economics of the facility would not support having a full-time payroll expense. These locations simply do not produce enough revenue. Remote management is the only way to run the business profitably.

But remote management, although efficient for our profit and loss statement, is not a walk in the park. It involves much more than putting up a website and hiring a call center. I often feel like it requires much more hands-on attention from the owner to run a well-maintained remotely operated storage facility.

That is because the best remote operators have the difficult task of figuring out how to address a big challenge: How do I maintain a high standard of facility operations and maintenance with no eyes and ears at the facility? How do I deliver a superb customer experience without having anyone there to understand what exactly the customers are experiencing? This is the challenge for those who take on remote operations. Below are some of the lessons we’ve learned at Iron Storage in our remote management journey.

In my experience, the key is to remain hyper-proactive about everything that goes on at your property. Put systems in place to constantly monitor and gather feedback about your facility. And, as with any style of management, make sure you prioritize the customer experience if you want to have long-term, sustainable success!

hy is Your Google Business Profile (GBP), formerly known as Google My Business, important? First and foremost, GBP is directly connected to Google Maps (see Image 1).

A potential customer may search for “Self Storage Near Me.” This is the person who needs storage for a multitude of reasons but lives or works in your neighborhood. Of course, you don’t need to put the words “near me” on your profile or website. Google will know based on the searcher’s GPS location, and it will pull up all the facilities matching the criteria based on their Google Business Profile.

People may also search for “self-storage in [your town or city].” This could be someone who’s relocating. At any rate, your exact address needs to be the same everywhere—not just in your GBP.

Additionally, in your GBP, you can highlight all your services, amenities, and products, as well as post your hours. Customers can leave reviews. Potential customers can ask questions like “Can I store my car?” You can post tips, blog posts, and even promote events like auctions.

Furthermore, you can brand your page by uploading your logo and images (see Image 2).

If you’re new to your location you will have to verify your business. Follow the prompts and instructions to get verified. Once you’re verified, you’ll get a blue checkmark on your logo. By the way, this is what my GBP Dashboard looks like. (See Image 4)

On your profile, when you click on the three dots to the right of “Profile Strength,” you’ll see your business profile settings. (See Image 3) The business profile settings is where you can add other managers to your profile. I recommend having at least two people with access to your profile. Set notifications as needed; you want to be notified when someone asks a question and when someone posts a review—good or bad. As for “add a new business profile,” that would apply if you have multiple locations.

Believe it or not, all of this is important. Go through each of these sections and make sure that everything is filled out and optimized with your relevant keywords. For instance, you get 750 characters for your description. Make it keyword-centric, but don’t overdo the keyword stuffing. Write for your potential customer, in natural language, with the search engine in mind.

There are two types of suspensions: hard or soft. A hard suspension is when your business profile doesn’t appear when you Google your business name and city. This is bad. This may happen when there’s a change in management or ownership, or when an employee leaves and takes all your passwords with them. Another possibility is that your business is “unverified.” Google may have suspended you if it thinks your business is closed or you’re using spammy tactics.

They also may send you an email saying, “Your business profile has been suspended for [violation type] content that violates our policies on deceptive content and behavior isn’t allowed. Deceptive content intentionally misleads or deceives others.” You’ll see an “Appeal” button to appeal the violation. Most times they won’t tell you about the offense. It’s up to you to determine what it was and avoid doing it again. You must fix what’s wrong before you submit your appeal.

It’s possible that you’ve been overzealous in your posting and Google thinks you’re spam. Maybe something you posted offended someone with a lot of clout. Don’t be surprised if a competitor is behind bad reviews or reports your facility.

It’s also possible you accidentally created more than one listing for the same location. In this case, disable the one that’s less complete. By no means should you create a new listing if your current one was suspended! Make sure any managers of your listing(s) are in good standing with Google. Finally, don’t violate any of Google’s terms of service (https://support.google.com/business/answer/9292476?hl=en).

All in all, your Google Business Profile should complement your website. You need both. The GBP is limited in the amount and type of information that you can include, thus your website can provide details.

elf-storage is a fiercely competitive market, and standing out as a preferred choice for customers can be a huge challenge. Despite concerns about oversupply—with 1.9 billion square feet of self-storage space added in 2024 alone—demand remains strong, as evidenced by facilities maintaining over 80 percent occupancy. Operators must find innovative ways to differentiate themselves in a crowded market.

Success in this industry hinges on both attracting new tenants and retaining existing ones. Tenant retention is vital for ensuring steady revenue, minimizing turnover costs, and enhancing community reputation. By fostering loyalty, self-storage businesses can establish lasting, mutually beneficial relationships, driving sustained growth and stability.

Let’s explore the key factors that influence tenant retention and customer loyalty in today’s self-storage landscape.

Economic trends play a significant role. A striking 43 percent of survey respondents are considering moving within the next year, signaling strong demand for storage solutions. This demand is closely tied to economic conditions, especially interest rates. Should the Federal Reserve cut rates in 2024, we could see an uptick in the real estate market, driving more activity in our sector.

However, tenants seek more than just space. They want flexible solutions that fit their changing lives. Our survey highlights a growing demand for personalized options, which is also evident when you look at the momentum within specific subsets of the self-storage industry. For example, demand for RV and boat storage has been growing since the pandemic reignited people’s appreciation of the outdoors. Beyond moving or downsizing, consumers desire storage that caters to their unique needs.

We also learned that tenants are willing to travel further for the right storage solution. While 40 percent would drive 11 to 20 minutes, 21 percent are willing to go over 20 minutes. This shows a strong commitment to finding the perfect fit, meaning we must differentiate our offerings and enhance our services to stay competitive.

According to Storable’s survey, 83 percent of respondents consider customer service important, with 39 percent rating it as very important. This underscores the need for storage facilities to prioritize high-quality, accessible support. But what does personalized service look like in an era dominated by digital experiences?

It involves understanding and addressing each tenant’s unique needs. Despite the rise of digital interactions, 32 percent of respondents still prefer in-person interactions, highlighting the enduring value of human connection. Having trained, knowledgeable staff on site can significantly enhance the tenant experience, providing reassurance and immediate assistance.

Digital innovations, such as online booking, payment systems, smartphone apps, and digital locks, streamline the tenant experience by offering easy access and management of storage units. They provide immense value for both self-storage tenants and facilities today.

However, digitization is most successful when balanced with a human element. Tenants appreciate the ease of digital tools, but personal interactions add a layer of trust and reassurance that technology alone cannot provide. This balance helps them feel safe and secure.

Our survey revealed that 43 percent of tenants prioritize theft prevention when choosing a storage facility. Modern security measures, such as 24/7 surveillance and unit alarms, are key to meeting these expectations. So too is your ability to clearly communicate your safety features. Keeping tenants informed of these upgrades through email newsletters, on-site signage, and direct communication during in-person interactions builds trust and reinforces your facility’s commitment to their needs. This level of effective communication is only possible when balancing technology with the empathy of a human.

Satisfied tenants are more likely to stay longer, recommend your facility to others, and provide positive reviews—all of which contribute to sustained business success. As we navigate the evolving landscape of the self-storage industry, the key to thriving lies in continuously adapting to meet tenant expectations, investing in both technology and human resources, and maintaining a steadfast commitment to security and service excellence. By doing so, we can build stronger tenant relationships and secure a competitive edge in the market.

ne thing is certain: We’re surrounded by uncertainty. Input from over a dozen self-storage owner-operators and five REITs confirms this. Nonetheless, they all still need to run their businesses, so understanding how today’s down economy impacts self-storage is very important.

With an election pending and the economy in a slump, how is our inflation- and recession-resistant asset class faring? It depends on who you ask. Inputs from operators of all sizes and all parts of the country range from good or steady to down and way down.

To clarify, demand for storage is not down everywhere. We all know self-storage is a local market. Most renters are within a 3-, 5-, 10-mile radius of their facility and have a reasonable drive time (20 minutes or less). So national trends should be taken with a grain of salt, because some local markets are thriving in today’s economy. However, others are not; overall, demand for storage is down, especially compared to the COVID highs of recent years.

“Moving is one of the biggest reasons people rent self-storage. Demand is absolutely down,” said Eva Chavez, founder of Beacon Ave Marketing, a digital marketing agency focusing on the self-storage market. Chavez works with facilities all over the U.S. “Millennials are stuck due to the real estate market. Without change, there’s no extra need for storage.”

Moving is not the only reason to rent self-storage. Life events such as getting married or divorced, having children or children moving back home, adding aging parents to the home, and death of a loved one also create demand for self-storage. “But even that is lower than before,” said Chavez, who has tracked leasing seasons for years. This year’s leasing season started later and did not peak as high as previous years, according to Chavez, who added that even stores where street rates have dropped dramatically did not receive a significant amount of move-ins as a result.

Pam Domingue, owner of eight Storage Solution facilities, agrees that demand is down, with occupancy down a few percentage points and delinquency up a few percentage points over 30 days. She notes that more delinquent units are going to auction than in the past, when people were more likely to come in and pay. “People seem to be more willing to walk away from their stuff,” said Domingue.

Adding perspective, while consumer debt is up since 2021, it is still less than 10 percent of disposable personal income, which is significantly lower than the 13 percent level from 2007 and 2008. Experts don’t seem to be worried about the 3 percentage points that separate today’s rate from that of the Great Recession.
See Household Debt Payments Chart

Other large storage operators and vendors providing services in accounts receivable (AR) and collections seem to agree. They report no significant increase in delinquency this year. Fredrik Velander is the co-founder of AI Lean, which offers a streamlined end-to-end lien to auction process. He has a view into AR across the country and indicates that delinquency did not change significantly since the beginning of the year. Likewise, occupancy remained consistent from Q1 to Q2 of 2024.

Domingue adds an important point to the demand discussion: “Part of it is that prices are up, and we are pricing people out. Price is driving us now, and we did it over the last three years.” Some people who used to be able to afford self-storage are not able to in today’s market, where more people describe themselves as living paycheck to paycheck.

Diane Gibson, president of Cox’s Armored Mini Storage Management, shared her thoughts on how we have historically viewed the self-storage market and how that compares to today. “In bad times, self-storage is a necessity. We’re not seeing that yet,” she says. “We’re seeing it is a luxury, so some people are moving out.” Gibson and her team carefully track why renters move out, and this is what the data is telling them.

What about the bigger picture? According to a recent survey by MarketWatch Guides, 66.2 percent of Americans feel like they are living paycheck to paycheck. The Living Paycheck to Paycheck chart shows this sentiment by generation.
See Living Paycheck to Paycheck Chart

Gen X also feels financially insecure, with a whopping 71.71 percent saying they live paycheck to paycheck. They are the second-largest generation of self-storage renters at 26.5 percent.

As for Gen Z, 66.77 percent describe themselves as living paycheck to paycheck. They represent 13.9 percent of renters.

If almost 79 percent of self-storage renters fall into these three generations, clearly many of our customers feel like they are living paycheck to paycheck. It’s not a stretch to conclude that they feel priced out of self-storage, especially since in-place rent skyrocketed so dramatically in recent years.

“Major, readily apparent growth trend” certainly describes self-storage development in the past 10 years. “… 462 million square feet of new self-storage space was delivered between 2013 and 2022, representing 25 percent of the total inventory,” according to CommercialSearch, Aug. 16, 2023.

Were investors tending to move in the same direction at the same time? A great deal of new self-storage supply was added to the 20 fastest-growing U.S. housing markets over the past 10 years.
See The 20 Fastest-Growing Housing Markets in the U.S. Map

• Yonkers, in the New York Metro Metropolitan Statistical Area (MSA)
• Three Arizona cities in the Phoenix MSA
• Three Florida cities, including Orlando

So yes, rates are falling in these markets, and overbuilding is one of the causes. It seems that investors have tended to move in the same direction at the same time, and falling rates are following them.

Most experts agree that new supply will be absorbed within a few years. Operators tend to expect it to take about 36 months for rates to recover after new supply is delivered to their local 3-, 5-, 10-mile market. Equilibrium will return, but for operators in those 36 months right now, in local markets where supply is up and overall demand is down, it hurts. It hurts even more if they need to convert short-term debt to permanent financing with higher interest rates.

Radius+ reports street rates by tracking data on REIT asking rates in the top 25 U.S. markets.

According to Radius+’s June 2024 report, the price per square foot for a 10-by-10 climate-controlled unit was $1.35. That is a 14.4 percent drop since June 2023. April and May saw similar year-over-year drops, which are an improvement over the 16 percent, 17 percent, and 18 percent drops in January, February, and March of 2024.

But what’s really interesting is comparing the $1.35 price per square foot in June 2024 to pre-COVID years. Radius+’s June 2023 report indicates that in 2019, the price per square foot was $1.37, which is two cents higher than 2024. Can you think of anything else in your world or operations that costs less now than it did before COVID? I can’t.

• Self-storage is hyper local.
• A facility’s performance depends on how well you operate it.

Hyper local to its core, each self-storage facility has a trade area of 3, 5, or 10 miles, or 20-minute drive times. The better your local market, the better your business.

Operational excellence is the cream that rises to the top. During the COVID years, every self-storage business benefitted from the industry’s increased occupancy and rental rates. That era is over. Self-storage performance today is also highly dependent on operations: Strong operators have better performing businesses. Operational excellence is critical, including marketing and customer service that turns leads into renters.

Overall demand for self-storage is down, but that doesn’t mean storage is performing poorly. On the contrary, many operators report that even though street rates are lower, and the 2024 rental season has not been as robust as years prior, revenue is still strong because rates increased so significantly during the boom of the COVID years.

The formula for the best performance is strong operations in strong markets. These are the facilities that earned the asset class its fame and popularity with investors. Generally speaking, in any economic conditions, most self-storage owners and investors would rather have self-storage than any other asset class.

He attributes much of what he has achieved to the people who became his mentors. While in his 20s, Watkins sought out and gained knowledge from three mentors who helped guide his success. “Two of them were billionaires and the other was also extremely successful,” he says. “They had massively different business interests, but all three of them suggested self-storage, and after looking into the industry, I understood why.”

Watkins started attending industry shows and asking questions. He undertook six months of due diligence on how to build containerized storage facilities. This included a trip to China to figure out how to have the containers built and shipped to the U.S. Prospecting for facility sites; he discovered that Southern California Edison was one of the largest landowners in the state. Most of the land was encumbered by power lines, so buildings were prohibited on those sites.

Thus began Storage Outlet. Watkins was able to negotiate a 65-year ground lease with Edison. He opened the first project, roughly 85,000 rentable square feet in South Gate, around 1997. “I leased it to 90 percent in 90 days while also developing two additional sites.”

He brought his partners opportunities for ground-built facilities, but they wanted to keep doing the container deals because they created tax and cash flow benefits. It took Watkins three years to convince his partners to let him do an in-ground project. “It was three times easier,” he says. “It was a huge success, so they turned me loose.”

Around that time, Google had launched, and consumers were beginning to use it to search for businesses, but Watkins didn’t know how to build a website. “You knew somebody who knew somebody,” he says. “Someone’s kid in a garage. That’s how I did it.”

When visiting his stores, Watkins always asked where the leads were coming from. “Door hangers? Penny Saver? The blimp?” he would ask. “They started telling me it was the website, and I was saying, ‘What website?’ I forgot I had built it.” After getting the same report from many managers, Watkins began to pay attention. In the early 2000s, he began building more robust websites.

As a young entrepreneur, Watkins had the opportunity to meet many large storage operators. “When I passed 1 million square feet, there was a thing called the Large Owners Council (LOC) under the SSA,” he says. By his first meeting with the council, Watkins had already had websites for two or three years and was tracking his marketing efforts. He used tracking numbers for each Yellow Pages ad and did a six-month study on the cost of gaining customers through those listings.

“In my first meeting of the Large Owners Council, I put my hand up and asked if anyone had done a similar study,” Watkins says. He shared his findings that his highest cost to gain a customer was $2,700 for Yellow Pages yet just a few dollars via digital leads. “With my little portfolio,” he says, “I was spending about $500,000 per year on Yellow Pages.” Watkins says he was the first large owner to pull all advertising from the Yellow Pages. “Everyone thought I was crazy,” he says.

Around 2008, Watkins noticed another trend that was gaining influence. Social media was rapidly taking off. He says he was the first large operator to seriously embrace the new digital trend. “I had 4,500 organic followers when Public Storage had 25,” he says. He hired an agency to help with digital marketing—the only agency focusing on self-storage at the time. Soon, Watkins saw that social media was becoming a critical aspect to how search engines saw his business.

“Social media grew up from hot or not to the five stars we all seek from our customers, the sites we use to acquire talent to run our businesses, and now AI,” says Watkins. “It was never going to be cat videos.”

He asked why a news crew was filming at the facility and learned that they were following Dan and Laura Dotson of American Auctioneers, who were ultimately the impetuous for the hit television show “Storage Wars,” and filming an auction. “I flipped,” Watkins says. “I said, ‘Get them off our property,’ but they had already finished filming. The biggest news agency in LA had discovered that there were storage auctions and decided to film a segment on it.” The management team hadn’t informed Watkins.

“Next day, I’m hiding under my desk thinking, ‘When this airs, my partners are going to crucify me. My business friends in self-storage are going to crucify me.’” At the time, auctions were something the industry did not broadcast. However, once the segment aired to about 4 million viewers, Watkins says his investors and even some renters were calling to ask if they could come to auctions. “Producers in LA were also watching the same show,” Watkins says, “and within a couple weeks, 35 producers were chasing the reality TV concept.”

Watkins saw an opportunity to turn the sudden interest in auctions into a positive. Original Productions had partnered with A&E to film a storage auction show and reached out to Watkins to film at his facilities. “I told them they were idiots and that no one was going to watch a show about storage auctions,” he recalls. “They laughed at me and said, ‘We want to do it. Will you help us?’ I said, ‘Absolutely.’ This stupid show that would fail within the first year would expose my Storage Outlet brand to millions of people.”

The social media content would drive relevancy and lead searchers back to his new website. This would reinvigorate his search engine rankings after their inevitable slump as he transitioned from a third-party marketing agency to hosting and managing his own websites. Watkins couldn’t believe the opportunity served up to him while the rest of the industry dreaded public awareness that delinquent units were ultimately auctioned if they remained unpaid.

The crew showed up at the Gardena facility with three minivans and a producer who knew nothing about self-storage. “That’s how ‘Storage Wars’ started,” Watkins says. Once it aired, the number of people showing up for auctions quickly grew from a few bidders to hundreds.

Watkins says that for five years straight, “Storage Wars” was the top syndicated reality show. “I was so wrong about whether the show would succeed,” he says, “but what I did recognize was the business opportunity. We were going to have to take our auctions online.” Watkins created Storage Treasures, an online storage auction website, with his former partner Leslie Watkins. To promote the brand-new website, he leveraged his involvement with “Storage Wars.” He created magnetic signage with the auction sites URL, and they would literally run between the storage unit during filming to throw his magnetic branding into the shot just before the cameras started to roll. “We were signing up 1,500 bidders a day and had the highest traffic of any storage related site in the world,” he recalls with a grin.

Watkins saw that the public companies owned maybe 10 percent of the physical real estate but owned a disproportionately high percentage of online real estate—roughly 25 or 30 percent. He says that alarms should have gone off for everyone when they looked at the inequity between physical real estate ownership and online ownership. “It was the precursor to consolidation,” he says. “It wasn’t about them buying up more than 10 percent of the real estate; it was about them buying up more and more of a digital footprint. They owned page one.”

By 2012 Watkins had a plan. “I partnered with StorageMart, the largest private operator at that time,” he says. He met with Chris Burnham in Newport Beach. “He had 180 stores at that point, and he knew he was in trouble with the publics,” Watkins says. The question the two operators contemplated was how they could get thousands of stores to band together to acquire tools to compete with the largest companies. They created a co-op called StoreLocal, with a target bigger than any public company collectively working together on their business.

One problem with building a co-op was that many operators were successful enough that they didn’t really understand the necessity of banding together to compete with the REITs. “The fact is, there was more demand than supply for our product,” Watkins says. “You didn’t have to be good to find success. The operators in StoreLocal participated, and they philosophically agreed, but they didn’t realize the importance.”

Tenant Inc. launched five years ago to provide tailored solutions designed for specific self-storage industry needs. The VSaaS seamlessly integrates the fintech, CRM, data, web, communication, and many more products operators value and use. Watkins says you can think of Tenant Inc. like Microsoft. “You don’t use Microsoft,” he says. “You use Word, Excel, PowerPoint, etc. Tenant Inc. owns and integrates Storage Front, StoreLocal, Hummingbird, Nectar, Tenant Payments, and Tenant Protection Services.”

For the self-storage industry, he sees further consolidation and holds to the theory that there will be only 10 strong brands owning consumer traffic in a relatively short timeframe. Watkins also sees a revolution in product offerings. “This has been a status quo industry for 50 years in every way,” he says. “The facilities we build today don’t look much different than the ones we built 50 years ago. Are they more beautiful? Are they vertical? Yes, but they’re built on a bell curve of a unit mix from 5-by-5s maybe up to 10-by-40. The same roll-up doors and the same product offering.”

This simple business of storage has become more complicated. “The most powerful location on Earth is 3.5 inches in somebody’s pocket,” Watkins says. “We’re going to realize that being good on 3.5 inches takes more than hiring some agency. It takes all of your data and information, and it has to be verticalized in a VSaaS, because ultimately, you need to make decisions quickly and efficiently.”

Storage customers are also changing. “Our biggest users now are millennials, and Gen Z is coming up,” Watkins says. “They’re using storage differently. If you can’t respond to how they use storage, you’re going to be behind.”

Watkins believes that the newer operators will adapt to today’s climate and do well. “These new people coming into the industry—most of them from technology and finance backgrounds—are not following the status quo at all,” he says. “They’re looking at how the business has been marketed and run, and they’re doing it differently.” There will be many failures, but new markets and methods will be proven by the pioneers.

Watkins always followed his own drummer as well, taking risks that not only panned out for his own business but also benefited the industry. Today, Watkins is focused on stabilizing Tenant Inc. and, as always, staying two steps ahead of where self-storage is going next.

“I’m fearless of execution and bored by status quo. I have many years ahead with Tenant Inc. Think of us as the disrupter of disruption and opening new doors to your income imagination.”

here are an estimated 700,000 hotels in the world—that’s about 18 million guest rooms. For many unfamiliar with the industry, or those who don’t belong to a frequent traveler program, it’s fair to assume that hotel brands directly own and operate the majority of properties flying their flag. But that’s no longer the case. Today, most popular hotel brands are part of 10 new “mega-chains” that use franchise and management contracts to expand their empire with minimal capital investment. So, rather than Marriott simply running Marriotts, everything from Ritz-Carltons to Residence Inns fall under an umbrella known as Marriott Bonvoy.

As I stated in May Messenger’s “Chief Executive Opinion,” I believe the self-storage industry will soon be run by 10 or so mega-chains too—we’re just fashionably late, as we always are compared to the hotel industry. Hospitality has always innovated much quicker than us, though in fairness, they’ve also had hundreds of years’ more experience than us.

But it’s worth noting that everything the hospitality industry does, we tend to follow suit. They implemented computerized reservation systems in the early 2000s, reducing staff sizes and allowing guests to conveniently register online; now we’re doing it. They adopted keyless entry technology, with IHG being the first to experiment with it in 2010 at several Holiday Inns; now we’re doing it. And they easily share industry data to the benefit of all operators, something we’re slowly (sometimes begrudgingly) beginning to do. (STR, which provides premium data benchmarking, analytics, and marketplace insights for the global hospitality industry, was founded in 1985.)

The first is likely due to the benefits of economies of scale (and the cost savings that come with it). Consolidation allowed hotel companies to centralize operations, share resources, and leverage their combined size to negotiate better deals with suppliers and distribution channels. Consolidation also often helped hotels save money by streamlining operations, eliminating redundancies, and optimizing resources across the merged entities.

We also entered the digital age in the mid-90s as the internet found its footing. Suddenly, online booking platforms were revolutionizing the way hotels could market and sell their inventory; it also made it significantly easier to reach international customers. Of course, the larger the hotel company, the better positioned they were to invest in new technology. Through consolidation, hotels could make investments in technology and quickly and efficiently enter new markets to establish a global footprint.

Finally, acquiring other hotel brands allowed companies to diversify their brand portfolios, catering to different market segments and consumer preferences. Just look at all the brands found under the Marriott Bonvoy umbrella, which is the largest of all hotel portfolios with 8,700-plus properties across 139 countries.

Are there still independents? Of course. Thousands of mom-and-pop hotels are operating across the country, and many succeed by offering local flavor or personalized experiences, appealing to the traveler who eschews anything corporate or unauthentic. But most travelers tend to gravitate toward a reputable brand because it takes the guesswork out of the accommodation experience. And that’s why consolidation will continue.

“We think a lot about consolidation, [but] despite all our efforts, we actually expect the industry to remain dominated by the smaller operators,” said Tom Robinson, former president and CIO of Storage USA, waving away the “threat” of consolidation. “The bigger operators, the ones with access to capital, will be buyers indefinitely, but there isn’t enough capital out there to really consolidate this industry.”

Storage USA was acquired by Extra Space in 2005—a mere 10 years later.

Talk about your on-point predictions!

By March 2016, it was clear industry consolidation would continue. That month the topic made our cover in the story “Consuming the Competition.” At the time, then-CEO of Extra Space, Spencer Kirk, told MSM that the smaller operators were having difficulty competing with the REITs for customers online and that eventually many would either choose to sell or align themselves with a REIT to manage their facility.

This is exactly what we’re seeing today in self-storage. Massive amounts of capital (some of it due to the COVID boom, which even an expert forecaster like Burnam might not have been able to predict back in 1995) means mega-deals are happening with greater frequency. And while huge $12 billion mergers like Extra Space and Life Storage and big $2 billion acquisitions like Public Storage and Simply Self Storage are the ones making headlines, there are always plenty of smaller transactions occurring too.

Of course, not all transactions are acquisitions. Instead, some smaller operators are choosing to simply hand over the reins to a larger operator or third-party management company (this also happens to be the second most popular hotel model, in which owners retain ownership control but bring on a branded management group to operate the property on their behalf).

Whether a small self-storage owner is hurting due to a slowdown in demand caused by a volatile housing market, or increasing interest rates are making the cost of borrowing too great, working with a larger operator that has deep pockets can be an attractive prospect. You can see these types of deals on MSM’s regularly updated Sales & Acquisitions page (www.modernstoragemedia.com/sales-and-acquisitions), and all the major REITs always make a point of highlighting their third-party management platforms on quarterly performance reports.

First off, by absorbing or managing other chains, self-storage giants are better able to diversify. They can begin offering differently branded tiers of storage designed for different types of tenants. The storage industry is already classified by A, B, and C. Now, one self-storage giant can have all three under their umbrella operating under different brands. This provides tenants with different experiences, from luxury Class-A facilities to no-frills Class-C facilities. We already have specialty storage facilities offering RV and boat, wine, fine art, and other types of storage; B2B-focused facilities with business centers and shipping and receiving services; short-term weekly rentals and extended stay facilities. Now it’s all in play for a mega-chain operating dozens of different brands.

What are the downsides? Perhaps the biggest negative in this situation is the fear that reduced competition will enable rate hikes and fee creep. Well folks, we’re already there. I recently wrote a series of articles on some of the aggressive rate hikes happening in the industry. Large operators initiated this, and some independents have had to follow suit in order to compete or even survive. Further consolidation is not likely to further this trend; if anything, consumer or legislative pushback will put an end to it or result in more transparency before it becomes a larger issue.

Franchising is one option. This plays a significant role in the hospitality industry, with franchisees handling the day-to-day operations but agreeing to adhere to brand standards around things like decor, amenities, and services. So, while the franchisee sacrifices some autonomy, they gain powerful distribution and operational efficiencies that allow them to compete in a crowded space.

Storage Authority is currently the only true self-storage franchise in the United States, with more than 30 franchisees operating under it. Storage Authority helps them find land, plan, design and construct the facility, and market it in order to compete with REITs. Although Marc Goodin, principal at Storage Authority, doesn’t think massive consolidation will take place as quickly as I do, he does see more of it happening over time.

“Maybe in 15 to 20 years, instead of the REITs owning 20 [percent] to 30 percent of the market they’ll own 50 percent. But I don’t think self-storage will ever be as branded as a hotel, simply because people don’t live or stay in it. It’s for their stuff, so branding isn’t as important.”

Another option for self-storage owners is Storelocal Storage. Their program allows independent operators to unite their marketing efforts under one flag while maintaining more autonomy and focus on the day-to-day operations of the facility. “Google rewards the size of an operation based on the number of facilities under one brand/domain,” says Dane Elefante of Platinum Storage, who recently moved the company’s 30-plus facilities to Storelocal Storage. “I couldn’t raise enough capital in my lifetime to build a portfolio large enough to compete with REITs online, so placing my portfolio with Storelocal Storage allows us to put our stores into a larger group with the same name to increase our online visibility.”

Of course, it’s still possible for an independent to survive on their own. Most likely, as consolidation continues, we’ll see more small operations leveraging their distinctiveness or “down-home flavor” as a differentiator to big brand names, which will always hold appeal to some segments of the population. Sure, it’s probably easier for small hotels to take this approach as Goodin noted, but like it always does, self-storage (and the independents responsible for creating the industry) will find a way.

Having cut his teeth advocating for the energy and telecommunications industries in the 1990s, he subsequently became the first lobbyist with a national scope for the self-storage sector. That was in August 2004, when he joined the Alexandria, Va.-based SSA.

After establishing that position, he took on the role of chief operating officer before his promotion to president and CEO in 2015.

Dietz understands the importance of building strong relationships. They are the glue that holds careers together and the tools that have enabled critical representation of the self-storage industry for two decades.

“I’d like to think that I try to get along with everybody,” he says. “You can’t run an association without associating with and welcoming everybody who belongs under your umbrella. If you’re the executive of a trade association, relationships come at many levels. Most importantly are relationships with our members, ultimately who we are here to serve. And of course, there’s management of capable staff that fulfill our mission. And if you even wanted to go deeper, you could say management of the relationships with capable and engaged board members.” Dietz estimates he has worked with about 90 board members over the past 20 years.

“What our members have to say on our platforms may not always be popular, or even accurate, but that doesn’t mean we shouldn’t provide them a forum,” he says. “That’s why you meet as an association. What people have to say, and their business practices, are their business.”

Nevertheless, Dietz certainly urges caution. “If something appears unfair to consumers, it can lead to scrutiny on the industry, new regulations, and legislative threats.”

The SSA was founded in 1975 in Denver, which means it will celebrate its 50-year anniversary next year. It has about 6,000 member companies, including the 23 state associations that it represents as well. The Golden Jubilee celebration will include a party at Allegiant Stadium in Las Vegas, where the NFL’s Raiders play, during their Las Vegas conference a year from September.

Because the association didn’t have a lobbyist until 2004, the self-storage industry largely lacked substantial representation, he says. “The industry was still coming into its own in the early 2000s, still emerging,” he says. “Advocacy for the sector was playing catch-up.”

Since then, the association has influenced nearly 500 laws that have redefined the regulatory landscape.

“Me and my successor, Joe Doherty [senior vice president of legal and legislation], could write a book about nearly every state capital, because that’s where real estate is regulated,” says Dietz. “We’ve directed the contributions for the collective good and hired representatives for the sector in dozens of venues around the country.”

Dietz is a free-market capitalist. Any pro-business advocate prefers a hands-off political culture, he says. For self-storage, that means fewer taxes, appropriate assessments, sensible regulations on insurance and collections, and overall reasonable treatment of the industry.

“When you have budget-thirsty governments looking to our sector as a solution, that usually means taxes,” he says. “If we are not here as a voice, then you’re going to find that regulations are influenced by interests from outside our industry.”

At roughly 60 or 70 years old, the self-storage industry is in its adolescence compared to much older industries, such as manufacturing, agriculture, and health care, Dietz says.

“We’re taking our place alongside the predominant trade associations in real estate,” Dietz says, “such as the American Hotel & Lodging Association, the National Apartment Association, NAREIT [the National Association of Real Estate Investment Trusts], and the International Council of Shopping Centers.”

It’s a big job. Self-storage’s annual revenue in the United States is estimated to be about $50 billion, he says. Still, 70 percent of self-storage owners can be considered small businesses. The industry had “the most impressive growth of any commercial sector during the past 20 years, which makes everybody invested before that a pioneer.”

Dietz says, “Those visionaries were the basis of this organization.”

The SSA also administers 23 state self-storage associations, including Florida (FSSA), Illinois (ILSSA), Maryland (MDSSA), Virginia (VASSA), Pennsylvania (PASSA), New Jersey (NJSSA), and North Carolina (NCSSA). It added this element to their structure about 15 years ago “because we believe state associations need to be strong to support the industry at local levels,” and “that wasn’t the case everywhere,” he says.

Dietz offered a few examples of problems state self-storage associations have faced: obstacles to the collections process in New York, rent control in Georgia and Texas, as well as sales taxes in several states. “The local dynamic is critical to the well-being of the industry,” he says.

Current SSA Chairperson Alyssa Quill of Lancaster, Pa., knows well how hard Dietz works to ensure reasonable treatment of the industry. Quill is CEO of Storage Asset Management LLC (SAM) based in York, Pa. She has known Dietz for about 15 years and worked with him for about 10 years.

“I think Tim really, really cares what the people he works for in this industry, and with, need and want,” Quill says. “He’s always thinking, ‘OK, how does this help self-storage owners and operators?’ Or ‘How does this help industry vendors?’ Or ‘What does this potential law mean for our industry?’ Or ‘What do the people who work with me at the SSA—how will this change affect their lives personally?’ Always thinking about customer and co-worker needs is probably his biggest strength as a leader. And I think he’s very good at balancing those when the needs or desires might be different for different people.”

Quill thinks Dietz’s biggest impacts may have started with the laws enacted that protected self-storage, but subsequently he has steered the SSA ship to financially healthier waters. And he has “really created a great environment for people to work.”

“So, he’s hired and developed great people on that team,” she says. “He has many people on his team that have been working for SSA for 20-plus years. They enjoy working in this industry. They especially enjoy working for Tim. And it shows in their years of service. … Tim is very good at working with a diverse group of people. The board has a new chair every year. That can be challenging, but he handles it very well.”

Dietz and the board communicate about association business regularly, she says. This can include big issues affecting the association and the industry, the association’s strategic plan for the coming year, decisions that need to be made, and plans for big events.

“In many cases, he’s letting me know what’s happening and giving reassurance,” Quill says. “In some cases, he’ll say, ‘Here’s what the team would like to do, but we need to put this to the executive committee or the whole board for a vote.’ And then we’ll schedule a meeting and figure out what’s going on next. He runs a very good organization. Because he’s such a good leader, there’s not a huge amount of work and stress put on the board.”

Originally from Southern California, his father’s military career brought him to the Washington D.C. area where he attended George Mason University and became engrossed with politics. Now 57, he credits much of his professional development and his skill as a leader to the late Mike Scanlon, whom he succeeded in 2015.

“He recognized that this organization could be something much bigger than it was when we both joined the association in 2004,” Dietz says of Scanlon. “He taught me not to be afraid to invest in the growth of this organization and the expansion of our mission on behalf of the industry. And not to be afraid to make mistakes, of which we both made quite a few.”

In a 2015 SSA news release announcing Dietz’s promotion, he praised Scanlon for having built “an excellent team of association professionals who share his vision of industry representation and membership services. For more than a decade, Mike has steadily improved the member value proposition of the SSA, establishing a stature consistent with the leading national real estate trade associations.”

In the spirit of Scanlon’s influence, Dietz’s advice for anyone who wants to rise to leadership is unadorned.

“It starts with treating people well,” he says. “And remember that life is about a lot more than work.”

he first few self-storage facilities started to appear in Latin American countries in 1990, but according to Nancy Torres, creator of the Latin America Self Storage Association (LASSA), the market only really took off in the early 2000s.

Torres started her career working for the company responsible for constructing the first self-storage facility in Puerto Rico, making the best out of the experience by getting acquainted with all the steps in the self-storage construction process.

Years later, once she became savvy in all things storage, she was invited by Janus International to showcase their self-storage products to the Latin American market as director of business development, becoming actively involved in helping developers from 18 countries understand the concept of the business while guiding them step by step on the completion of their facilities.

Although borrowed from the U.S., the business model received alterations to better suit Latin American customers—one of the key differences being the implementation of customer service, a characteristic the population expects to be available from any business, no matter how big or small. This is how self-storage spaces in the region gained a bellboy to greet customers upon arrival at the facilities.

At the forefront of a pioneering industry, Torres began to realize what she needed to improve to grow the market in Latin countries. “The main problem was the lack of information in Spanish,” she says. “People had nowhere to go to find out about what self-storage was about and what they needed to do before building self-storage spaces, like market studies, visibility, and I had to learn these things in order to help my customers complete the process of zoning, permitting, financing, and more.”

The original Latin America Self Storage Association ceased to exist after five years of operations as it achieved its main goal. However, her passion for the teaching aspect of this business wasn’t over; to this day, she continues to work at the forefront of the industry she helped develop as a freelance business advisor, working alongside companies to develop their business and implementing the latest innovations.

The use of technology in the industry has also skyrocketed in Latin America. Now it is possible to make online reservations and access them via mobile device, but it wasn’t always like that. Some businesses didn’t understand the need to take such a physical business online until the COVID-19 pandemic. “The pandemic, in Puerto Rico, put basically all the facilities to maximum capacity. I can honestly say it helped businesses to adhere to the technology because we were kind of forced to,” Torres adds.

According to Torres, the costs of the new features tailored to the Latin market and the entire work put into it was worth it, as even when paired with the instability of the economy, the profit margin in self-storage business in Latin America is usually higher than that of the U.S. “To my surprise, the amount per square foot that was charged in Latin America was sometimes higher than in the U.S.,” she states.

The internationally acclaimed Mr. B’s Self-Storage follows the same reasoning. Their CEO Federico Rölz states the company partnered with Metro Self Storage back in 2017, but it has been in the business since 1997, having opened a total of eight facilities in their home country, Guatemala, as well as El Salvador, Costa Rica, Dominican Republic, and soon Mexico.

The company was born in 1997 under the name Mr. Bodeguitas, mainly catering to B2B clients by developing big warehouse spaces with large gates that allowed customers to maneuver and park inside, accommodating large semi-trucks and container trucks. “[It] accounted for probably 85 percent to 90 percent of our customer base,” Rölz states.

But between 2011 and 2013, they noticed the need to rebrand and reformulate the company, catering more to customers looking to rent a space for personal use. That’s when they changed their development efforts from patios on the outskirts of cities to constructing multilevel buildings in density-heavy city centers with the goal of marketing to people who rent small living spaces and need extra storage space.

After succeeding in their transition, they achieved a 50/50 customer base between business and personal users—a number they are proud to sustain to this day, with few deviations.

In 2017, they started their partnership with the U.S. company Metro Self Storage by selling a private percentage of their company to the owners of more than 85 locations in the U.S., followed by an official rebranding of Mr. Bodeguita to Mr. B, which involved the creation of a strong and consistent design for their new buildings, as well as updating the old ones to resemble their new spaces.

The next step in advertising came with the popularity of the internet: “We went deep into digital marketing early on. We worked with a few agencies throughout our history, but now we have been working with the same agency for a while, as well as an internal team. [Both] working together to interpret the expertise of the agency with the inside team that understands the business,” he adds.

The Argentine self-storage company MasMetros had a digital footprint from the beginning. It was created in 2009 by Jonathan Komarofsky, who was inspired to invest in the business during a work trip in the United States when he observed the proliferation of storage businesses in Florida. After conducting thorough market research, he found out self-storage was set to arrive and stay in his country for three key reasons: buildings were getting smaller, access to goods was increasing, and there was a growing number of businesses looking for third-party logistics spaces.

He went into business with his father-in-law and brother-in-law; they both had backgrounds in the parking business that was not doing well. “The company started with our first branch, which was essentially a parking lot with office spaces of around 700 square meters. This was our initial MVP test for MasMetros, using very basic Google AdWords at the time. We quickly reached maximum occupancy levels within a few months, which made us realize the business could be serious,” says Komarofsky.

For MasMetros, innovation is key. Besides the digital DNA they carry from the beginning, along with a fully operating website, they recently relaunched a 360-degree model responsible for collecting boxes at the customer’s house and organizing them into a storage unit. “While it’s not the most demanded service today, the advantages over traditional self-storage are substantial both for the company and the client. [For us], the key to business is in adding value to the square meter, and the physical possibilities here are limited,” Komarofsky adds.

An impact of the pandemic on the innovation-savvy business was how it accelerated the adoption of digital channels. “Our first experiment with the 360-degree service didn’t work for this reason: The client wasn’t yet ready to manage or make online requests for their objects. [The pandemic] allowed us to continue incorporating these types of services,” he says.

Komarofsky is also excited about merging artificial intelligence into the business; they’re currently experimenting with an online bot that operates 24 hours via WhatsApp, which is fed by their websites and historical queries. However, as of now, in 40 percent of cases, people still request human attention. They are also investing in the integration of AI in their back office. “We have measures through the integration of our ERP system, our website with a Power BI platform, where we monitor many KPIs on the financial and economic performance and also have very good marketing statistics regarding the origin of queries, conversion rates, recommended investment levels.”

At the Uruguayan company Punta Box, around 80 percent of the advertising budget goes towards digital services, and that is where most of their customers come from.

After opening a few facilities in Punta, they soon expanded to Montevideo, where they got a space big enough to support containers, attracting clients such as DHL, which currently uses their facilities as a mini distribution center.

The main difference between the self-storage market in the two cities is that Punta is located on the seaside, a popular vacation destination that causes revenue to skyrocket during warm months and slow down once the seasonal movement dies down. In contrast, Montevideo is the capital of the country and a metropolitan city where revenue tends to be consistent year-round.

After 14 years in the business, personal use continues to be the driving force behind the company. “The personal use outweighs the companies a lot. It’s more of a 70 to 30 kind of thing. Pretty similar to the United States,” he adds.

In Chile, the award-winning self-storage company Aki KB, opened by Arie Rezepka in 2003, has had a similar experience. Like Punta Box, personal-use customers make up to 70 percent of their annual revenue. The company was born when Rezepka, who worked as an architect for self-storage companies, noticed there was a demand for smaller spaces.

His architectural background played a big role when working on the marketing plan for the company; the building gained international traction, winning prizes like the International Facility of the Year award because of their distinct architecture—a choice that helped them become a reference point by locals.

Rezepka’s goal from the start was to build facilities with a unique design that improved the quality of life and added value to the neighborhoods they were inserted into. Their efforts include adding solar panels, keeping their carbon footprint to a minimum, taking their parking lots underground, and adding convenience stores and cafés to their facilities to create hubs where locals can congregate.

Another innovation when it comes to marketing in Latin America is the company’s brand ambassador program, a strategy in which they partner with influencers and local celebrities to leverage the company in the long term in the minds of future customers.

Aki KB’s Brazilian sister company is one of the most prominent in the country’s self-storage market. Good Storage was created by Thiago Cordeiro in 2013. He comes from a financial background, having already worked for major companies such as Credit Suisse Hedging Griffo and BTG Pactual.

He decided to invest in the market even after many financial analysts advised him against it, as it was considered a dead-end investment in the country at the time. However, he persisted, and his first personal business venture became a successful case that many tried to replicate.

While studying for his MBA at Northwestern University, Cordeiro decided to turn the business into a reality. After securing Hemisfério Sul Investimentos and Evergreen Investment Advisors as partners, which together invested a total of $150 million (USD), he was able to get the business off the ground in December 2013.

Now, with over 30 facilities around the city of São Paulo, the company is looking to attract more business customers through its recently launched flexible modules feature, which allows customers to customize their storage space, according to demand. “Currently, our audience is made up of 75 percent personal users and 25 percent companies,” says Cordeiro. “A decade ago, at the beginning of our operations, the proportion was 40 percent companies. This scenario reflected a market that was still developing, as there was a cultural challenge in explaining the concept of self-storage as an extension of the home.”

Cordeiro is currently the president of the Brazilian Self Storage Association (ASBRASS), which recently conducted research that concluded the market has been growing around 15 percent per year in the country, further proving the self-storage market is currently in its golden age in the country.

s the self-storage industry continues to expand and evolve, so do the financing options available to prospective owners and operators. Self-storage facilities present an attractive investment opportunity due to their low operational costs, high profit margins, and minimal business risks. Financing for these facilities comes in a variety of forms, with options tailored to diverse needs, rates, terms, and levels of flexibility. In this article, we dig into the diverse loan options available for relocatable self-storage units, offering insights and practical advice from industry experts.

Relocatable self-storage units are gaining popularity for their unmatched flexibility and adaptability. Unlike traditional fixed structures, these units can be easily placed and moved to accommodate changing customer needs, offering enhanced customer experiences and catering to evolving market demands. Financing options for these units are diverse, with banks providing customized loan solutions based on clients’ credit profiles and specific requirements. From conventional loans to government-backed programs, owners and operators have a range of options to explore.

Self-storage businesses want to be profitable and sustain long-term success, so it is important to choose the right financing option. To get some ideas on how to secure financing for relocatable units, we interviewed several senior lenders from various financial institutions, including Dylan Towey of MMP Capital, Anne Mino of Live Oak Bank, and Will Buchly and Will Jackson of Georgia Banking Company. Each lender emphasized the importance of understanding clients’ needs to offer tailored financing solutions for several types of storage businesses. Whether financing hundreds of relocatable units for a new build or a smaller number to expand an existing facility, lenders can create customized solutions to meet diverse business goals. With thorough preparation, financing for relocatable self-storage units can be a straightforward process.

Dylan Towey, account executive at MMP Capital, underscores the importance of customization in self-storage financing. His bank offers a range of programs tailored to different credit profiles. For example, their custom 84-month financing program extends affordability for storage businesses and eliminates balloon payments. His advice for potential customers in the storage industry: “Be more willing to provide more information upfront. At the end of the day, if you were to go to your local bank, they would ask for a full financial package. So, for us, it comes down to needing information on paper, PDF filings, and things in that nature to where I could use the information provided to mitigate any risk that underwriting might see.” Additionally, Towey emphasized the advantages of a capital lease structure, which provides ownership of equipment from day one. He outlined a streamlined approval process at MMP Capital, highlighting quick turnaround times, especially for clients with strong credit profiles.

In our interview with Anne Mino, senior loan officer at Live Oak Bank, she discusses financing options for relocatable self-storage units. She sheds light on the fact that many people may not realize they can obtain loans for such ventures, however big or small. She breaks down the financing process into three types of projects: ground-up businesses using relocatable units, expanding existing businesses, and acquiring businesses. Mino goes over the nuanced self-storage loan structures. Along with the other lenders we interviewed, she emphasizes the importance of having a clear understanding of the funding needs and ensuring borrowers are not over-leveraged. “I think it’s really important to work with a knowledgeable lender that understands self-storage because we won’t let you get in trouble. I’m not going to structure a deal with so much debt that it doesn’t make sense.”

Will Buchly, senior lender, and Will Jackson, underwriter, both with Georgia Banking Company (GBC) also offer various financing options for self-storage owners and operators, including traditional commercial financing. They discuss the resilience of the self-storage industry throughout various economic cycles. “Owners of self-storage can reprice the rents as often as monthly … Those are things that investors and banks really look for.” Buchly underscores the importance of tailored loan strategies, which will depend on the property and the overall goal of the borrower. At GBC, they have seen owners create a full facility with relocatable self-storage units. And they have also seen owners add relocatable units to a current facility with excess land. Along with the other lenders we interviewed, they emphasize the importance of thorough planning and due diligence. Borrowers need to be prepared to provide detailed financial information and project specifics to secure financing.

The resilience of self-storage continues to make it a compelling investment, but we are not a one-size-fits-all industry. Relocatable self-storage units, with their inherent flexibility and adaptability, are increasingly becoming a preferred choice to meet dynamic market demands. As highlighted by the industry experts we spoke with, the key to successfully financing these units lies in understanding the diverse range of loan options available—from conventional loans to specialized programs like SBA loans—and tailoring them to fit specific business need. Therefore, be sure to engage with knowledgeable lenders who understand the intricacies of self-storage financing to secure favorable terms and ensure long-term success and investigate the tax advantages associated with relocatable units, such as those offered under Section 179, to provide further financial incentives. Thorough preparation, detailed business planning, and strategic financial decisions are crucial for leveraging the benefits of relocatable self-storage units and capitalizing on this growing trend within the industry.

elf-storage is a booming business that has proven to be recession-resistant time and time again, making it an interesting investment for newbies and senior investors. However, as more private equity firms and major names began to invest in the industry, it started to change at a pace most small businesses couldn’t keep up with.

Around the world, small businesses, often referred to as “mom-and-pops,” seem to have an expiration date, according to many specialists. So trying to break in as a newbie now can be a daunting, anxiety-inducing task.

To help level out their odds, there are currently two major options that can support a new investor: third-party management and franchising. While the first is probably the most popular when it comes to the self-storage industry as of right now, the second has also been achieving great results. The difference between them is simple: In the first, investors have to put in little to no work; the latter, although flexible, requires them to follow up closely every step of the way.

According to an article published by Franchise Guardian, a new franchise opens every eight minutes every business day, and the franchise industry accounts for 40 percent of all retail sales in the United States. The business model, invented and popularized by American companies, has been replicated and successful worldwide in many different industries. But when it comes to the self-storage industry, it’s still a relatively new concept.

The only franchising self-storage company in the U.S., Storage Authority, put an entire system into place inspired by their experience creating and running self-storage facilities to help franchisees avoid making beginner mistakes that could easily cost them their business.

The company was created in 2016 as Marc Goodin, a self-storage industry specialist who had been retired for the previous five years, was starting to look for a new endeavor to occupy his free time. While advising his now-co-founder, Garrett Byrd, who comes from a hotel franchising background, Byrd saw the opportunity to work together to create a self-storage franchising company.

Goodin is a known figure in the industry who knows its ins and outs and has published several books on the topic, some of which eventually became audiobooks, including “Crush Your Competition: 101 Self Storage Marketing Tips For The Fastest Way To Huge Profits” and “Your Self Storage, Planning: Site Selection, Design – Build.”

However, even as the industry continued to grow, he noticed demand for industry advice wasn’t slowing down, which led him to realize the potential of the offer. “He [Byrd] told me people were going to ask the same questions and need the same answers, the same systems,” says Goodin. “So, about 10 years ago, we started Storage Authority.”

Franchising also makes the entire process more flexible for investors timewise, as they are able to work after hours while a team does most of the leg work during office hours. This is especially good for investors who work normal 9-to-5 jobs and don’t have much time during the day to oversee things like construction, team hiring, training, etc.

Working under a known name is also a great advantage, as brand awareness leads customers to trust your brand from the get-go, and in turn generate growth for your business. Brand recognition is something earned with time, great service, and the right marketing strategy, which makes it tricky to maneuver, especially as a first-timer investing in a new industry. Although it’s not impossible to achieve it from the ground up, it just takes time, strategic planning, and investment.

Financially, a benefit of franchising is having access to a Small Business Administration (SBA) loan, which only requires 10 percent to 15 percent capital and provides operational capital–against around 30 percent to 40 percent and no operation capital in traditional loans. SBA loans may not be available for businesses working with third-party management companies, and new constructions may not get approved.

It’s important to remember that when buying into a franchise, investors must abide by the company’s rules and systems. Making any major changes requires disclosure, and choosing to do things differently can lead to a legal issue with the brand. So, it is imperative to study the brand’s business model to ensure it is a great fit.

Another downside of franchising is that while it can save investors money by ensuring they don’t overspend to get their business up and running, the support comes with an additional cost, starting with an initial franchise fee and continuing with regular royalty and marketing fees. Franchisees are also obligated to maintain facility standards, which is another additional cost to keep in mind. Plus, if they decide to sell it, they will likely make a smaller profit margin than someone who ventured into business independently.

Perhaps the biggest disadvantage of franchising is the lack of control. As investors are essentially buying into someone else’s business, it can be frustrating not being able to control important aspects of a brand’s name, like its reputation. Even though franchisees are expected to offer a high-quality service at their facilities, that is not always the case. This is especially worrying in the age of cancellation culture, as if the brand or one of their other franchisees becomes the target of a scandal, all of the brand’s facilities could end up suffering the consequences. In the self-storage industry, however, this kind of situation may be less likely and may not cause as much concern as other industries, but it is a good idea to research smaller-scale instances like checking up on other franchisees’ facilities to make sure they are not causing the brand name to devalue due to off-the-book practices.

The program was created by Storelocal, a membership organization that empowers self-storage owners and operators who work together to increase their competitive advantage in the marketplace. “With Storelocal Storage, operators can maintain their independence and ownership while gaining national brand recognition. One of the key goals of Storelocal Storage is to help independent operators maximize profits, which we’re able to do by operating differently than the franchise model,” states Emily O’Leary, brand manager for Storelocal Storage.

The price of the investment is also wildly different when compared to franchising. “A quick Google search for self-storage franchises yields results for a company with start-up fees approaching $70,000 in addition to monthly royalty fees of 6 percent plus an additional 2.5 percent fee for marketing, sales, technology, and website,” she states. “We currently charge a nominal setup fee of $1,000 for software and website setup in addition to a $5,000 brand licensing fee. We do not charge monthly royalty fees, but instead charge a flat monthly fee under $1,500 (current as of July 2024) for what we call our ‘Operations in a Box,’ which includes a website with national domain authority, property management software, reputation management, citation management, an AI chatbot, a dedicated branded email, SEO, an operations playbook, trademark license, competitive merchant processing rate of 1.89 percent plus $0.10 per transaction, Storelocal Protection (which operators are able to keep 75 percent to 80 percent of monthly protection fees collected), automated rent management, automated promotions, rate campaigns, consulting, and networking.”

Another benefit of the program is that it allows investors to mix and match, as StoreLocal Storage gives them the freedom to hire a third-party management company to run everything, as long as the company is willing to operate the store under the StoreLocal Storage name and guidelines.

However, the downside of the program compared to franchising is that it doesn’t offer the same level of structure that can come in handy for someone just starting in the industry. “A franchise would outline exactly what the franchisee is to buy for their store. Think of McDonald’s; they have the same counter, the same cash register, the same tables, etc. With Storelocal Storage, operators have the flexibility to build their stores how they want, which can be daunting for someone who prefers to have everything prescribed for them,” she adds.

n 2024, the U.S. economy could be considered “stable,” especially when compared to more challenging financial times in the prior years, specifically the COVID-19 recession, which lasted roughly from February 2020 until April 2020, according to the National Bureau of Economic Research.

This year, data from the Bureau of Labor Statistics has stated that the unemployment rate in the U.S. is low, with 8.5 million job openings. Nowadays, American workers also earn more, with an hourly rate 22 percent higher than pre-pandemic times. Why is this relevant? Well, it’s known that low unemployment rates usually indicate economic prosperity in a country.

However, even if the U.S. economy is considered “stable” in 2024, that doesn’t mean that there are no issues. For example, the inflation, which closed the month of May with 3.3, is still considered uncertain by some specialists. With that in mind, those in leadership positions at self-storage companies need to have a plan for how they’ll handle their finances if the U.S. economy, or the self-storage market, becomes challenging. It’s better to be prepared, right?

To understand the best ways to raise capital for your self-storage company in a challenging market, MSM spoke with Banks Brown, an acquisition associate at Madison Capital Group, and Shawn Hill, a principal and founding member of The BSC Group.

However, before looking for an investor, it’s important to understand what type of business partner or investor you’re seeking. Is it a long-term business partner, someone you can work with on multiple projects and deals? Or is it a one-time investor? What type of investor would be best for your company? What are your goals with this partnership? It’s necessary to understand what your company can offer to an investor and what you expect in return.

Banks Brown, for example, stated that Madison Capital Group values its close relationships and repeat individual investors. “We are interested in forming strategic partnerships, however, the relationship must be the right fit across the board. We are very lucky that we can be patient and we can make sure we have a partner committed to doing business together long term,” he said.

In challenging financial times, these relationships can be a great way to raise capital and invest in new deals. But where can you find partners and investors who align with your business practices and expectations? Well, we’ve established the importance of understanding the type of investor you’re seeking. When you acknowledge the profile you’re looking for, there are many options to connect with those prospects.

Social media, especially LinkedIn, is a great option. It can be helpful to join groups on LinkedIn related to your niche, follow creators you admire, and interact with posts. Another way of finding possible investors is by attending events and conventions related to the self-storage industry. In addition, it’s helpful to reach out to your connections and current investors to network with their connections, too.

According to Shawn Hill from The BSC Group, it’s important to make sure current and future investors understand your business and feel confident partnering with you. “We have helped create bridge loan programs that strategically align capital sources with REITs or large operators that are also in the third-party management business. This has helped sponsors with lease-up deals obtain bridge loans because the partnerships help the capital to better understand the real estate and gain comfort in the forward-looking economics given the expertise of the management company,” he explained.

In summary, to raise capital, investors are essential. It’s necessary to understand the profile of the investor you’re looking for, connect with them, and build a relationship based on communication and trust. The investors must know that it’s a smart decision for them to partner with and/or invest in your self-storage company. These relationships should be cultivated so that investors can help your self-storage company raise capital in a challenging market.

Investing in marketing tactics and publicizing your company is a good strategy to keep investors confident in continuing their partnership with your business. What’s new about your company? How is it doing? What’s the best way to market your company to showcase financial stability? What are you comfortable sharing? What’s relevant to share? If you can make that information easily accessible to your investors, even better. If they aren’t heavy social media users, make sure they’re signed up for an email newsletter informing them of how your self-storage company is improving and succeeding.

Hill agrees that it’s very important to keep business partners and investors informed and confident about partnering with your company. “First and foremost, cash is king and cash flow is key. If you have a long-standing history of reliable cash flow, that is certainly something to showcase,” he said.

Even if your company is going through a challenging financial time, having knowledge about your business is very relevant. How have your past deals worked out? What positive things do your previous partners and investors have to say about you and your company? There’s always something positive to showcase; make sure your partners and investors are aware of those things.

To showcase your self-storage business’ financial stability, keeping ongoing communication with partners and investors is crucial. Make sure they can ask questions, and be sure to fully answer their questions. Schedule meetings to keep the conversation going and inform them about news/updates on your deal/partnership. The more confident and informed they feel, the more likely your company can have a long-term partnership with them.

Challenging financial situations can be challenging and anxiety-inducing, but it’s possible to raise capital using these tips. Great relationships with business partners and investors are always going to be a phenomenal asset to your self-storage company. Keeping those relationships takes work, but it’s worth it. Even if your company is doing great financially, it’s always great to be prepared and have a plan if the economic situation becomes a bit more difficult.

n the dynamic world of self-storage investment, the significance of networking and the role of industry associations cannot be overstated. While national organizations like the Self Storage Association (SSA) provide a wealth of resources and advocacy, state and local associations, along with their networking and educational events, are equally important in fostering investor success. This article explores how these elements contribute to the thriving self-storage sector, emphasizing the unique benefits provided by localized networks and events.

“Networking and active involvement in industry associations were meaningful for the growth and success of the U-Haul self-storage business. These opportunities not only provided invaluable insights into market trends and regulatory landscapes but also opened doors to new relationships, collaborations, and partnerships,” said Jennifer M. Settles, Esq., former corporate and real estate counsel to U-Haul International, Inc.

For instance, the TSSA conducts annual market surveys that offer detailed analyses of the Texas self-storage market. These surveys help investors identify emerging trends, potential opportunities, and challenges unique to the state. Such localized data is invaluable for investors looking to optimize their portfolio performance in specific regions.

At these events, investors can participate in roundtable discussions, attend educational seminars, and engage in one-on-one conversations with industry experts. This exposure to diverse perspectives and experiences can provide investors with new ideas and strategies to enhance their operations and investment returns.

“Networking through state associations has been a game-changer for our work at Citadel Development Partners. These events facilitate the exchange of ideas and experiences, fostering partnerships that lead to innovative solutions and successful projects. The insights and relationships gained through networking have been crucial to our strategic planning and project execution,” says Alexander Clark, principal at Citadel Development Partners in Fayetteville, Ark.

These gatherings benefit new investors, providing a supportive environment to ask questions, seek advice, and build a local network. Seasoned investors also benefit from these events by staying connected with the community and informed about local market developments.

By participating in these educational events, investors can stay current with industry trends, regulatory changes, and best practices. This continuous learning is vital for maintaining a competitive edge in the ever-evolving self-storage market.

Investors can join these associations to contribute to and benefit from advocacy efforts. Staying informed about regulatory changes and participating in lobbying activities can help protect their investments and promote industry growth.

Networking and industry associations are indispensable to the success of self-storage investors, particularly at the state and local levels. These associations provide critical resources, educational opportunities, advocacy, and a supportive community, all of which contribute to the growth and profitability of self-storage investments. By leveraging the benefits offered by local and state associations, investors can enhance their operations, stay informed about market developments, and build a robust network that supports their long-term success in the self-storage industry.