After 10 years of service and over two million doors, our company has evolved, but we still build each door with the same level of quality and service that we did from the start.
Thank you to our clients and vendors that have helped us achieve this milestone.
steeldoordepot.com
1 866 562 2580 w w w. j a n u s i n t l . c o m
• • • 3 7 years of collective dedicated self 3 37 years of collective dedicated self 7 years of collective dedicated self storage transaction experience storage transaction experience storage transaction experience • • • $ 3.2 billion in closed self storage $ $3.2 billion in closed self storage 3.2 billion in closed self storage transactions transactions transactions • • • M M M ore than $750 million in closed ore than $750 million in closed ore than $750 million in closed self storage transactions in 2010 and self storage transactions in 2010 and self storage transactions in 2010 and 2011. 2011. 2011.
www.HFFselfstorage.com I n v e S t M e n t S A L e S | D e b t P L A C e M e n t | e q u I t y | t o tA L t r A n S A C t I o n M A n A g e M e n t
www.hfflp.com www.hfflp.com
Aaron Swerdlin
Doug McCarron
Barbara Guffey
Senior Managing Director t (713) 852-3500 aswerdlin@hflp.com
Managing Director CA Lic. # 01473385 t (310) 407-2100 dmccarron@hflp.com
Associate Director t (713) 852-3509 bguffey@hflp.com
Colby Mueck
Steven Klein
Associate Director t (713) 852-3575 cmueck@hflp.com
Managing Director t (212) 632-1838 sklein@hflp.com
Boost your appearance on the web for less cost! With our quick-and-easy page-build process you can get your locations online, share details and deals, and close more rentals fast. Super easy setup
PUBLISHER Poppy Behrens CONTRIBUTING EDITOR Joanne Donnelly WRITERS Elizabeth Ferrin (U.S.) Candace Watson (Canada)
Great visibility in search Calls-to-action that work Instant lead conversion Data tracking
PRODUCTION Jeffry Pettingill ART DIRECTORS JeffryPettingill•KenOwens NATIONAL SALES MANAGER Donna Morgan-Esquibel (800) 824-6864 CIRCULATION & SOCIAL MEDIA MANAGER KeithRawson ••••••••••••••••••••••••••••••• MiniCo Insurance Agency, LLC © 2011 All rights reserved.
PRESIDENT & CEO Mike Schofield CHIEF FINANCIAL OFFICER Mary Schick
A complete web package for larger self storage brands. Each custom design is based on web best practices in page design, function, SEO, coupons, lead conversion and analytics. Best-practices design Content management system Comprehensive SEO Robust data tracking This web value is unmatched!
WEB SITES www.ministoragemessenger.com www.minico.com•www.aranins.com E-MAIL messenger@minico.com Reproductioninwholeorinpartwithout writtenpermissionisprohibited. Printed in the United States. Unsolicitedmanuscripts,artworkand photographs must be accompanied by an addressed return envelope and the necessary postage. Publisher assumes no responsibility for the return of materials. All correspondence and inquiries should be addressed to: Mini-Storage Messenger 2531W.DunlapAve.•Phoenix,AZ85021 Phone: (800) 352-4636
10
Self-Storage Almanac 2012
SELLING? WE’RE BUYING! The Storage Post acquisitions team is pursuing growth in the self storage industry by seeking expansion opportunities. We aggressively deploy capital in our acquisition strategy and value engineer offers to deliver more attractive sale prices than other companies. Storage Post has a national acquisitions scope and targets both single property and portfolio transactions. Deals are structured with consideration to the needs of the seller, and we offer a quick close.
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Table of Contents United States Almanac ...................................................................................... 1 A Note from the Publisher.......................................................................................15 Regional Information ..............................................................................................16 Methodology ...........................................................................................................17 Contributions and Credits ......................................................................................19 1•IndustryOverview ..................................................................................... 20 2•IndustryTrends........................................................................................... 26 3•EconomicsandDemographics............................................................... 32 4•MarketConditions ..................................................................................... 39 5•Occupancy ............................................................................................... 45 6•RentalRates ............................................................................................... 53 7•CustomerBase ...........................................................................................61 8•SiteInformation ..........................................................................................75 9•Security ...................................................................................................... 88 10 •Marketing ....................................................................................................96 11 •ManagementandTraining .................................................................... 100 12 •Valuation ...................................................................................................109 13 •Finance......................................................................................................123 Association Listings ...............................................................................................196 Glossary ................................................................................................................ 204 AdvertisingIndex ................................................................................................. 208
Canadian Almanac ........................................................................................137 A Note from the Publisher..................................................................................... 141 Table of Contents .................................................................................................. 141 1•IndustryProfile ..........................................................................................143 2•EconomicsandDemographics..............................................................146 3•Occupancy ..............................................................................................150 4•RentalRates ..............................................................................................155 5•CustomerBase ......................................................................................... 161 6•SiteInformation ........................................................................................163 7•Security ..................................................................................................... 175 8•Marketing .................................................................................................. 181 9•ManagementandTraining .....................................................................185 AdvertisingIndex ................................................................................................. 208 2012 Self-Storage Almanac
13
A Note from the Publisher
W
hen I joined MiniCo in 2000, thefirstprojectIworkedon was the 2001 Self-Storage Almanac. Other than the info I had garnered from freelance editorial contributions, this publication my introduction to the data behind self-storage. Moreover, it became my anchor to the industry and my most valuable educational tool as I delvedintotherealinnerworkingoftheindustry. Now, more than 11 years later, we present the 2012 Self-Storage Almanac—available in both the print and digitaledition.Whileithasgrownandimprovedoverthe years, it is still one of the most valuable tools for tracking the data of the self-storage industry. Once again utilizinganindependentthird-partyresearchform,wehave continued to refine the data collection and analysis process. Aswehaveforthepastseveralyears,weonceagain partneredwithCushman&Wakefield’sSelfStorageIndustry Group to produce this 20th edition of the Almanac. We especially thank Chris Sonne and Jonathan Langfortheirtirelesseffortsinassistinguswiththedata evaluation and table creation. This year after many requests and much consideration, this U.S. version of the Almanac includes the first ever Canadian Self-Storage Almanac. Wewouldliketo thank Sue Margeson and the Canadian Self-Storage Association for their assistance in producing this inaugural publication. Moreover, we offer a special thank you to Candace Watson of Canadian Self-Storage valuation for her invaluable role in analyzing the Canadian data. It is essential to understand that self-storage is a localized business. Consequently, demand, saturation, and market feasibility can greatly vary from one location toanother.Henceonemustunderstandthatwhilethe Almanac is a benchmark—an industry staple for owners, operators, investors, developers, and appraisers—it shouldbeusedinconjunctionwithotherindustrytools
PoppyBehrens Publisher
includingtheuseofindependentindustryexpertswho arefamiliarwithspecificmarketareayouarestudying. Inclosing,wethankyouforyourcontinuedsupport of the annual Self-Storage Almanac. We hope that it willbecomeasvaluableatoolforyouasitwasforme whenIfirstcametothisindustry.
Poppy Behrens
2012 Self-Storage Almanac
15
Methodology ince 1992, the annual SelfStorage Almanac has provided the self-storage industry with benchmarks by which facility owners, investors, and others may gauge the state of the industry, thereby allowing them to make more educated business decisions. It is important to note, however, that the information provided in the Almanac isinnowaymeantto serve as a substitute for local market research. As such, it is essential that every developer and investor conduct his or her own market-specific research. The information collected through such research, combined with the data provided herein, will provide an accurate basis for the comparison of individual facilities as wellasaforecastoftheself-storage business in general.
S
IT IS
IMPORTANT TO NOTE, HOWEVER, THAT THE
INFORMATION PROVIDED IN THE ALMANAC IS IN
NO WAY MEANT TO SERVE AS A
SUBSTITUTE FOR LOCAL MARKET RESEARCH. Data Generation The data presented in the Almanac is not based on an empirical study. To be more precise, the information reported in various tables, charts, and editorial throughout Almanac represents averages calculated from the responses to survey questions from the annual Self-Storage Alma-
nac Survey.Thisyearthesurveywas senttoapproximately7,500facilities across the United States, selected from a database maintained by MiniCo of 50,048 facilities. The selected sample size for eachregionwasdeterminedbased onthenumberoffacilitieswithinthe given region. A probability-based, systematic sampling method was then employed to select the number of facilities predetermined from the ZIP code order database. On page 16, in addition to the regional breakdown, is a summary of the total number of potential facilities availableforselectionaswellasthe actual number of responses from each region and sub-region. This year, as in the past, survey respondentswereaskedtoprovide awiderangeofinformationbyanswering questions covering various aspects of the industry from occupancy levels and rental rates to the usage of various promotional media and security measures. This year, the total number of usable surveys received was 734, accounting for anoverallresponserateof9.8percent.
Analysis The results of the survey are represented on both a national and regional basis. To help localize the information, the United States was divided into five standard geographical regions: West, South Central, North Central, Southeast, and Northeast. Those regions were further divided into nine subdivisions: Pacific, Mountain, East South Central, East North Central, West South Central, West North Central, South Atlantic, Middle Atlantic, and New England. Consideration should be given when reviewing the results that self-storage is a highly localized business. Conditions at national or
regional levels may not necessarily represent the conditions in a fivemile radius surrounding a particular location.
THIS YEAR THE SURVEY WAS SENT TO APPROXIMATELY
7,500 FACILITIES ACROSS THE UNITED STATES, SELECTED FROM A DATABASE MAINTAINED BY MINICO OF
50,048 FACILITIES. Statistical Approach For the purpose of the 2012 SelfStorage Almanac survey, we applied a mean average, also called the“arithmeticaverage,”whichisa common method of finding a value for a list of numbers. The mean average is determined by adding all the values and then dividing by the number of responses we received for those values.
Sources The information provided within this bookwasderivedprimarilyfromthe followingsources:theU.S.CensusBureau, the results of the 2012 Self-Storage Almanac Survey, and Nielsen, a private demographic data vendor.
2012 Self-Storage Almanac
17
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Contributions and Credits
MiniCowouldliketorecognizethefollowingindustryprofessionalsfortheir invaluable contributions to the 2012 Self-Storage Almanac:
R. Christian Sonne, MAI Cushman&Wakefield’sSelfStorageIndustryGroup
Jonathan Lang Cushman&Wakefield’sSelfStorageIndustryGroup
Shawn Hill The BSC Group
Candace Watson CanadianSelfStorageValuationServicesInc. Photos Courtesy of Premier Storage and Cypress Self Storage Thisstudy,orpartsthereof,maynotbereproduced,copied,ortransmittedinanyformwithoutpriorwritten permissionofMiniCo,whichhasreceivedone-timereproductionpermissionfromthesourcesreferredtoherein. Allrightsreserved•Copyright©2011•PrintedintheU.S.A. MiniCo Insurance Agency, LLC•2531W.DunlapAvenue•Phoenix,Arizona85021•(800) 528-1056 2012 Self-Storage Almanac
19
1•IndustryOverview
D
espite three years of cut backs, belt tightening and cost control, self-storage facilities across the country continue to have an uphill battle. Although economists declared June 2009 to be the official end of the GreatRecession—thedeepesteconomicdownturnintheU.S.sincethe Great Depression—the recovery has beenslowandweak.Thehousingindustry,oneofthemaindriversofnew customers at self-storage businesses, remains flat and no upturn is in sight. Some operators are feeling the pressure of the down economy and are anxious about the future. The threat of a double dip recession still looms large over the nation, and many self-storage owners and operators are taking measures to mitigate any further impact on their businesses—reducing expenditures and shoring up savings to stay afloat during another economic trough. Self-storage businesses are not alone in feeling the pinch. Across the country, consumers are also tightening purse strings. Many have been forced to change spending habits, making do with less income.The unemployment rate remains over 9 percent, compounding employmentprospectsforthoseoutofwork. This recession was characterized by massive corporate layoffs, and many moreworkershavehadtheirhoursor salarycut.Othershavebeenforced to accept a lesser, part-time job to bring in additional income while theylookforfull-timework.
Feeling The Pinch Consumers are living on less for a variety of reasons. According to the U.S. Census Bureau, median household incomes have fallen for three consecutive years and the poverty rateisata20-yearhigh.Nationwide, buyers are scrutinizing every ex-
20
Self-Storage Almanac 2012
pense, including their monthly selfstorage bill. In an effort to trim their budgets, some customers are opting to vacate storage units, leaving self-storage businesses scrambling toattractanewcustomerforevery tenantwhomovesout. Although consumers are spending less, a solid market for self-storage persists. The Self Storage Association estimates that approximately 10 percent of U.S. households currently rent a storage unit. The group also reports that gross revenues of $22 billion for companies whose primary business is self-storage. The self-storage industry is more recession-resistant than other property sectors for a number of reasons, making it attractive for those lookingforawaytomakemoneyinthe face of the difficult economic environment. While the demand to own new storage facilities may be strong, development continues to be flat. Construction loans remain difficult to find and credit for entrepreneurs remains tight. However, some new storage properties opened this year—approximately692newpropertieswereidentifiedinthenational facility count this year. It is important to note not all of these represent new sites but rather new facilities identified. Therefore, this number captures both new facilities that have opened their doors for businessandexistingfacilitiesthathave beennewlyidentifiedoverthepast year. It is also important to note that the current rate of development is approximatelyhalfthatof2009and the number of developments is four timeslowerthanitwasin2008. For2011,newdevelopmentsand existing stores total approximately 50,048 self-storage facilities operating in the U.S. These self-storage fa-
cilities offer customers the ability to rent one of their 28.32 million units spread out over more than 2.55 billion rentable square feet. To imagine the figures another way, all of the self-storage properties in the U.S. could be combined to form an impressive 91 square miles of storage space under a single roof, an area approximatelyfourtimeslargerthan ManhattanIslandinNewYork.
Per Capita Numbers There are an estimated 7.41 rentable square feet of self-storage space for every man, woman and child in the country, a number that has grown steadily over the past several years despite the protracted economic downturn. Although the industry’s growth rate has slowed overthepasttwoyears,developers continuetakeonnewprojectsand construct new self-storage stores across the country. The reigning self-storage capital of the U.S. remains the Dallas-Fort Worth-Arlington, Texas Core Based Statistical Area (CBSA). On the top ofthelistformorethansixyears,this area contains 1,389 self-storage facilities.However,whenrankingmetro areas by rentable square footage per person, Palm Bay-MelbourneTitusville, Florida is in the number one spot for the third consecutive year, with 14.74 square feet of storage space for every area resident. When ranking states by number of storage stores, Texas tops the list ofmetropolitanareaswiththemost storage facilities for more than five years. The Lone Star State currently has 6,430 self-storage facilities, having opened 80 new facilities over the past year. At the other end of the spectrum, North Dakota has the fewest selfstorage businesses with 95 facilities.
IndustryOverview• 1
This, too, is a long-held position for the state as it has ranked in the last slot for four consecutive years. By rentable square footage, Montana has the most self-storage space, totaling 24.91 square feet for every resident. By contrast, New York has the least with only 3.70 square feet per person. The self-storage industry remains fragmented.Withthesector’stop10 players controlling only 11 percent
of the market and its top 50 players controlling 15 percent of the market, the industry is comprised of mostly mom-and-pop facilities. Many predict further industry consolidations willallowthelargerplayerstotake advantage further of their economies of scale. The market share (number of facilities) controlled by the industry’s top 10 operators has been growing over the past three years. The current economic environment is increasing opportunities
forconsolidationbylarge,wellfundedstoragecompaniesandREITs,as they capitalize on distressed operations that are buckling under both financing and economic distress. According to Table 1.2, survey respondents indicated that they own or operate an average of 5.23 facilities.Thisfigureisslightlylowerthan lastyear’saverageof5.96peroperatorandsignificantlyofffrom2009’s average of 7.60.
TABLE 1.1
INDUSTRY PROFILE National Data Total Number of Facilities Average Number of Units per Facility Average Facility Net Square Footage Total Number of Units Total Rentable Square Footage Average Rentable Square Footage per Person State Information State with Most Facilities State with Fewest Facilities State with Most Rentable Square Footage per Person State with Least Rentable Square Footage per Person MSA Information* Metro Area with Most Facilities Metro Area with Most Rentable Square Footage per Person Market Share** Largest Self-Storage Company By Number of Facilities By Rentable Square Footage Market Share of Top 10 Companies By Number of Facilities By Rentable Square Footage Market Share of Top 50 Companies By Number of Facilities By Rentable Square Footage Market Share of Top 100 Companies By Number of Facilities By Rentable Square Footage Average 2009 Industry Occupancy Level Economic Physical
2011
2010
2009
2008
50,048 566 51,119 28.32 million 2.55 billion 7.41
49,356 352 46,669 17.37 million 2.30 billion 7.31
48,721 378 52,885 18.42 million 2.58 billion 7.26
47,514 460 45,884 21.85 million 2.18 billion 7.03
Texas - 6,430 No. Dakota - 95 Montana - 24.91 New York - 3.70
Texas - 6,350 No. Dakota - 91 Montana - 22.59 New York - 3.20
Texas - 6,258 No. Dakota - 89 Montana - 21.99 New York - 3.24
Texas - 5,744 No. Dakota - 88 Montana - 21.90 New York - 3.04
Dallas-Fort Worth Arlington, TX - 1,389 Palm Bay-Melbourne Titusville, FL - 14.74
Dallas-Fort Worth -Arlington, TX - 1,385 Palm Bay-Melbourne Titusville, FL - 13.92
Dallas-Fort Worth Arlington, TX - 1,382 Palm Bay-Melbourne Titusville, FL - 13.70
Dallas-Fort Worth Arlington, TX - 1,261 Tulsa, OK & Little Rock, North Little Rock Conway, AR - 12.36
Public Storage 4.47% 5.29%
Public Storage 4.13% 6.03%
Public Storage 4.50% 5.31%
Public Storage 4.60% 4.80%
11.11% 12.42%
10.85% 14.59%
10.78% 12.39%
10.30% 13.20%
15.12% 29.68%
14.53% 20.16
14.89% 17.67%
14.30% 19.20%
16.77% 32.92%
16.34% 22.71%
16.92% 20.30%
16.30% 22.20%
75.70% 79.70%
68.30% 75.50%
71.8% 76.7%
77.70% 80.30%
* Various MSA have been modified by the U.S. Census Bureau ** Includes international facilities owned by the industry’s top operators
2012 Self-Storage Almanac
21
1 •IndustryOverview
TABLE 1.2
At 10.5 stores per operator, the Pacific sub-region posted the highest average number of facilities ownedormanagedperoperator.At thelowendofthespectrum,theaveragenumberoffacilitiesownedor managedbyoperatorsinNewEng-
22
NUMBER OF FACILITIES OWNED OR OPERATED REGION Number of Division Facilities NORTH CENTRAL 5.97 East North Central 6.34 West North Central 4.87 NORTHEAST 2.44 Middle Atlantic 2.94 New England 1.71 SOUTH CENTRAL 2.55 East South Central 2.85 West South Central 2.40 SOUTHEAST 8.68 South Atlantic 8.68 WEST 5.56 Mountain 1.82 Pacific 10.51 NATIONAL 5.23 Number of Units 1 to 99 2.43 100 to 299 2.30 300 to 499 3.59 500 to 999 11.18 1,000 or more 9.00 Square Footage Less Than 25,000 3.01 25,000 to 49,999 2.80 50,000 to 74,999 9.03 75,000 to 99,999 8.85 100,000 or more 6.49 Market Area Urban 8.18 Suburban 4.61 Rural 2.52 Year Facility Built Prior to 1981 3.27 1981 to 1985 2.05 1986 to 1990 4.77 1991 to 1995 5.81 1996 to 2000 4.89 2001 to 2005 3.76 2006 or after 9.39 Self-Storage Almanac 2012
land was 1.71. The Mountain subregion followed with an average of1.82self-storagestoresownedor managed per operator. There is a strong correlation between the number of facilities ownedormanagedbyanoperator and the number of units. By number of units, the smallest groupings— thosewithfewerthan100units,and 100to299units—averaged2.43and 2.30facilities,respectively,ownedor managed per operator. The largest sizecategories,500to999units,and 1,000 or more units, averaged 11.18 and nine storage stores, respectively,ownedormanagedperoperator. A similar correlation is seen in number of facilities and rentable square footage. While the smallest two size categories average approximately three facilities per operator, the larger groupings ranged from9.03to6.49peroperator. Similarly, size and location correlate. Stores in urban areas are more likely to be owned by a top operator than those in suburban or rural properties. The population size of the area surrounding a storage facility correlates with the average number of facilities owned per operator. For 2011, storage sites in urban areas averaged 8.18 facilities per operator, stores in suburban locations averaged 4.61 properties per operator and self-storage businesses in rural settings averaged 2.52 facilities owned or managed per operator. Interestingly, the average numberoffacilitiesownedormanaged per operator is evenly dispersed in every age category with the exceptionofthenewestfacilities,indicating large storage operators are more likely to own a new self-storage store than an older asset. While
the category of stores built prior to 1981 has an average of 3.27 facilities per operator and the grouping built between 1981 and 1985 average 2.05 storage properties per operator, self-storage stores built after 2006 average 9.39 facilities owned or managed per operator.
Top Operators Public Storage remains the largest operator controlling 4.47 percent of the nation’s facilities and 5.29 percent of the rentable square footage. Like many of the top operators, Public Storage is an equity REIT—it uses investor capital to purchase and manage income property. Also a REIT, Extra Space Storage remains the number two operator on the list as it did last year. With approximately 60.2 million net square feet of storage space in 555,500 units under its ownership or management, Extra Space Storage has added approximately 137 new facilities to its portfolio this year—25 company-ownedsitesand112professionally managed by the organization.Intotal,theExtraSpaceStorage has grown by approximately 9,063,500rentablesquarefeetover the past year. U-Haul International, Inc., a subsidiaryofAMERCO,offerstruckand trailer rentals, sells boxes and movingsuppliesandownsandoperates self-storage facilities. Holding the number three spot, U-Haul boasts 1,119storagepropertiesinitsportfolio with more than 36.7 million rentable square feet. Over the past 12 months, U-Haul has grown its portfolio by 30 properties and added more than 41,000 self-storage units to its holdings. Listed as numbers four and five respectively, CubeSmart (formerly known as U-Store-It) and Sovran
IndustryOverview• 1
TABLE 1.3a
TOP OPERATORS 2011 2010 Ranking Ranking 1 1 2 2 3 3 4 4 5 5 6 7 7 6 8 33 9 10 10 13 11 * 12 11 13 14 14 8 15 12 16 17 17 16 18 20 19 19 20 21 21 24 22 32 23 22 24 23 25 34 26 25 27 36 28 28 29 9 30 35 31 29 32 44 33 27 34 31 35 38 36 42 37 37 38 30 39 41 40 * 41 56 42 50 43 40 44 59 45 48 46 46 47 45 48 55 48 39 48 51 49 18 50 52 51 53 52 43
TOTAL Number of Net Rentable Number of Firm Name Facilities Square Footage Units Public Storage** 2,241 140,000,000 1,350,000 Extra Space Storage 835 60,200,000 555,500 U-Haul International, Inc.** 1,119 36,751,339 414,706 CubeSmart 453 29,484,379 263,881 Sovran Self Storage, Inc. 401 26,620,290 232,590 Derrel's Mini Storage, Inc. 53 9,744,875 64,483 Simply Self Storage 120 8,875,000 73,200 Platinum Storage Group 135 8,600,000 81,550 Metro Storage LLC 115 8,050,000 72,560 Strategic Capital Holdings, LLC** 90 7,661,000 58,600 SecurCare Self Storage, Inc. 148 6,729,264 55,120 Dahn Corporation 90 6,100,000 53,000 TnT Self Storage Managment 59 5,724,129 36,466 Storage Mart** 131 5,338,863 71,453 Storage Inns, Inc. 103 5,000,000 # Ash Development, LLC DBA Ash Properties 47 4,800,000 31,500 Kevin Howard Real Estate 71 4,641,065 33,425 The Jenkins Organization, Inc. 62 4,180,000 38,000 Republic Storage of Idaho 17 3,631,297 16,512 LAACO, Ltd. 45 3,565,000 31,500 Optivest Properties 43 3,390,212 23,916 William Warren Group 51 3,315,710 36,987 Sentry Self Storage Management LC 44 3,283,000 28,177 Stor-All Systems, Inc. 43 3,266,640 25,605 Absolute Storage Management, Inc 49 3,165,000 25,100 BACO Realty Corporation 42 3,157,744 32,052 Westport Properties, Inc. 44 3,133,486 31,372 A-1 Self Storage 40 3,127,384 31,192 A-American Storage Management Co. Inc. 47 3,121,767 30,505 Mornigstar Properties 54 3,112,887 26,366 Pogoda Companies 40 3,020,000 24,160 Brundage Management Co., Inc. 40 2,890,000 23,742 Private Mini Storage 43 2,863,000 22,000 Urban Self Storage 52 2,857,942 30,101 Brookwood Properties, DBA The Storage Center 32 2,853,558 22,768 Universal Management Company 36 2,837,466 24,603 Landvest Corporation 55 2,650,000 22,500 Watson & Taylor Management, Inc. 40 2,536,657 18,545 The Lock Up Self Storage** 38 2,512,276 29,148 Self Storage Management Company 33 2,499,618 18,886 Storage Pros Management LLC 39 2,200,000 19,200 AMSMC-Storage Solutions 43 2,192,728 18,201 Professional Self Storage 36 2,187,055 15,969 Cutting Edge Self Storage Management 16 2,171,740 10,276 Strategic Property Management, Inc 32 2,143,000 19,249 Personal Mini Storage Management 31 2,125,000 19,400 The Heyward Companies 29 2,070,018 15,751 SKS Management LLC 23 2,000,000 17,766 Storage Deluxe 28 2,000,000 37,000 Pegasus Group 31 2,000,000 20,000 Devon Self Storage 26 1,981,406 18,638 America West Management 33 1,900,396 16,994 Investment Development Corporation 32 1,870,000 17,800 Accountable Management & Consulting 27 1,783,709 16,044
**Includes facilities owned internationally
# Did not provide
FACILITIES OWNED Number of Net Rentable Number of Facilities Square Footage Units 2,241 140,000,000 1,350,000 305 21,700,000 205,000 1,119 36,751,339 414,706 369 23,927,865 210,921 354 23,002,720 197,510 53 9,744,875 64,483 114 8,400,000 69,700 28 1,500,000 16,450 65 4,750,000 36,000 90 7,661,000 58,600 135 5,894,745 48,645 90 6,100,000 53,000 0 0 0 131 5,338,863 71,453 103 5,000,000 # 47 4,800,000 31,500 54 3,671,882 28,300 10 800,000 7,000 17 3,631,297 16,512 45 3,565,000 31,500 26 1,912,297 12,348 39 2,302,690 26,929 2 120,000 1,462 43 3,266,640 25,605 4 215,000 1,700 42 3,157,744 32,052 32 2,341,840 24,068 40 3,127,384 31,192 46 3,068,733 29,642 36 2,137,533 18,213 18 1,335,000 10,740 40 2,890,000 23,742 43 2,863,000 22,000 0 0 0 32 2,853,558 22,768 0 0 0 0 0 0 25 1,581,875 12,780 37 2,432,921 18,202 33 2,499,618 18,886 19 1,220,000 11,390 13 376,771 3,468 1 24,655 180 2 120,275 1,041 26 1,828,000 15,859 27 1,810,000 16,500 8 680,786 5,133 0 0 0 28 2,000,000 37,000 31 2,000,000 20,000 8 659,308 6,340 22 1,377,552 10,887 0 0 0 1 32,220 297
FACILITIES MANAGED Number of Net Rentable Number of Facilities Square Footage Units 0 0 0 530 38,500,000 350,500 0 0 0 84 5,556,514 52,960 47 3,617,570 35,080 0 0 0 6 475,000 3,500 107 7,100,000 65,100 50 3,300,000 36,560 0 0 0 13 834,519 6,475 0 0 0 59 5,724,129 36,466 0 0 0 0 0 0 0 0 0 17 969,183 5,125 52 3,380,000 31,000 0 0 0 0 0 0 17 1,477,915 11,568 12 1,013,020 10,058 42 3,163,000 26,715 0 0 0 45 2,950,000 23,400 0 0 0 12 791,646 7,304 0 0 0 1 53,034 863 18 975,354 8,153 22 1,685,000 13,420 0 0 0 0 0 0 52 2,857,942 30,101 0 0 0 36 2,837,466 24,603 55 2,650,000 22,500 15 954,782 5,765 1 79,355 684 0 0 0 20 980,000 7,810 30 1,815,957 14,733 35 2,162,400 15,789 14 2,051,465 9,235 6 315,000 3,390 4 315,000 2,900 21 1,389,232 10,618 23 2,000,000 17,766 0 0 0 0 0 0 0 0 0 11 522,844 6,107 32 1,870,000 17,800 26 1,751,489 15,747
*Not ranked last year
2012 Self-Storage Almanac
23
1 •IndustryOverview
Self Storage, Inc. complete the top five list of self-storage operators. Unchanged in their rankings from the previous year, these industry leaders are also structured REITs and have responsibility for more than 400 storage stores each. Over the past 12 months, CubeSmart grew its holdings by approximately 4,480,379 rentable square feet and Sovran added1,610,190netsquarefeetof storage space to its portfolio.
Ten Largest Operators Derrel’s Mini Storage, Inc. moves up oneslottothesixthspotonthe2011 TopOperator’slist.With53locations in Central California, Derrel’s Mini Storage added one more location to its family of stores this year. The company not only owns all of its properties, but it develops each selfstorage facility in its portfolio. Dropping from number six to number seven, Simply Self Storage oversees120stores,114ofwhichare ownedbythefirmandanadditionalsixpropertiesthatareprofessionally managed by the company. With responsibility for 8,875,000 rentable square feet of storage space, Simply Self Storage operates facilities in 16 statesandPuertoRico. Moving up 25 spaces to eighth place, Platinum Storage Group oversees 135 self-storage facilities in 16 states across the U.S. The company owns 28 of these stores and manages 107, giving them a total of 81,550 storage units across 8.6 million square feet of space to fill. While the organization added three new company-owned facilities to holdings over the past year, most of the operator’sgrowthwaspostedinthe facilities managed category. With storage stores in 13 states across the country, Metro Storage LLC moves up one slot to the num-
24
Self-Storage Almanac 2012
ber nine operator on the list. The company controls a total of 115 storageproperties,owning65stores outright and managing the remaining 50 sites. In total, Metro Storage LLC’sholdingscover8.0millionrentable square feet of storage space made up of 72,560 self-storage units.
Non-Traded REIT Rankedasthetenthlargestoperator in the nation for 2011, Strategic Capital Holdings, LLC is a public, non-traded self-storage REIT. With the same qualifications as publicly traded REITs, non-traded public REITs differ in that they generally have less liquidity and usually requirehighertransactioncostswhen buying and selling shares. They can alsobemoredifficulttofollowwith fewer performance benchmarks and analyst reports published than their publicly traded counterparts. However, non-traded REITs retain the same tax advantages enjoyed bytradedREITs.Thecompanyowns and operates 90 self-storage facilitieswithaportfoliothattotalsmore than 7.6 million rentable square feet of storage space. Debuting on the Top Operators list in the 11th slot, SecurCare Self Storage,Inc.boastsaportfoliowith148 self-storage properties in 11 states. Operating under the names SecurCare Self Storage and Colonial Self Storage, the Colorado-based companyowns135storageproperties and manages an additional 13 storage properties, bringing its total self-storage holdings to more than 6,729,264netsquarefeet. Other new entrants to the Top 100 list include Self Storage Management Company, which comes inatnumber40,owningandoperating 33 self-storage stores. Life Storage Center is also debuting on the list in the 73rdspotwith17storagefa-
cilities located throughout Illinois. At number 75 on the list, American Self Storage owns 12 self-storage properties in New York and New Jersey. StorPlace Self Storage ranks 83rd on thelistandservescustomersinKentuckyandTennesseewithits13selfstorage stores. With 12 storage properties, Golden State Storage owns 10 sites and professionally manages two,makingitthe85th largest operator in the country.
Debuting On The List Also new to the Top Operators List arecompaniesrankedbelownumber 85 which include Storage Masters, Next Door Self Storage, Liberty Investment Properties, Donald Jones Consulting & Service, Big Red Self Storage, Andasol Management, Inc., Amazing Spaces Storage Centers, Averett Company, The Heron Group Management&ConsultingandEZ Self Storage, LLP. While Public Storage, the industry’slargestoperator,controlsabout 4.5 percent of the sector’s facilities, the ten largest operators together control about 11 percent of the nation’sstoragestoresand12percent of the rentable square footage of storage space across the country. The 50 largest storage firms in total oversee approximately 15 percent of the nation’s storage stores and almost 30 percent of the industry by rentable square foot. In aggregate, the top 100 operators control fewer than 17 percent of storage facilities and less than 33 percent of thesector’srentablesquarefeet.In otherwords,independentmomand pop style operators account for the vast majority of business owners in the self-storage market, controlling more than 83 percent of storage stores and 66 percent of the rentable square footage that makes up the entire U.S. self-storage sector.
IndustryOverview• 1
TABLE 1.3b
TOP OPERATORS 2011 TOTAL 2010 Number of Net Rentable Number of Ranking Ranking Firm Name Facilities Square Footage Units 53 54 Southern Self Storage** 25 1,721,258 15,105 54 57 Management Enterprises, Inc. DBA All Aboard Mini Storage 22 1,640,206 15,484 55 60 Litton Property Management, Inc. 18 1,597,400 11,416 56 67 Synergy Storage Group 28 1,584,542 15,546 57 84 Cox Armored Mini Storage Management, Inc. 19 1,543,002 11,856 58 64 Storage Investment Management, Inc. 32 1,517,000 14,160 59 90 Advantage Storage 14 1,504,680 11,410 60 62 Union Development Company DBA Storage Solutions 21 1,468,552 12,573 61 61 Chesapeake Resources, Inc. 20 1,466,980 14,904 62 85 Nolan Brothers / Nolan Brothers of Texas 18 1,451,010 12,461 63 71 Herman & Kittle Properties, Inc. 23 1,446,283 11,488 64 70 Stor-n-Lock Self Storage 21 1,405,000 10,455 65 69 BPI Capital Management, Inc.** 21 1,402,834 12,288 66 47 Excellence In Management Group, Inc. 21 1,401,388 10,917 67 88 Metro Mini Storage 15 1,350,000 7,450 68 97 Storage Asset Managament, Inc. 26 1,333,474 11,549 69 65 York Developments 13 1,307,010 10,600 70 72 Access Self Storage** 19 1,307,000 14,900 71 73 Stockade Storage 18 1,294,455 9,751 72 66 Storage Management Associates, Inc. 19 1,290,092 10,513 73 * Life Storage Centers 17 1,260,000 13,225 74 58 Storage PRO, Inc. 21 1,146,206 11,050 75 American Self Storage 12 1,100,000 11,300 75 75 Sterling Management & Consulting Services, Inc. 15 1,100,000 # 76 74 Stor All Self Storage 17 1,000,000 9,000 76 87 Hide-Away Storage Services LLC 13 1,000,000 7,000 77 76 Century Storage 15 994,788 12,500 78 81 Clark Properties DBA All Aboard Storage 12 980,825 7,170 79 82 Automated Properties Management, Ltd. 17 955,626 6,623 80 78 National Self Storage Management, Inc. 14 951,960 5,925 81 86 Guardian Storage Solutions 13 951,353 7,745 82 83 Polo Properties, LLC 14 950,000 10,000 83 * StorPlace Self Storage 13 892,853 6,412 84 89 Attic Self Storage 11 858,000 5,394 85 * Golden State Storage 12 812,108 6,983 86 91 Artisan Properties 9 792,138 4,773 87 92 Gainer & Assoc., Inc. 18 760,000 7,850 88 93 Site Management Services, Inc. 5 713,550 4,426 89 * Storage Masters 8 698,570 5,405 90 * Next Door Self Storage 11 695,000 7,000 91 49 Noah's Ark Developemnt 9 605,474 4,784 92 * Liberty Investment Properties 10 600,000 6,400 93 97 NitNeil Partners 12 550,000 4,500 94 * Donald Jones Consulting & Service 15 544,713 3,860 95 100 Storage Inns of America 7 500,305 3,998 96 * Big Red Self Storage 6 449,477 2,883 97 * Andasol Management Inc. 6 449,119 4,481 98 * Amazing Spaces Storage Centers 4 382,880 2,810 99 * Averett Company 6 350,000 2,800 99 * The Heron Group Management & Consulting 5 350,000 4,100 100 * E Z Self Storage, LLP 7 324,926 2,255 **Includes facilities owned internationally
# Did not provide
FACILITIES OWNED Number of Net Rentable Number of Facilities Square Footage Units 25 1,721,258 15,105
FACILITIES MANAGED Number of Net Rentable Number of Facilities Square Footage Units 0 0 0
22 3 6 0 0 13
1,640,206 21,240 496,000 0 0 907,745
15,484 2,158 4,665 0 0 6,698
0 15 22 19 32 0
0 1,385,000 1,088,542 1,543,002 1,517,000 0
0 9,258 10,881 11,856 14,160 0
21 11 18 21 21 12 1 15 0 13 8 17 0 17 8 12 0 17 13 15 12 0 5 11 14 13 11 10 6 0 0 8 11 8 8 12 0 7 6 5 4 6 5 7
1,468,552 794,570 1,451,010 1,339,471 1,405,000 717,714 94,139 1,350,000 0 1,307,010 640,000 1,174,766 0 1,260,000 448,206 1,100,000 0 1,000,000 1,000,000 994,788 980,825 0 239,397 873,617 950,000 892,853 858,000 659,293 637,938 0 0 698,570 695,000 539,449 480,000 550,000 0 500,305 449,477 394,391 382,880 350,000 350,000 324,926
12,573 8,138 12,461 10,745 10,455 6,876 959 7,450 0 10,600 7,400 9,115 0 13,225 3,929 11,300 0 9,000 7,000 12,500 7,170 0 1,989 7,103 10,000 6,412 5,394 5,446 3,487 0 0 5,405 7,000 4,147 5,100 4,500 0 3,998 2,883 3,774 2,810 2,800 4,100 2,255
0 0 0 2 0 9 20 0 26 0 11 1 19 0 13 0 15 0 0 0 0 17 9 2 0 0 0 2 3 18 5 0 0 1 2 0 15 0 0 1 0 0 0 0
0 0 0 106,812 0 685,120 1,307,249 0 1,333,474 0 667,000 119,689 1,290,092 0 698,000 0 1,100,000 0 0 0 0 955,626 712,563 77,736 0 0 0 152,815 154,200 760,000 713,550 0 0 66,025 120,000 0 544,713 0 0 54,728 0 0 0 0
0 0 0 743 0 5,412 9,958 0 11,549 0 7,500 636 10,513 0 7,121 0 # 0 0 0 0 6,623 3,936 642 0 0 0 1,537 1,286 7,850 4,426 0 0 637 1,300 0 3,860 0 0 707 0 0 0 0
*Not ranked last year
2012 Self-Storage Almanac
25
2•IndustryTrends he self-storage industry has grown and matured dramatically over the years. First generation storage facilities showcasedrowafterrowoforange metalroll-updoorsandweregenerally relegated to out of the way industrialparks.Overtime,theindustry slowly evolved to produce second generation stores which were usually larger and better laid out than their older counterparts. These second generation properties often were located in higher traffic retail areas and sported more aesthetically pleasing designs. More time passed and second generation designs were replaced with state-ofthe-art, third generation self-storage stores. Complete with architectural features, these developments were specifically designed to meet increasingly strict local and municipal zoning requirements, and to blend in with neighboring homes and buildings. Often located in highly visible, prime commercial areas, the third generation self-storage facilities
T
were defined by large management offices and full retail areas. Many of these sites also included state-of-the-industry security, and provided additional services like truck rentals, computerized access control and on-site kiosks. Just as the design and construction of self-storage facilities have evolvedovertime,theindustry’sservices have undergone a dramatic transformation. With a growing focus on added convenience and individual customer’s needs, many self-storage stores now offer extra amenities that go above and beyond simply renting storage spaces. Themajorityoftoday’sstoragebusinesses boast a variety of services to help improve the overall storage experience and to distinguish their facilities from the competition.
Needs And Expectations Self-storage customers’ needs and expectations have also evolved over the years. They increasingly
TABLE 2.1
NATIONAL TENANT MIX Year 2003 2004 2005 2006 2007 2008 2009 2010 2011
Commercial 18.7% 19.5% 17.6% 20.0% 18.9% 20.6% 16.5% 17.2% 18.4%
Residential 75.3% 75.3% 76.9% 74.7% 74.8% 73.8% 77.1% 70.4% 69.9%
Military 2.1% 2.0% 2.3% 2.7% 3.2% 2.9% 2.7% 6.2% 5.9%
Students 2.8% 2.8% 2.8% 2.6% 3.2% 1.9% 2.5% 6.3% 5.8%
TABLE 2.2
NATIONAL AVERAGE RENTAL PERIOD IN MONTHS
26
Year 2003 2004 2005 2006 2007 2008 2009 2010 2011
Commercial 22.0 22.9 22.4 22.7 25.2 22.5 23.1 25.7 31.4
Self-Storage Almanac 2012
Residential 12.8 12.6 12.0 12.1 13.4 13.7 14.9 15.6 16.6
Military 12.8 12.0 12.1 11.6 12.7 11.8 6.3 13.7 13.7
Students 4.2 4.4 4.7 5.0 4.6 4.5 2.5 5.7 5.4
demand convenience in terms of facility location and retail products offered. Many customers also show a district preference for stores that canprovidetenantswithaone-stop shopping experience for all of their storage and moving needs. Some also expect top-of-the-line security coupled with and a friendly, comfortable atmosphere.
OVER TIME, THE INDUSTRY
SLOWLY EVOLVED TO PRODUCE SECOND GENERATION STORES... Changing expectations can affect what types of potential customers are most likely to sign a lease and move their goods into storage. In general, renters come from one of four main groupings—commercial, residential, military and students; the categoryoftenantswhorentspace at self-storage facilities can fluctuate over time. Commercial customers are businesses that utilize self-storage propertiesforoff-sitestorage.Often,storage facilities can provide this group withalessexpensiveratepersquare foot than they would realize storing their items on-site at their offices. Contractors and other trade business owners with large equipment also frequently utilize storage stores. Othercommoncommercialrenters include pharmaceutical company salesrepresentativeswhousefacilities to store inventory and accept deliveries. This category peaked in 2008 when commercial customers accounted for more than 20 percent
IndustryTrends•2
of tenants at self-storage facilities across the U.S. One year later, the category declined more than 4 percent but since has been steadily increasing and currently accounts for 18.4 percent of the tenant mi-by- at storagestoresnationwide.
Historical Tenant Mix Residential customers are the traditional area homeowners or rent-
ers who need a storage space to store household goods or vehicles. Often, these customers are going through a period of transition—a move, divorce or death in the family. This category has always accounted for the majority of customers at self-storage sites and is considered the bread and butter of the industry. However, the group’s share has been declining since 2009. While
it fell only a half percentage point over the past year, the category droppednearly7percentbetween 2009and2010—intotal,adecrease of almost 10 percent. Military renters are storage customers enlisted in the armed services who are generally seeking to store goods or vehicles during a deployment. This category peaked in
TABLE 2.3
SERVICES OFFERED AT A FACILITY (NATIONAL) (PERCENTAGE OF FACILITIES) Moving Truck Rentals 18.9% 17.0% 19.5% 27.2% 23.8% 28.5% 29.1% 22.9% 33.5%
Year 2003 2004 2005 2006 2007 2008 2009 2010 2011
Ancillary Products For Resale 62.5% 61.6% 57.9% 72.3% 71.6% 73.8% 76.4% 61.7% 79.4%
Customer Storage Insurance 53.4% 49.6% 48.5% 53.4% 58.2% 59.1% 39.3% 41.8% 53.8%
Car Wash ** ** ** ** ** ** ** 2.9% 1.0%
Offers Shipping Services 7.1% 4.9% 5.2% 8.3% 4.5% 6.9% 4.7% 6.9% 3.1%
Other On-Site Business 9.8% ** 1.6% 1.0% 1.9% 1.7% 10.6% 10.7% 12.7%
**Insufficient data
TABLE 2.4
NATIONAL DISTRIBUTION OF UNITS (PERCENTAGE BY UNIT SIZE) Year 5x5 2003 13.8% 2004 13.1% 2005 12.8% 2006 8.3% 2007 9.0% 2008 9.7% 2009 6.8% 2010 6.4% 2011 7.1%
5x10 15.5% 14.5% 14.9% 16.3% 16.2% 17.2% 18.4% 17.2% 19.0%
10x10 17.4% 17.3% 17.3% 20.0% 18.8% 20.9% 24.8% 23.3% 25.6%
10x15 15.0% 14.2% 14.8% 12.4% 12.4% 12.4% 13.2% 13.0% 13.6%
10x20 10x25 11.2% 4.4% 13.1% 5.9% 13.9% 5.3% 14.0% 4.8% 13.6% 5.2% 13.7% 4.7% 16.6% 5.0% 19.4% 3.9% 15.2% 3.5%
10x30 3.6% 5.9% 5.9% 5.2% 4.5% 4.9% 4.6% 4.4% 3.8%
20x20 Other 1.0% 2.4% 2.2% ** 1.6% ** 1.7% 4.8% 1.3% 6.6% 0.9% 4.4% 1.4% 5.9% 0.7% 11.8% 0.5% 11.6%
**Insufficient data
TABLE 2.5
NATIONAL AVERAGE FACILITY SIZE Based on Units Year 2003 2004 2005 2006 2007 2008 2009 2010 2011
Units 352 299 307 399 391 460 378 382 566
RV/Boat 47 48 54 52 43 52 51 51 35
Based on Square Footage Square Footage RV/Boat 35,810 20,108 37,590 15,822 40,234 19,055 45,218 17,889 46,792 15,406 55,600 24,345 52,885 20,844 51,557 18,936 51,119 16,380
2010when6.2percentofallcustomersnationwidefellintothiscategory. For 2011, the percentage of enlisted tenants fell slightly to its current level of5.9percent. Most common in the summer months, students rent self-storage units between terms. In 2010, the proportion of students renting at storage stores peaked at 6.3 percent. Although down slightly from last year, the 5.8 percent figure posted for 2011 is still higher than the category’shistoricalaverage. Rental periods vary widely, especially when comparing various categories of tenants with their average rental terms. On average, commercial customers boast the longest rental period. This group held on to their storage spaces for an average of 31.4 months in 2011—a 22 percent increase over the average length of stay in 2010. 2012 Self-Storage Almanac
27
2•IndustryTrends
Residentialcustomersalsoposted a longer rental period for the year, averaging 16.6 months. This represents an increase of approximately 6 percent for the 12 month period. Over a five year period, residential length of stays have increased by more than 37 percent.
On-Site Services
TABLE 2.6
The industry has responded to customer demands with a growing number of on-site amenities and services. With the exception of the carwashandtheshippingservices categories, every service grouping analyzed has grown over time. While 27.2 percent of storage stores offered moving truck rentals to customers five years ago, more than 33 percent of stores now have this amenity available. Going back to 2004 when only 17 percent of selfstorage properties had moving truck rentalsatthesite,thegrowthcurve
for moving truck offering has become even steeper. The ancillary product category postedthemostgrowthfortheyear. Between 2010 and 2011, the proportionofstoreswithretailofferings grew by 17.7 percentage points. The customer storage insurance category is up significantly as well, rising 12 percent over the past 12 months. Increased participation rates in services that generate additional income—such as moving truck rentals, customer storage insurance and retail sales—indicates that operators are continuing to look for new ways to bring extra dollars to the storage business. The fact that the other on-site business category continues to grow is further evidence that storage businesses are experimenting with new ideas and
NATIONAL SHARES OF FACILITIES WITH MULTIPLE LEVELS AND/OR CLIMATE CONTROL (PERCENTAGE OF FACILITIES) Year
With Multiple Levels
With Climate-Controlled Units
2003 2004 2005 2006 2007 2008 2009 2010 2011
13.6% 13.8% 14.3% 18.4% 16.0% 27.3% 18.2% 16.2% 18.2%
20.8% 25.7% 24.3% 39.1% 50.0% 52.0% 49.0% 35.7% 47.9%
TABLE 2.7
NATIONAL PRIMARY COMPETITIVE MARKET (FIVE-MILE RADIUS)
28
Year
Average Number of Existing Competitors
Average Number of New Facilities Under Construction
2003 2004 2005 2006 2007 2008 2009 2010 2011
7.8 9.5 6.7 8.7 6.8 6.5 8.0 7.6 7.7
1.2 2.6 1.3 1.1 0.8 1.5 0.2 0.2 0.2
Self-Storage Almanac 2012
attempting to establish a competitiveedgetohelpgrowtheirbottom line.
THIS MAY BE AN INDICATION OF THE
GROWING POPULARITY OF SPECIALTY STORAGE STORES... Unit Distribution The 10-by-10 unit size has long been the most common container size at self-storage facilities. Nationwide, these units have accounted for more than 20 percent of the total unitmixatstoragestoressince2008. This year, more than 25 percent of storage spaces measure 10-by-10, signaling strong demand for this size. The 5-by-10 space has also posted steady gains over time. Currently, 19 percent of self-storage units currently fall into this size category. Up almost two percent from 2010 and more than four percent from 2004, the 5-by-10 unit is increasing its share of self-storage facilities. On the other hand, the proportion of larger unit sizes has been declining over time. The mix of 20by-20 units as a percent of all units dropped from 2.2 percent to approximately 0.5 percent over the past seven years. The 10-by-30 size category is also becoming less common. While these spaces accounted for5.9percentofallunitsatstoresin 2004, they amount to only 3.8 percentoftoday’sstoragemix. The “other” category has also increased significantly over the past
IndustryTrends•2
four years. This may be an indication of the growing popularity of specialtystoragestores,suchasRVand boatstorageorwinestorage,where the average unit would be unlikely to fall into one of the standard size categories. Since most storage stores are constrained size-wise by land boundaries and municipality regulations, there has never been a specific square footage or number of units that could be considered the standardfortheindustry.Evenwithinthe same three- to five-mile radius, selfstorage customers will find a wide range of facility sizes. This year, the self-storage properties contained anaverageof566unitsand51,119 rentable square feet. When included,RVandboatstoragespacestotaled 35 per facility and amounted to an additional 16,380 net square feet of space.
feasible otherwise cost prohibitive storage developments over the last several years. While multiple levels wereontheriseforseveralyearsin the mid-2000s, the use of additional stories peaked in 2008 when 27.3 percent of respondents indicated their developments had two or more floors. Since then, the use of multiple levels has averaged about 17.5 percent. Many consumers, especially those in states with notoriously severe weather, demand climatecontrol guarantees when storing their personal goods away from home. In 2004, just over one quarter of all storage stores offered climatecontrolled spaces. In 2008, more than half of all respondents indicatedtheirunitswereclimatizedto protect items in storage from temperature extremes. Currently, 47.9 percentofstoresareequippedwith climate-control technology.
Storage Facility Specs In terms of traditional storage spaces,thisyear’saverageof566representsabigincreasefrom2010when theaveragewas382units.Withthe exception of some slight declines over the years, the average number of units at self-storage stores has increased by more than 89 percent since 2004. Today’s self-storage facility has more rentable square feet than it did several years ago. While the average size topped out at 55,600 in 2008 and has been gradually decreasingeversince,today’sfacilities remain much larger than the average storage property of the past. The rentable square feet of traditional storage space at self-storage stores has grown by almost 36 percent since 2004. Adding multiple levels has become the industry’s way of making
Competitive Environment Theself-storageindustryisextremelycompetitive.In2004,ownersand operators reported more than nine facilitieswereconductingbusinesses within their stores’ primary market areas—the five-mile radius surrounding a self-storage store. While that number has continued to fluctuate over time, today’s average fallsat7.7competingstoreswithina five-mile radius. When sizing up the competition, ownersandoperatorsmustconsider that additional facilities are constantly being built and new stores are continually gearing up to go toe-to-toe with existing storage facilities in the area. Although overall development has been down with the real estate market turmoil and theeconomicrecession,newstores are still being constructed. In 2011, operators estimated that approxi-
mately 0.2 percent of storage projectswereunderconstructionwithin five miles of their existing storage businesses.
Facility Management Just as the size of facilities and amenities offered has changed over time, the management profile of self-storage businesses seems to vary year-by-year. Currently, full-time resident managers are extremely popular at self-storage stores. More than half of respondents indicated
ADDING
MULTIPLE LEVELS HAS BECOME THE INDUSTRY’S WAY OF
MAKING FEASIBLE OTHERWISE COST PROHIBITIVE
STORAGE DEVELOPMENTS... that they use resident managers at their storage businesses this year. This is a significant increase from last year whenonly29.2percentofstoresutilized this type of manager and the first large increase in the category over the past several years. Historically, approximately 29 percent to 30 percent of stores employ an onsite resident manager. Assistant managers remain the most common employee of all management categories. In fact, more than 67 percent of all stores opted for a relief manager this year. This is also a huge increase over 2010 when 28.7 percent of respondents reported this type of manager on staff. However, with the exception of a sharp decline between 2009 2012 Self-Storage Almanac
29
2•IndustryTrends
and 2010, this category has been increasing steadily over time. The inverse relationship between owner-managed properties, and full-time resident and assistant manager-run properties is most evident in the 2010-2011 data. Owner manager properties leaped in 2010, reflecting economy-induced belttightening. At the same time, resident and relief managers took a nose-dive. This year, both trends reversed.Owner-managedproperties fell to 18.4 percent from 41 percent of properties in 2010. Some economic easing may be behind the data turnaroundtopre-2010trends,when assistant and off-site managed facilities dominated the industry.
Manager Wages Looking at management salaries over time also indicates some clear trends. The most common salary category for management staff is
$20,000 to $29,999 per year. This grouping has remained the most common pay rate for managers over the past several years. In fact, almostonethirdofmanagerswere paid a salary in this range in 2011. The second most common pay rate for managers falls between $30,000 and $39,999 per year. This category represents the current wage of almost 25 percent of selfstorage management employees nationwide. Over the past several years, this range has replaced $10,000 to $19,999 as the second most popular salary range for selfstorage managers, indicating salarieshavegrownovertheyears. Although it is off a little from 2010, the $40,000 and higher pay rate has also posted steady gains year over year. While less than 10 percent of managers earned a salary in this category in 2004, more than 17 per-
TABLE 2.8
Full-Time Full-Time Assistant Resident Off-Site Management or Relief Owner Third-Party Manager Manager Couple/Team Manager Managed Management 29.3% 24.8% 10.0% 20.6% 50.5% 3.3% 29.5% 28.7% 7.6% 22.4% 43.7% 4.9% 27.4% 30.2% 8.2% 21.7% 41.9% 3.8% 28.8% 41.5% 9.6% 36.5% 35.8% 7.0% 29.0% 37.4% 13.9% 35.3% 34.0% 7.8% 30.8% 39.6% 10.1% 43.4% 28.9% 9.9% 29.2% 35.6% 10.1% 28.7% 40.9% 6.7% 53.3% 30.9% 3.7% 67.3% 18.4% 6.7%
TABLE 2.9
NATIONAL BREAKDOWN OF MANAGERS’ BASE SALARIES
30
Year 2003 2004 2005 2006 2007 2008 2009 2010 2011
Less than $10,000 24.6% 23.5% 18.4% 10.5% 12.3% 9.3% 3.9% 5.5% 9.4%
$10,000 to $19,999 21.7% 24.3% 21.8% 12.4% 12.6% 10.9% 11.7% 17.5% 15.7%
Self-Storage Almanac 2012
$20,000 to $29,999 25.1% 31.7% 33.1% 35.0% 39.9% 34.7% 50.8% 32.0% 33.0%
$30,000 to $39,999 15.6% 18.7% 16.0% 28.4% 23.5% 33.3% 28.1% 25.9% 24.5%
SECURITY IS ONE OF THE BIGGEST CONCERNS CUSTOMERS CITE WHEN RENTING... The clearest trend in wages can be seen in the less than $10,000 per year salary group. Excepting 2011, this category has decreased fairly evenly over time, dropping from 23.5 percent in 2004 to 5.5 percent in 2010. Although this salary category grew significantly this year, one explanation for the increase could go hand-in-handwiththeriseintherelief manager category. Since many relief managers are part-time employees, it stands to reason that they would earn less than full-time staff members.
Growth in Automation
NATIONAL PROFILE OF FACILITY MANAGEMENT Year 2004 2005 2006 2007 2008 2009 2010 2011
cent of managers’ wages fall into this grouping today.
$40,000 or More 13.0% 9.8% 11.0% 14.1% 12.3% 11.7% 5.5% 19.2% 17.3%
Automation has been on the rise in the self-storage industry for many years. As the business has become more sophisticated and technology has improved, automation allowsmanagerstospendmoretime focusing on renting units rather than worryingaboutday-to-daymaintenance and operational duties. The majority of stores now boast automated security, accounting, access control and computerized rent payments. All of these categories are up fromlastyear,aswell. Accounting remains the most commonly automated duty in the self-storage industry. In 2011, almost 85 percent of the sector utilized technology to help keep the books at storage businesses. This percent share rose more than 15 percent from 69.6 percent in 2004 and 68.8 percent in 2005.
IndustryTrends•2
Security is one of the biggest concernscustomerscitewhenrenting a storage unit. They need to feel their personal items will be in good hands while in storage away from home. This year, almost 81 percent of storage facilities indicated they utilize automated security systems, up from 61.5 percent in 2010 and 45.3 percent in 2004.
Marketing Trends Traditional self-storage marketing and advertising efforts have gone through significant changes over the years. In the past, many operators turned to the Yellow Pages exclusively to market their businesses. This medium became the industry standardforadvertising.However,as both technology and consumer behavior have evolved, the industry is shifting more of its advertising dollars to Internet advertising.
This year represents the first in which more stores indicate they utilize the Internet than they do the Yellow Pages for marketing and advertising, making it the preferred medium for self-storage operators. The category has skyrocketed since 2004 and this type of marketing has more than tripled over the seven year period. In the last 12 months alone, Internet marketing for selfstoragehasgrownbyalmost20percentage points. Just as Internet marketing is growing, Yellow Pages advertising is posting declines, though at a much slower rate. More than 91 percent of operators indicated they used the Yellow Pages to market their self-storage businesses in 2006—a highpoint for the category. Over the next three years, the percent of stores relying on the Yellow
Pages for advertising averaged 87.8 percent. In 2010, the category fell to 77.4 percent and then dropped again in 2011 to 76.8 percent. Newspaper advertising is also downfromitshistorichighof28percent in 2008. In 2009 and 2010, utilization rates for this medium to the low 20 percent. This year, only 13.1 percent of operators report using newspaperadvertising. Signs have become a more popular marketing tool for self-storage businessesovertime.Whileapproximately half of operators reported using signage to spread the word about their storage facilities in 2004, more than three-quarters now say they employ this advertising medium. The utilization rate of this medium has more than doubled over the seven year period.
NATIONAL ELECTRONIC FACILITY AUTOMATIONS
TABLE 2.10
Computerized rent payments are also a popular automated feature at self-storage properties. While only 48.3 percent of facilities offered computerized payments in 2004, almost 82 percent currently offer this service to tenants. As customersgrowtofeelincreasinglyatease withonlinepayments,thiscategory is likely to continue to rise over the nextseveralyears.
Accounting/ Year Security Bookkeeping 2003 45.0% 70.7% 2004 45.3% 69.6% 2005 51.7% 68.8% 2006 65.0% 78.5% 2007 58.2% 81.4% 2008 70.9% 75.3% 2009 81.3% 76.0% 2010 61.5% 71.0% 2011 80.9% 84.5%
Access Control 52.1% 53.9% 59.2% 72.3% 69.7% 73.2% 70.7% 62.0% 79.4%
Lights 46.4% 53.9% 53.3% 61.4% 68.8% 63.1% 56.0% 58.2% 27.4%
Computerized Rent Payment 46.6% 48.3% 52.7% 67.6% 71.2% 71.5% 68.0% 59.6% 81.9%
Kiosks ** ** ** 2.3% 2.8% 3.1% 4.0% 4.3% 1.4%
**Insufficient data
TABLE 2.11
ACTUAL USAGE OF PROMOTIONAL MEDIA (NATIONAL) (PERCENTAGE OF FACILITIES) Direct Telephone Yellow Year Billboards Mailings Flyers Internet Magazines Newspapers Radio Signage Solicitation Television Pages Referrals Other 2002 9.2% 10.8% 21.8% 24.8% 3.1% 28.5% 5.0% 44.2% 4.4% 3.1% 85.5% ** 10.5% 2003 8.6% 13.4% 20.8% 22.8% 3.5% 31.4% 6.3% 55.2% 3.7% 2.4% 85.7% ** 8.6% 2004 5.8% 13.6% 20.5% 26.9% 3.5% 27.1% 5.2% 52.4% 3.4% 1.9% 86.0% 43.8% 8.2% 2005 5.8% 11.1% 17.9% 29.6% 4.4% 23.1% 5.6% 53.9% 3.6% 1.8% 82.3% 42.9% 6.0% 2006 8.3% 19.2% 24.6% 49.7% 7.5% 24.6% 4.7% 62.7% 9.6% 3.1% 91.2% 51.8% 10.4% 2007 7.6% 21.0% 30.7% 48.9% 3.7% 27.3% 6.9% 60.2% 6.1% 4.1% 88.5% 50.9% 7.8% 2008 8.6% 29.8% 45.5% 62.9% 5.0% 28.1% 6.5% 63.7% 9.4% 2.9% 86.8% 60.6% 6.1% 2009 7.9% 24.1% 35.7% 63.9% 9.9% 20.2% 7.0% 78.0% 16.2% 2.4% 88.0% 53.4% 8.6% 2010 10.1% 16.3% 28.8% 61.8% 5.9% 22.4% 7.1% 74.2% 16.0% 3.2% 77.4% 39.4% 19.4% 2011 9.6% 11.0% 34.9% 81.5% 3.7% 13.1% 3.4% 75.5% 4.2% 1.0% 76.8% 45.3% 4.9% **Insufficient data
2012 Self-Storage Almanac
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3•Economics & Demographics
A
s caretakers of the self-storageindustry,ownersandoperators have always championed the sector, knowing itoffersanexcellentinvestmentopportunity with its low development costs, and relatively steady income stream. Unlike other commercial real estate categories, self-storage facilities can react immediately to changesinthemarket.Ratherthan being locked into one year or longer leases, self-storage facilities generally operate on a month-to-month basis. When demand grows in the market, self-storage operators can increaserentsimmediately.Likewise, they can reduce rates if demand tapers off. In response to customer demand, they can also adjust rents of specific unit sizes that are not renting well. Many sites have the added flexibility to modify unit sizing—large units can be divided into smaller spaces and smaller units can be combined to add additional large spots at the facility as needed.
Slow Recovery Process Even with the benefit of low overhead costs and highly flexible pricing, one cause for concern looms large over the industry—the economy. Recovery from the Great Re-
cessionisprovingextremelydifficult andpainfullyslow. Unemployment continues to hoveraboveninepercent.Nationwide, ten states are suffering double-digit unemployment rates. Nevada tops thelistwithanunemploymentrate of 13.4 percent. California, Michigan, South Carolina and Washington D.C. all have rates of 11 percent or higher. An additional six states arecurrentlygrapplingwithdouble digit unemployment. The outlook for employment remains grim. The Federal Reserve Bank predicts continued unemploymentwoeswellintothefutureand is forecasting an unemployment rate of over 7 percent through 2013. This rate is well above the normalized unemployment rate of 5 to 6 percent. Currently, only eight states haveemploymentlevelsatorbelow this baseline target—New Hampshire,SouthDakota,Nebraska,Oklahoma,Iowa,Wyoming,Vermontand North Dakota. Almost half of Americans believe it is now difficult to find work. According to the Consumer Confidence Survey, more than 47 percent of those surveyed said that jobs are “hard to get.” General con-
sumer sentiment is also declining as a more Americans rate business conditions as “bad.” According to Lynn Franco, Director of The Conference Board Consumer Research Center, “Consumer confidence is nowbacktolevelslastseenduring the 2008-2009 recession. Consumer expectations, which had improved in September, gave back all of the gain and then some, as concerns about business conditions, the labor market and income prospects increased. Consumers’ assessment of present-day conditions did not fare any better. The Present Situation Index posted its sixth consecutive monthly decline, as pessimism about the current economic environmentcontinuestogrow.”
The Spillover Effect Economic stress in Europe and around the globe is also threatening to spill over into the U.S. economy. The stock market had an immediate reaction to the debt crisis in Greece after several consecutive months of gains. Fears that Italy would be the nextvictimledtoanotherselloffon Wall Street and stocks fell 2 percent. Large corporations and individual investors are not the only groups affected by the volatile market. The nation’s overall balance sheet
University of Michigan: Consumer Sentiment (UMCSENT) Source: Thomson Reuters/University of Michigan
120 (Index 1st Quarter 1996 = 100)
CHART 3.1
CONSUMER SENTIMENT
110 100 90 80 70 60 50 1975
32
1980
1985 1990 1995 2000 2005 Shaded areas indicate U.S. recessions • 2011 research.stlouisfed.org
Self-Storage Almanac 2012
2010
2015
In spite of the impact of financial woesabroad,self-storagehasfared wellintheequitiesmarketsoverthe past year. The three largest publicly traded self-storage REITs all outperformed the S&P 500 Index over the 12monthperiod.Risingshareprices indicate that investors are bullish on the self-storage industry. Generally less vulnerable to economic conditions than other businesses, self-storage is especially attractive during periods of recession since it is driven more by changes in customers’ personal lives than market forces. In fact, major life changes, like divorce, relocation and death, still occur regularlywhethertheeconomyisgaining steam or stumbling.
Moving Numbers According to the U.S. Census Bureau, more than 50 million Americans move each year. The Bureau also estimates that the average U.S. citizen willmovealmost12timesinhisorher lifetime. The most common driver for movers is housing. Almost 44 percent of movers say reasons like wanting toownahomeratherthantorent, orlookingforanareawithalessexpensivehousingstockorlowercrime rates motivated their moves. Family relatedreasonswerethenextmost common, driving more than 30 percent of relocations nationwide. Movingtoacceptanewjoborother work-related reason accounted for more than 16 percent of moves. The remaining movers cited other reasons as prompting their moves. With a wide variety of motivators, the majority of movers, almost 70 percent, relocate locally to a
UNEMPLOYMENT RATES FOR STATES Monthly Rankings Seasonally Adjusted Sept. 2011 Rank State Rate Alabama 9.8 Alaska 7.6 Arizona 9.1 Arkansas 8.3 California 11.9 Colorado 8.3 Connecticut 8.9 Delaware 8.1 D.C. 11.1 Florida 10.6 Georgia 10.3 Hawaii 6.4 Idaho 9.0 Illinois 10 Indiana 8.9 Iowa 6.0 Kansas 6.7 Kentucky 9.7 Louisiana 6.9 Maine 7.5 Maryland 7.4 Massachusetts 7.3 Michigan 11.1 Minnesota 6.9 Mississippi 10.6 Missouri 8.7 Montana 7.7 Nebraska 4.2 Nevada 13.4 New Hampshire 5.4 New Jersey 9.2 New Mexico 6.6 New York 8.0 North Carolina 10.5 North Dakota 3.5 Ohio 9.1 Oklahoma 5.9 Oregon 9.6 Pennsylvania 8.3 Rhode Island 10.5 South Carolina 11.0 South Dakota 4.6 Tennessee 9.8 Texas 8.5 Utah 7.4 Vermont 5.8 Virginia 6.5 Washington 9.1 West Virginia 8.2 Wisconsin 7.8 Wyoming 5.8 Source: U.S. Department of Labor Statistics
newaddresswithinthesamecounty. Those who move to a different county within the same state and thosewhorelocateoutofstateaveraged approximately 28 percent. The remaining population of movers headedtoanewlocationoverseas. Census data also shows that more than half of movers were under30yearsoldwhilejustunder30 percent fell into the 30 to 49 years old age category. Under 10 percent ofmoverswerebetween50and64 years of age, and only about 5 percentwere65andolder. According to U-Haul International, Inc., which collects specific data from more than 1.4 million UHaul truck transactions during a 12 month period, Michigan comes out asthetopstatewiththemostfamiliesmakingamove.Texasisnumber twofollowedbyMaryland,Washington, Colorado, Kentucky, Ohio, New York, North Carolina and California. Forstateswith5,000to20,000families moving each month, the top 10 in order are Vermont, Maine, Delaware, Oregon, North Dakota, Iowa, Washington D.C., Utah, Wyoming andWestVirginia.
TABLE 3.2
couldbeimpactedwithweakerU.S. exports to Europe and other ports abroad. Credit markets may also feel the global pain as banks tighten overall lending standards across the board.
TABLE 3.1
Economics&Demographics•3
2010 TOP TEN U.S. GROWTH STATES States with More Than 20,000 Families Moving Rank State Percentage Growth 1 Michigan 3.14% 2 Texas 1.67% 3 Maryland 1.61% 4 Washington 1.53% 5 Colorado 1.38% 6 Kentucky 1.30% 7 Ohio 1.25% 8 New York 1.21% 9 North Carolina 0.93% 10 California 0.75% Source: U-Haul International
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3•Economics&Demographics
U-Haul’stopfivecitiesforgrowth with more than 5,000 movers each month include Santa Monica, California, Boise, Idaho, Oakland, California, NewYork City, NewYork and Austin,Texas.TopfivedestinationcitiesareHouston,Texas,Orlando,Florida,LasVegas,Nevada,Chicago,IllinoisandPortland,Oregon.
Source: U-Haul International
Source: U-Haul International
Source: U-Haul International
2010 TOP TEN U.S. GROWTH STATES
Self-Storage Almanac 2012
TOP 25 CITIES FOR GROWTH TABLE 3.4
In projected population figures bycompoundannualgrowthforthe years 2011 to 2016, Arizona ranks first withayear-over-yeargrowthrateof 2.03 percent. Utah follows with esti-
Three states are grappling with negativepopulationgrowthprojections—Michigan, Rhode Island and WestVirginia. Since the start of the recession, Michigan has faced massive layoffs and closures in the auto industry which has long fueled the state’s economy. It struggles with an unemployment level that exceeds 11 percent and faces one of the highest foreclosure rates in the country. As of September 2011, approximately one in every 282 housing units is going through the foreclosure process in this state.
TABLE 3.5
States with 5,000 to 20,000 Families Moving Rank State Percentage Growth 1 Vermont 19.46% 2 Maine 13.41% 3 Delaware 8.23% 4 Oregon 6.01% 5 North Dakota 3.61% 6 Iowa 2.28% 7 District of Columbia 1.98% 8 Utah 1.88% 9 Wyoming 1.46% 10 West Virginia 0.52%
January – December 2010 Rank City Percentage Growth 1 Santa Monica, California 20.67% 2 Boise, Idaho 10.96% 3 Oakland, California 10.71% 4 New York City, New York 8.97% 5 Austin, Texas 8.75% 6 Queens, New York 6.73% 7 San Francisco, California 6.38% 8 Pittsburgh, Pennsylvania 6.34% 9 Brooklyn, New York 4.00% 10 Chicago, Illinois 3.99% 11 Van Nuys, California 3.85% 12 Salt Lake City, Utah 3.79% 13 Colorado Springs, Colorado 3.70% 14 Sacramento, California 2.99% 15 Nashville, Tennessee 2.99% 16 Omaha, Nebraska 2.92% 17 El Paso, Texas 2.72% 18 Charlotte, North Carolina 2.34% 19 Reno, Nevada 2.33% 20 Jersey City, New Jersey 2.22% 21 Los Angeles, California 2.20% 22 Torrance, California 2.16% 23 Tampa, Florida 1.80% 24 Shreveport, Louisiana 1.77% 25 Spokane, Washington 1.73%
Many of the Americans relocating every year will choose to move to one of the top growth states. By number of people, California is expected to see the highest growth, expanding its population by more than2.2millionpeopleoverthenext five years. Texas is also a top destination,swellingitsranksbyalmost2 million by 2016. Florida is projected to rank third in growth, adding 1.2 million residents over the five year period. More than half a million additionalindividualsareexpectedto be counted in Georgia, Arizona and NorthCarolinain2016,aswell.
TABLE 3.3
TOP 50 DESTINATION CITIES January – December 2010 Rank City 1 Houston, Texas 2 Orlando, Florida 3 Las Vegas, Nevada 4 Chicago, Illinois 5 Portland, Oregon 6 San Antonio, Texas 7 Austin, Texas 8 Brooklyn, New York 9 Sacramento, California 10 Kansas City, Missouri 11 Philadelphia, Pennsylvania 12 New York City, New York 13 San Diego, California 14 Phoenix, Arizona 15 Columbus, Ohio 16 Dallas, Texas 17 Los Angeles, California 18 Queens, New York 19 Tampa, Florida 20 Jacksonville, Florida 21 Minneapolis, Minnesota 22 San Francisco, California 23 Charlotte, North Carolina 24 Bronx, New York 25 Oklahoma City, Oklahoma 26 Saint Louis, Missouri 27 Van Nuys, California 28 Tucson, Arizona 29 Indianapolis, Indiana 30 Baltimore, Maryland 31 Atlanta, Georgia 32 Plano, Texas 33 Birmingham, Alabama 34 Long Beach, California 35 San Jose, California 36 Seattle, Washington 37 Salt Lake City, Utah 38 Fort Worth, Texas 39 Albuquerque, New Mexico 40 Colorado Springs, Colorado 41 Washington, D.C. 42 Boise, Idaho 43 Columbia, South Carolina 44 Raleigh, North Carolina 45 Miami, Florida 46 Victorville, California 47 Tulsa, Oklahoma 48 Reno, Nevada 49 Bakersfield, California 50 Oakland, California
High Growth States
34
mated year-over-year growth topping 1.9 percent. Georgia, Texas, Idaho and Colorado rank high on the list according to their estimated populations, boasting compound annualgrowthratesexceeding1.4 percent for the five year period.
Economics&Demographics•3
TABLE 3.6
PROJECTED STATE POPULATION GROWTH State Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming
Population 2011 4,802,155 715,859 6,544,462 2,932,778 37,484,030 5,078,475 3,585,455 905,659 603,732 18,991,634 9,789,495 1,361,901 1,586,057 12,858,425 6,511,032 3,054,482 2,864,235 4,365,417 4,537,225 1,331,959 5,805,777 6,561,103 9,880,029 5,329,903 2,975,574 6,015,487 995,269 1,834,147 2,740,495 1,321,916 8,817,378 2,075,380 19,405,977 9,636,032 670,683 11,548,303 3,771,943 3,858,749 12,730,760 1,052,852 4,666,735 818,230 6,385,137 25,435,007 2,809,512 626,877 8,063,269 6,780,574 1,856,021 5,708,821 568,343
Population 2016 4,914,537 749,302 7,238,005 3,031,538 39,723,696 5,446,151 3,616,758 951,520 619,868 20,234,335 10,594,007 1,392,275 1,703,205 13,070,401 6,649,212 3,082,544 2,922,043 4,481,098 4,615,319 1,339,149 5,960,098 6,681,897 9,809,157 5,476,291 3,018,012 6,182,966 1,027,936 1,870,844 2,836,891 1,354,068 8,909,848 2,160,822 19,617,389 10,284,248 674,593 11,573,443 3,886,692 4,053,697 12,824,937 1,046,500 4,934,719 846,700 6,662,442 27,393,544 3,089,668 628,398 8,420,255 7,162,817 1,852,014 5,819,365 596,424
Change 2011-2016 112,382 33,443 693,543 98,760 2,239,666 367,676 31,303 45,861 16,136 1,242,701 804,512 30,374 117,148 211,976 138,180 28,062 57,808 115,681 78,094 7,190 154,321 120,794 -70,872 146,388 42,438 167,479 32,667 36,697 96,396 32,152 92,470 85,442 211,412 648,216 3,910 25,140 114,749 194,948 94,177 -6,352 267,984 28,470 277,305 1,958,537 280,156 1,521 356,986 382,243 -4,007 110,544 28,081
Percent Change 0.46% 0.92% 2.03% 0.66% 1.17% 1.41% 0.17% 0.99% 0.53% 1.28% 1.59% 0.44% 1.44% 0.33% 0.42% 0.18% 0.40% 0.52% 0.34% 0.11% 0.53% 0.37% -0.14% 0.54% 0.28% 0.55% 0.65% 0.40% 0.69% 0.48% 0.21% 0.81% 0.22% 1.31% 0.12% 0.04% 0.60% 0.99% 0.15% -0.12% 1.12% 0.69% 0.85% 1.49% 1.92% 0.05% 0.87% 1.10% -0.04% 0.38% 0.97%
Median Family Income $47,000 $70,100 $46,200 $43,300 $57,200 $60,200 $82,000 $61,800 $51,600 $45,300 $44,600 $72,400 $49,800 $56,600 $52,900 $58,500 $53,700 $43,000 $46,300 $54,200 $71,600 $88,300 $51,400 $59,200 $41,600 $47,200 $55,900 $56,200 $65,100 $69,400 $51,600 $47,100 $56,100 $49,500 $63,000 $52,900 $48,800 $52,700 $54,900 $51,600 $47,700 $55,600 $45,400 $48,600 $56,800 $62,900 $51,900 $56,600 $44,800 $59,100 $67,400
Source: U.S. Department of Housing and Urban Development
2012 Self-Storage Almanac
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3•Economics&Demographics
20 18 16 14 12 10 8 6 4 2
Consumer
Source: The Federal Reserve Board
36
Self-Storage Almanac 2012
Total
2010
2009
2007
2008
2005
2006
2003
Mortgage
2004
2001
2002
1999
2000
1997
1998
1995
1996
1993
0
1994
Although the American population continues to be relatively mobile and ever-changing, the U.S. housing market remains weak which makes moving more difficult than in times
Homeowners continue to be served with foreclosure notices despite government programs designed to help owners keep their houses. An expansion of the Home Affordable Refinance Program (HARP)wasunveiledthisyeartohelp those who are underwater—meaningtheyowemoreonthemortgage thantheirpropertyisworth.TheFederal Housing Finance Agency esti-
HOMEOWNER HOUSEHOLD DEBT SERVICE
1991
Other demographics are experiencing massive growth throughout the U.S., as well.The percentage of Americans who identify themselves asbiracialormultiracialisexpected to grow by more than 77 percent over the next 20 years. Census projections forecast the number of peoplewhomakeupthiscategorywill more than double by 2035.
While the inventory numbers seem hopeful, concerns remain about the looming shadow inventory of homes—homes that are in foreclosure or have been repossessed by banks but have not yet come on the market.Standard&Poor’sestimates the inventory of shadow homes is worth$405billionandthatitwilltake more than four years to clear all of these units from the market.
On a brighter note, the supply of homes for sale declined between 2010 and 2011. The Census Bureau estimates that approximately 163,000 new homes came on the market for sale in Septem-
1992
The U.S. continues to become more diverse with especially high growth rates in the Hispanic population. The Census Bureau estimates that one in three Americans will identify themselves as Hispanic by 2030. States in the Southwest and California already count a high number of Hispanics, and in many cities in these areas, Hispanics are the majority of the population.
1990
Changing Demographics
Looming Shadow Inventory
These statistics add up to real dollars. The Wall Street Journal estimatesthat$7trillioninhomeowner equity has been lost since 2005. In addition,oneinfiveAmericanswith a mortgage now owes more than theirhouseisworth.Anyfurtherprice depreciation,evensmalldownward moves, will only further aggravate the negative equity picture.
Percentage of Disposable Income
WestVirginiahasthesecondlowest median family income in the country and is grappling with the reality of a population decline. According to West Virginia University College of Business and Economics, thestate’sworkingagepopulation, defined as residents between 16 and64yearsofage,isexpectedto drop by 100,000 over the next two decades.Theexodusisprojectedto result in the loss of more than 60,000 jobsstate-wide.
ber, a decline of 19.3 percent from the new housing inventory a year earlier. Based on the current sales pace, it would take 6.2 months to go through the entire inventory of homes. In September 2010, the housing inventory amounted to a higher 7.7 months of supply.
of stability. According to the U.S. Census Bureau, the average home pricefellapproximately10percent betweenSeptember2010andSeptember 2011. Analysts disagree on wherethebottomofthemarketlies but most agree that the majority of the country has not hit the tough. According to Standard & Poor’s Case-Shiller20-cityindex,U.S.home prices have dropped more than 31 percent from their 2005 peak. Economists are forecasting another declinefor2011followedbystagnant price appreciation through 2015.
CHART 3.2
Rhode Island is also struggling with record high unemployment of 10.5 percent—the sixth highest in the nation. In addition, the state had significant exposure to the housing bubble which burst in 2006 and is nowsufferingwithhighaforeclosure rate, affecting one in 845 homes.
Economics&Demographics•3
mates that 800,000 to one million homeowners could be helped by the program. Criticsoftheexpansionarequick to point out that it does nothing to help owners sell their homes. They add that such measures actually drawoutthemarketcorrectionand impede the price discovery process. However, the potential to reduce monthlymortgagepaymentsiswelcome relief for many Americans as housing debt remains historically high and high payments burden many U.S. households. Low interest rates are a critical component of the refinancing program and forecasts call for continued low rates. The Federal Reserve
announced it would leave shortterm rates unchanged through 2013 unless there is a significant improvement in the U.S. economy. It also introduced a plan dubbed“OperationTwist”whichcallsfortheselling of $400 billion short-term securities whilesimultaneouslypurchasingan equal amount of longer-term securities in an attempt to hold down long-term interest rates. The outlook on long-term low rates for self-storage investors and other commercial real estate owners is good. Financial advisory firm Deloitte estimates that $1.7 trillion incommercialrealestateloanswill comeduebetween2011and2015. In light of current rates, now may be an excellent time to refinance.
However, the company also estimates that 60 percent of these loans areunderwater,makingrefinancing orextendingthetermverydifficult.
Growth And Income Although the real estate market remains stagnant, self-storage developers are always looking for highly visible properties in locations with good fundamentals. Key attributes like a solid population base, nearby homes and multiple housing units and a high average income level are important. There is also a strong preference for locations experiencing higher than average growth rates. The Dallas-Fort Worth-Arlington, Texas CBSA remains the fastest growing in the country with a projected 1.37 million new residents
CHART 3.3
FORECLOSURE ACTIONS TO HOUSING UNITS
1 in 65 Housing Units
1 in 67,408 Housing Units
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3•Economics&Demographics
moving to the area by 2020. Its neighbor to the south, the HoustonSugar Land-Baytown, Texas CBSA is forecasted to welcome approximately 1.3 million people to the metroareabetweennowand2020. Thesenewmove-insgivebothcities ananticipatedgrowthratetopping 20percentoverthenextnineyears. Ofthemetroareaswiththelargestquantityofmovers,Raleigh-Carey,NorthCarolinaisexpectedtosee thehighestrateofgrowthbetween 2011 and 2020. Forecasts estimate a metro population increase of more than 31 percent over the nine year period. Following close behind is theAustin-Round Rock,Texas CBSA
where a 29.1 percent growth rate expectedbetweennowand2020. Washington-Arlington-Alexandria, DC-VA-MD and San JoseSunnyvale-Santa Clara, California top the high-growth CBSAs for income. Both areas boast median household incomes in excess of $103,000 for 2011—well above the U.S. Department of Housing and UrbanDevelopment’smedianfamily income estimate of $64,200 for the nation. San Francisco-OaklandFremont,Californiaranksnextwitha medianincomeof$93,400.Interestingly,onlytwoofthe25highgrowth metro areas come in with incomes below the national median—San
Antonio,Texaswithafamilyincome of $57,800 and Miami-Fort Lauderdale-Pompano Beach, Florida with a median income of $60,200. With their high personal income levelsandgrowth,thesemetroareas areexpectedtobeafocalpointfor many storage professionals. New move-insareanexcellentsourceof potential customers at facilities and those populated by residents with solid incomes who can pay their rents month after month are all the morevalued.Themixtureofgrowth and income help create the type of conditions that make self-storage a stable investment, even against an uncertain economic forecast.
TABLE 3.7
PROJECTED POPULATION GROWTH Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
MSA Name Dallas-Fort Worth-Arlington, TX Houston-Sugar Land-Baytown, TX Atlanta-Sandy Springs-Marietta, GA Los Angeles-Long Beach-Santa Ana, CA Phoenix-Mesa-Scottsdale, AZ Washington-Arlington-Alexandria, DC-VA-MD New York-Northern New Jersey-Long Island, NY-NJ San Francisco-Oakland-Fremont, CA Chicago-Naperville-Joliet, IL-IN-WI Austin-Round Rock, TX Denver-Aurora-Broomfield, CO Seattle-Tacoma-Bellevue, WA Riverside-San Bernardino-Ontario, CA San Antonio, TX Charlotte-Gastonia-Rock Hill, NC-SC Boston-Cambridge-Quincy, MA-NH Raleigh-Cary, NC Portland-Vancouver-Hillsboro, OR-WA Miami-Fort Lauderdale-Pompano Beach, FL San Diego-Carlsbad-San Marcos, CA Minneapolis-St. Paul-Bloomington, MN-WI San Jose-Sunnyvale-Santa Clara, CA Las Vegas-Paradise, NV Nashville-Davidson-Murfreesboro-Franklin, TN Sacramento-Arden-Arcade-Roseville, CA Source: Proximity
38
Self-Storage Almanac 2012
Population 2010 6,555,267 6,122,511 5,389,058 12,953,079 4,299,883 5,696,475 19,010,476 4,376,753 9,541,234 1,783,626 2,608,655 3,504,407 4,286,583 2,179,040 1,812,548 4,605,623 1,177,911 2,274,148 5,614,870 3,141,165 3,320,904 1,874,826 1,987,096 1,624,456 2,182,322
Population 2020 7,933,362 7,434,350 6,312,907 13,835,479 5,131,677 6,521,994 19,810,197 4,979,345 10,126,959 2,302,813 3,096,237 3,979,583 4,735,966 2,607,509 2,236,368 4,989,443 1,546,556 2,633,560 5,963,573 3,482,454 3,623,487 2,158,408 2,264,666 1,886,170 2,426,873
Change 2010-2020 1,378,095 1,311,839 923,849 882,400 831,794 825,519 799,721 602,592 585,725 519,187 487,582 475,176 449,383 428,469 423,820 383,820 368,645 359,412 348,703 341,289 302,583 283,582 277,570 261,714 244,551
Percent Change 21.02% 21.43% 17.14% 6.81% 19.34% 14.49% 4.21% 13.77% 6.14% 29.11% 18.69% 13.56% 10.48% 19.66% 23.38% 8.33% 31.30% 15.80% 6.21% 10.87% 9.11% 15.13% 13.97% 16.11% 11.21%
MSA Median Household Income $68,300 $65,100 $71,800 $68,200 $66,600 $103,500 $78,300 $93,400 $75,100 $73,800 $75,900 $81,700 $65,000 $57,800 $67,200 $89,500 $77,700 $71,200 $60,200 $75,500 $84,000 $103,500 $65,700 $65,200 $73,100 Source: Fannie Mae
MarketConditions•4
State Index The performance of an individual facility is more dependent on local market conditions than national, state, or regional trends. Nevertheless, these trends can be used as benchmarks for comparison to local trade areas. The State Saturation Levels Table 4.1 is a comparison of the rentable square feet of self-storage per person compared to the national average. If a property has a score above 100percent,forexample,itindicates the rentable square feet per person of self-storage property in the state are higher than the national average.Ascorebelow100percentindicates less rentable square feet per person than the national average.
CHART 4.1
CALCULATING SUPPLY INDEX Step 1 Step 2 Net Rentable Square Square Supply Square Footage Footage Per Person Index Footage Per Person 7.41 Population
=
=
The data is based on survey research and should primarily be used for trend analysis. For example, the average square footage per person for 2011 is 7.41, marking an increase of 1.37 percent from 2010. Investment discipline tends to increase
STATE SATURATION LEVELS
TABLE 4.1
U
nderstanding market conditions is critical to selfstorage performance. The market is generally described in three ways: undersupplied, oversupplied, or market equilibrium. Undersupplied indicates the market has capacity for more selfstorage product. Conversely, oversupplied indicates the market is saturatedwithself-storage.Amarketat equilibrium is generally in balance in the forces of supply and demand.
Area Number of Square State Facilities Footage Alabama 1,224 62,569,656 Alaska 158 8,076,802 Arizona 1,290 65,943,510 Arkansas 869 44,422,411 California 5,051 258,202,069 Colorado 1,234 63,080,846 Connecticut 355 18,147,245 Delaware 105 5,367,495 District of Columbia 22 1,124,618 Florida 3,510 179,427,690 Georgia 1,605 82,045,995 Hawaii 99 5,060,781 Idaho 420 21,469,980 Illinois 1,267 64,767,773 Indiana 912 46,620,528 Iowa 311 15,898,009 Kansas 607 31,029,233 Kentucky 624 31,898,256 Louisiana 1,078 55,106,282 Maine 177 9,048,063 Maryland 527 26,939,713 Massachusetts 599 30,620,281 Michigan 1,486 75,962,834 Minnesota 470 24,025,930 Mississippi 696 35,578,824 Missouri 1,103 56,384,257 Montana 485 24,792,715 Nebraska 214 10,939,466 Nevada 675 34,505,325 New Hampshire 243 12,421,917 New Jersey 684 34,965,396 New Mexico 616 31,489,304 New York 1,403 71,719,957 North Carolina 1,704 87,106,776 North Dakota 95 4,856,305 Ohio 1,455 74,378,145 Oklahoma 955 48,818,645 Oregon 925 47,285,075 Pennsylvania 1,392 71,157,648 Rhode Island 100 5,111,900 South Carolina 989 50,556,691 South Dakota 120 6,134,280 Tennessee 1,294 66,147,986 Texas 6,430 328,695,170 Utah 645 32,971,755 Vermont 154 7,872,326 Virginia 964 49,278,716 Washington 1,556 79,541,164 West Virginia 261 13,342,059 Wisconsin 704 35,987,776 Wyoming 186 9,508,134 Total 50,048 2,303,395,164
Rentable 2010 Square Footage Supply Population Per Person Index 4,802,155 13.03 176% 715,859 11.28 152% 6,544,462 10.08 136% 2,932,778 15.15 204% 37,484,030 6.89 93% 5,078,475 12.42 168% 3,585,455 5.06 68% 905,659 5.93 80% 603,732 1.86 25% 18,991,634 9.45 127% 9,789,495 8.38 113% 1,361,901 3.72 50% 1,586,057 13.54 183% 12,858,425 5.04 68% 6,511,032 7.16 97% 3,054,482 5.20 70% 2,864,235 10.83 146% 4,365,417 7.31 99% 4,537,225 12.15 164% 1,331,959 6.79 92% 5,805,777 4.64 63% 6,561,103 4.67 63% 9,880,029 7.69 104% 5,329,903 4.51 61% 2,975,574 11.96 161% 6,015,487 9.37 126% 995,269 24.91 336% 1,834,147 5.96 80% 2,740,495 12.59 170% 1,321,916 9.40 127% 8,817,378 3.97 53% 2,075,380 15.17 205% 19,405,977 3.70 50% 9,636,032 9.04 122% 670,683 7.24 98% 11,548,303 6.44 87% 3,771,943 12.94 175% 3,858,749 12.25 165% 12,730,760 5.59 75% 1,052,852 4.86 65% 4,666,735 10.83 146% 818,230 7.50 101% 6,385,137 10.36 140% 25,435,007 12.92 174% 2,809,512 11.74 158% 626,877 12.56 169% 8,063,269 6.11 82% 6,780,574 11.73 158% 1,856,021 7.19 97% 5,708,821 6.30 85% 568,343 16.73 226% 310,650,750 7.41
Source: Nielsen and MiniCo Insurance Agency, LLC
2012 Self-Storage Almanac
39
4•MarketConditions
as market conditions decline. In this cycle, market fundamentals remain strong for the self-storage asset class.Yet,duetoacrisisinthecredit markets, investment requirements and caution have increased, particularlyfornewdevelopment. As all of these forces are coming into play, storage investors and developers have become more sophisticated in their site selection procedures. Whereas some in the industry operated from a mindset of “build the property and the customers will come,” today the focus is on a thorough predevelopmentprocess,oneinwhich various sites are evaluated for their market conditions, costs of development, and other relevant factors regarding feasible development. Thus, it has become all the more important to carefully evaluate the market conditions of a particular area, starting with the region, then looking more closely at individual states, metropolitan areas, cities, and finally, particular streets and intersections. Is the area oversupplied already?Doesitshowstrongpopulationandjobgrowthtrends?What kinds of customers live or operate businesses nearby, and what kinds of storage do they need? Answering these questions can help shape and direct a facility before the site is purchased.
Market Conditions By Major City Or CBSA Another tool of benchmark analysis is comparing market conditions in the largest metropolitan areas of the country or CBSA (core based statistical area). This analysis is based on comparing existing supply to a forecast of stabilized demand. The demand forecast is based on an econometric model developed by the Self Storage Industry Group of Cushman&Wakefield.Itcompares
40
Self-Storage Almanac 2012
existing demand in a CBSA to four demographic variables: population, percentage of renters, average household income, and average household size. Using multi-variable regression analysis, the data is compared from the forecast CBSA to all other CBSAs in the data set. The outcome is a quantified indication of stabilized demand for self-storage for each CBSA.
ically combine multifamily housing withofficeand/orretailspacenear new or existing mass transit lines.As this trend continues, demand for storagewillincreaseasmuchofthe new housing being built contains limited storage space.
BEING BUILT CONTAINS
While a useful tool, like the state index,theCBSAtabledoesnotaddress self-storage market conditions in a neighborhood or trade area. Self-storage demand characteristics are unique to most real estate because demand is local. Survey researchandZIPcodestudiesconfirm that demand or customers for a typical self-storage facility come from about a three-mile radius from the subject. Moreover, demand for self-storage is difficult to induce from outside the trade area. Therefore, it is critical to understand the supply and demand characteristics within the local trade area, rather than rely on benchmark tools.
LIMITED
Location, Location, Location
STORAGE SPACE.
Understanding a local market beginswithasurveyofalllocalcompetitionwithinthetradearea.Thistotal supply can be compared to demographic data, such as total populationwithinthetradearea,todetermine the amount of self-storage in square feet per person. The rentable square feet per person within the trade area can be compared to national, state, and CBSA benchmarks. Analyzing market conditions in the local trade area is to understand occupancy of competing facilities. Some investors consider a market undersupplied if occupancy of all competitors is 90 percent or higher, market equilibrium if occupancy is 80percentto89percent,andoversuppliedifbelow80percent.
AS THIS
TREND CONTINUES, DEMAND FOR STORAGE
WILL INCREASE AS MUCH OF THE
NEW HOUSING
The CBSA table can be used to benchmark large cities for self-storage demand. The data indicates a trend that large, established urban areas tend to be favorable for selfstorage development. Urban development has barriers to entry such as availability of land. Consequently, renovation of existing buildings to self-storage is also a rising strategy of successful self-storage development. Although finding developable land at an affordable price may be achallengeinmarketssuchasNew York City, Philadelphia, Boston, and Chicago, the low scores of these areas indicate pent-up demand. Moreover,manyofthenation’slargestcitieshaveexperiencedawave of urban redevelopment in their downtowncores.Theseprojectstyp-
Tools Of Analysis Ultimately, storage investors must complete their own due diligence
MarketConditions•4
TABLE 4.2a
MARKET EQUILIBRIUM BY CBSA (CORE BASED STATISTICAL AREA) Area Number of Square Facilities Footage New York et al, NY-NJ-PA Metro 946 48,358,574 Los Angeles-Long Beach-Santa Ana, CA Metro 1157 59,144,683 Chicago-Joliet-Naperville, IL-IN-WI Metro 765 39,106,035 Dallas-Fort Worth-Arlington, TX Metro 1389 71,004,291 Houston-Sugar Land-Baytown, TX Metro 1328 67,886,032 Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Metro 464 23,719,216 Miami-Fort Lauderdale-Pompano Beach, FL Metro 714 36,498,966 Washington-Arlington-Alexandria, DC-VA-MD-WV Metro 498 25,457,262 Atlanta-Sandy Springs-Marietta, GA Metro 732 37,419,108 Boston-Cambridge-Quincy, MA-NH Metro 403 20,600,957 San Francisco-Oakland-Fremont, CA Metro 508 25,968,452 Detroit-Warren-Livonia, MI Metro 435 22,236,765 Phoenix-Mesa-Glendale, AZ Metro 578 29,546,782 Riverside-San Bernardino-Ontario, CA Metro 582 29,751,258 Seattle-Tacoma-Bellevue, WA Metro 522 26,684,118 Minneapolis-St. Paul-Bloomington, MN-WI Metro 283 14,466,677 San Diego-Carlsbad-San Marcos, CA Metro 369 18,862,911 St. Louis, MO-IL Metro 326 16,664,794 Tampa-St. Petersburg-Clearwater, FL Metro 450 23,003,550 Baltimore-Towson, MD Metro 212 10,837,228 Denver-Aurora-Broomfield, CO Metro 376 19,220,744 Pittsburgh, PA Metro 269 13,751,011 Portland-Vancouver-Hillsboro, OR-WA Metro 315 16,102,485 Cincinnati-Middletown, OH-KY-IN Metro 251 12,830,869 Sacramento--Arden-Arcade--Roseville, CA Metro 407 20,805,433 Orlando-Kissimmee-Sanford, FL Metro 364 18,607,316 San Antonio-New Braunfels, TX Metro 488 24,946,072 Kansas City, MO-KS Metro 307 15,693,533 Cleveland-Elyria-Mentor, OH Metro 194 9,917,086 Las Vegas-Paradise, NV Metro 374 19,118,506 San Jose-Sunnyvale-Santa Clara, CA Metro 188 9,610,372 Charlotte-Gastonia-Rock Hill, NC-SC Metro 283 14,466,677 Columbus, OH Metro 223 11,399,537 Austin-Round Rock-San Marcos, TX Metro 450 23,003,550 Indianapolis-Carmel, IN Metro 257 13,137,583 Virginia Beach-Norfolk-Newport News, VA-NC Metro 250 12,779,750 Nashville-Davidson-Murfreesboro-Franklin, TN Metro 289 14,773,391 Providence-New Bedford-Fall River, RI-MA Metro 145 7,412,255 Milwaukee-Waukesha-West Allis, WI Metro 132 6,747,708 Jacksonville, FL Metro 223 11,399,537 Memphis, TN-MS-AR Metro 242 12,370,798 Louisville-Jefferson County, KY-IN Metro 147 7,514,493 Richmond, VA Metro 130 6,645,470 Oklahoma City, OK Metro 269 13,751,011 New Orleans-Metairie-Kenner, LA Metro 210 10,734,990 Hartford-West Hartford-East Hartford, CT Metro 141 7,207,779 Raleigh-Cary, NC Metro 171 8,741,349 Birmingham-Hoover, AL Metro 232 11,859,608 Salt Lake City, UT Metro 223 11,399,537 Buffalo-Niagara Falls, NY Metro 98 5,009,662
Renter Occupied Average Average 2011 Housing Household Household Population Units Size Income 19,079,958 30.2% 2.73 100,905 13,086,642 44.8% 2.92 82,522 9,561,117 24.3% 2.73 81,001 6,620,337 31.0% 2.77 71,883 6,036,648 29.9% 2.83 71,073 6,028,225 24.3% 2.58 84,008 5,602,280 29.4% 2.62 71,078 5,592,714 26.6% 2.62 103,906 5,482,487 28.8% 2.70 70,452 4,575,412 27.8% 2.55 96,697 4,377,656 37.6% 2.58 105,818 4,336,906 21.0% 2.59 71,153 4,334,998 27.4% 2.76 69,188 4,201,834 28.0% 3.01 65,430 3,475,241 33.6% 2.47 78,201 3,333,364 23.1% 2.57 79,478 3,098,405 37.3% 2.74 83,109 2,822,935 22.0% 2.50 62,429 2,784,237 26.5% 2.42 62,624 2,747,435 22.2% 2.61 93,620 2,575,765 28.0% 2.53 76,252 2,355,071 21.5% 2.35 56,399 29.0% 2.57 69,686 2,258,398 2,182,726 25.9% 2.54 64,899 2,153,802 27.7% 2.58 72,821 2,145,795 26.0% 2.62 64,828 2,127,318 27.2% 2.83 63,072 2,109,813 24.4% 2.52 66,134 2,069,998 25.1% 2.49 66,435 1,967,395 35.1% 2.59 68,978 1,850,571 40.5% 2.96 112,234 1,835,982 27.9% 2.52 67,781 1,813,346 28.5% 2.52 66,239 1,784,275 31.6% 2.69 75,050 1,784,042 23.0% 2.55 68,496 1,689,760 30.7% 2.56 63,676 1,611,035 24.7% 2.53 60,992 1,594,941 26.2% 2.54 74,464 1,556,402 29.4% 2.48 73,840 1,378,416 28.2% 2.61 63,907 1,317,756 28.7% 2.54 56,782 1,268,171 21.9% 2.51 61,364 1,266,725 22.1% 2.47 69,532 1,259,733 26.5% 2.52 57,222 1,218,842 26.3% 2.53 56,871 1,218,287 22.6% 2.49 91,550 1,194,998 28.1% 2.57 72,539 1,156,314 21.9% 2.48 56,822 1,141,537 29.7% 2.88 69,521 1,108,092 25.0% 2.39 59,791
Rentable Square Footage 2.53 4.52 4.09 10.73 11.25 3.93 6.52 4.55 6.83 4.50 5.93 5.13 6.82 7.08 7.68 4.34 6.09 5.90 8.26 3.94 7.46 5.84 7.13 5.88 9.66 8.67 11.73 7.44 4.79 9.72 5.19 7.88 6.29 12.89 7.36 7.56 9.17 4.65 4.34 8.27 9.39 5.93 5.25 10.92 8.81 5.92 7.31 10.26 9.99 4.52
Demand Estimate 2.22 4.78 5.41 6.70 6.83 5.79 6.98 4.17 7.02 4.98 4.29 7.13 7.28 7.53 6.80 6.61 6.37 8.16 8.21 5.48 7.05 8.80 7.65 8.06 7.39 8.05 8.13 7.97 7.96 7.80 4.03 7.89 8.03 7.25 7.80 8.27 8.49 7.35 7.45 8.27 8.91 8.50 7.82 8.88 8.91 5.95 7.58 8.91 7.74 8.72
Variance (0.32) 0.26 1.32 (4.03) (4.41) 1.85 0.46 (0.38) 0.19 0.48 (1.64) 2.00 0.46 0.45 (0.88) 2.27 0.28 2.25 (0.05) 1.53 (0.41) 2.96 0.52 2.18 (2.27) (0.62) (3.60) 0.53 3.17 (1.92) (1.16) 0.01 1.75 (5.65) 0.43 0.71 (0.68) 2.70 3.12 (0.00) (0.47) 2.57 2.57 (2.04) 0.10 0.03 0.26 (1.34) (2.25) 4.20
Conclusion under-supplied equilibrium under-supplied over-supplied over-supplied under-supplied under-supplied equilibrium equilibrium equilibrium over-supplied under-supplied equilibrium equilibrium over-supplied under-supplied equilibrium under-supplied equilibrium under-supplied equilibrium under-supplied equilibrium under-supplied over-supplied over-supplied over-supplied under-supplied under-supplied over-supplied over-supplied equilibrium under-supplied over-supplied equilibrium equilibrium over-supplied under-supplied under-supplied equilibrium over-supplied under-supplied under-supplied over-supplied equilibrium equilibrium equilibrium over-supplied over-supplied under-supplied (Continued)
Source: Nielsen
2012 Self-Storage Almanac
41
4•MarketConditions
TABLE 4.2b
MARKET EQUILIBRIUM BY CBSA (CORE BASED STATISTICAL AREA) Number of Facilities Rochester, NY Metro 136 Tucson, AZ Metro 161 Tulsa, OK Metro 251 Honolulu, HI Metro 57 Fresno, CA Metro 81 Bridgeport-Stamford-Norwalk, CT Metro 56 Albuquerque, NM Metro 206 Omaha-Council Bluffs, NE-IA Metro 114 New Haven-Milford, CT Metro 82 Albany-Schenectady-Troy, NY Metro 102 Allentown-Bethlehem-Easton, PA-NJ Metro 94 Dayton, OH Metro 111 Bakersfield-Delano, CA Metro 124 Oxnard-Thousand Oaks-Ventura, CA Metro 119 Worcester, MA Metro 78 Baton Rouge, LA Metro 205 Grand Rapids-Wyoming, MI Metro 124 El Paso, TX Metro 118 Columbia, SC Metro 158 Greensboro-High Point, NC Metro 114 Knoxville, TN Metro 113 North Port-Bradenton-Sarasota, FL Metro 138 Akron, OH Metro 91 Greenville-Mauldin-Easley, SC Metro 125 Little Rock-North Little Rock-Conway, AR Metro 191 Springfield, MA Metro 82 Stockton, CA Metro 109 Charleston et al, SC Metro 129 Poughkeepsie-Newburgh-Middletown, NY Metro 91 Toledo, OH Metro 104 Syracuse, NY Metro 90 Colorado Springs, CO Metro 148 Wichita, KS Metro 150 Boise City-Nampa, ID Metro 129 Cape Coral-Fort Myers, FL Metro 131 Des Moines-West Des Moines, IA Metro 51 Madison, WI Metro 86 Harrisburg-Carlisle, PA Metro 74 Palm Bay-Melbourne-Titusville, FL Metro 160 Scranton--Wilkes-Barre, PA Metro 63 Jackson, MS Metro 132 Youngstown-Warren-Boardman, OH-PA Metro 64 Augusta-Richmond County, GA-SC Metro 128 Portland-South Portland-Biddeford, ME Metro 70 Chattanooga, TN-GA Metro 107 Deltona-Daytona Beach-Ormond Beach, FL Metro 109 Lexington-Fayette, KY Metro 67 Santa Rosa-Petaluma, CA Metro 93 Spokane, WA Metro 99 Anchorage, AK Metro 79 Source: Nielsen
42
Self-Storage Almanac 2012
Area Square Footage 6,952,184 8,230,159 12,830,869 2,913,783 4,140,639 2,862,664 10,530,514 5,827,566 4,191,758 5,214,138 4,805,186 5,674,209 6,338,756 6,083,161 3,987,282 10,479,395 6,338,756 6,032,042 8,076,802 5,827,566 5,776,447 7,054,422 4,651,829 6,389,875 9,763,729 4,191,758 5,571,971 6,594,351 4,651,829 5,316,376 4,600,710 7,565,612 7,667,850 6,594,351 6,696,589 2,607,069 4,396,234 3,782,806 8,179,040 3,220,497 6,747,708 3,271,616 6,543,232 3,578,330 5,469,733 5,571,971 3,424,973 4,754,067 5,060,781 4,038,401
Renter Occupied Average 2011 Housing Household Population Units Size 1,025,686 23.9% 2.51 990,951 27.2% 2.47 950,129 26.1% 2.50 949,035 48.4% 3.02 935,798 39.4% 3.22 919,495 24.3% 2.69 887,012 22.0% 2.54 872,711 23.7% 2.54 862,919 30.4% 2.52 846,846 22.3% 2.45 838,287 19.3% 2.55 831,343 28.2% 2.45 830,774 31.9% 2.87 818,227 33.6% 2.85 799,041 22.4% 2.61 787,921 23.5% 2.60 774,526 18.2% 2.66 767,683 41.1% 3.20 759,810 25.5% 2.48 738,711 28.2% 2.46 716,105 27.6% 2.32 713,934 17.9% 2.27 708,705 30.2% 2.41 703,079 24.9% 2.46 26.5% 2.42 694,996 693,899 24.6% 2.42 682,983 34.7% 2.99 680,929 24.9% 2.53 669,518 22.5% 2.74 669,215 22.5% 2.49 643,301 21.5% 2.50 630,560 27.3% 2.69 628,875 22.7% 2.66 627,642 24.2% 2.61 619,395 18.5% 2.35 582,921 21.3% 2.54 568,472 26.4% 2.47 564,472 24.5% 2.43 554,761 21.9% 2.28 552,058 24.7% 2.33 548,160 30.3% 2.57 542,505 20.6% 2.42 529,846 27.3% 2.56 523,762 15.9% 2.36 519,225 28.5% 2.42 509,981 18.5% 2.32 481,084 33.9% 2.35 475,079 28.3% 2.43 471,278 27.8% 2.56 388,317 28.1% 2.34
Average Household Income 61,982 58,173 54,750 78,085 56,495 129,122 54,708 64,916 80,166 68,124 72,186 60,570 53,529 84,305 82,578 54,928 60,617 47,990 55,669 56,234 53,171 72,652 61,458 55,071 55,682 65,514 66,378 59,851 84,772 60,381 60,790 68,250 64,760 56,155 72,752 68,181 69,824 59,488 59,425 54,948 51,796 50,658 49,958 70,622 54,539 54,403 64,938 83,684 61,488 69,794
Rentable Square Footage 6.78 8.31 13.50 3.07 4.42 3.11 11.87 6.68 4.86 6.16 5.73 6.83 7.63 7.43 4.99 13.30 8.18 7.86 10.63 7.89 8.07 9.88 6.56 9.09 14.05 6.04 8.16 9.68 6.95 7.94 7.15 12.00 12.19 10.51 10.81 4.47 7.73 6.70 14.74 5.83 12.31 6.03 12.35 6.83 10.53 10.93 7.12 10.01 10.74 10.40
Demand Estimate 8.50 8.86 9.14 3.11 8.82 2.74 9.12 8.26 7.02 8.02 7.61 8.70 8.17 6.57 6.73 9.10 8.56 9.59 9.10 9.08 9.39 7.69 8.67 9.16 9.14 8.29 8.07 8.73 6.52 8.69 8.65 7.99 8.26 9.02 7.67 8.01 7.93 8.82 8.86 9.24 9.46 9.55 9.60 7.85 9.28 9.26 7.46 6.80 8.64 8.03
Variance 1.72 0.56 (4.36) 0.04 4.39 (0.38) (2.76) 1.58 2.16 1.86 1.88 1.87 0.54 (0.86) 1.74 (4.20) 0.38 1.73 (1.53) 1.19 1.33 (2.19) 2.11 0.07 (4.91) 2.25 (0.08) (0.95) (0.43) 0.75 1.50 (4.01) (3.93) (1.49) (3.14) 3.54 0.20 2.12 (5.88) 3.41 (2.85) 3.52 (2.74) 1.01 (1.26) (1.67) 0.34 (3.21) (2.10) (2.37)
Conclusion under-supplied equilibrium over-supplied over-supplied under-supplied equilibrium over-supplied under-supplied under-supplied under-supplied under-supplied under-supplied equilibrium over-supplied under-supplied over-supplied equilibrium under-supplied over-supplied under-supplied under-supplied over-supplied under-supplied equilibrium over-supplied under-supplied equilibrium over-supplied equilibrium under-supplied under-supplied over-supplied over-supplied over-supplied over-supplied under-supplied equilibrium under-supplied over-supplied under-supplied over-supplied under-supplied over-supplied under-supplied over-supplied over-supplied equilibrium over-supplied over-supplied over-supplied
tosatisfytheirowninvestmentcriteria. Cumulatively, these tools can be used as benchmarks in identifying self-storage opportunities. The state index is comparative, although not comprehensive. Even in areas with ahighindexscore,localmarketsor trade areas may be underserved. Similarly, the CBSA tables can be a
EVEN IN AREAS WITH A
HIGH INDEX SCORE, LOCAL MARKETS OR TRADE AREAS MAY BE UNDERSERVED. SIMILARLY, THE
CBSA TABLES CAN BE A USEFUL REFERENCE TO
REVIEW MARKET CONDITIONS IN LARGE CITIES. useful reference to review market conditions in large cities. Yet, most importantly, it is the market conditions in the local trade area that warrantthemostconsideration.Determining market conditions in the local trade area is key to a successful self-storage facility.
TABLE 4.3
MarketConditions•4
TOTAL NUMBER OF HOUSEHOLDS IN 50 STATES AND DISTRICT OF COLUMBIA: OWNERS VS. RENTERS Percentage of Number of Owner-Occupied State Households Housing Units Alabama 1,922,890 63.53% Alaska 254,110 38.07% Arizona 2,374,853 57.15% Arkansas 1,157,580 61.03% California 12,487,378 51.32% Colorado 1,947,813 56.78% Connecticut 1,379,726 69.28% Delaware 348,771 63.56% District of Columbia 265,557 35.72% Florida 7,492,676 59.13% Georgia 3,579,346 61.01% Hawaii 464,354 48.00% Idaho 580,513 59.32% Illinois 4,750,701 69.42% Indiana 2,537,930 69.67% Iowa 1,218,004 69.24% Kansas 1,115,065 64.21% Kentucky 1,767,241 66.95% Louisiana 1,723,770 62.02% Maine 561,660 53.27% Maryland 2,186,610 68.05% Massachusetts 2,538,466 63.90% Michigan 3,821,015 63.90% Minnesota 2,086,978 65.64% Mississippi 1,124,668 62.48% Missouri 2,393,904 64.13% Montana 401,466 56.03% Nebraska 720,192 62.23% Nevada 1,014,694 52.44% New Hampshire 514,056 60.19% New Jersey 3,220,563 67.29% New Mexico 791,587 56.94% New York 7,196,817 59.53% North Carolina 3,793,080 60.84% North Dakota 278,337 59.32% Ohio 4,599,423 67.58% Oklahoma 1,478,071 61.86% Oregon 1,506,263 58.52% Pennsylvania 5,018,138 66.29% Rhode Island 412,522 64.41% South Carolina 1,837,174 63.30% South Dakota 320,213 60.21% Tennessee 2,554,832 66.22% Texas 8,962,033 59.28% Utah 881,356 60.20% Vermont 255,195 58.67% Virginia 3,113,434 63.54% Washington 2,626,675 58.43% West Virginia 782,521 64.99% Wisconsin 2,272,646 63.69% Wyoming 229,438 54.86%
Percentage of Percentage of Renter-Occupied Unoccupied Housing Units Housing Units 21.44% 14.86% 22.50% 31.92% 24.57% 17.09% 21.58% 17.22% 34.21% 12.11% 23.64% 19.14% 22.45% 7.53% 22.13% 14.31% 54.14% 10.13% 24.14% 15.47% 25.85% 12.71% 36.72% 15.29% 19.46% 20.83% 20.52% 9.98% 19.86% 10.47% 19.11% 11.65% 19.14% 16.65% 21.22% 11.83% 22.33% 15.02% 13.35% 29.32% 20.81% 10.45% 25.16% 10.54% 16.16% 19.83% 16.00% 17.55% 22.84% 14.42% 20.55% 15.02% 20.02% 23.33% 21.13% 16.64% 29.89% 16.34% 15.47% 18.99% 24.62% 8.09% 18.56% 23.45% 23.36% 16.86% 24.03% 14.86% 16.34% 24.35% 22.74% 9.68% 21.74% 16.23% 25.23% 15.01% 19.86% 13.72% 26.44% 9.15% 22.59% 14.11% 19.77% 20.02% 22.37% 11.09% 25.10% 15.40% 19.76% 18.28% 16.06% 25.28% 22.79% 13.08% 26.49% 13.97% 16.90% 18.11% 18.53% 17.78% 20.43% 24.70%
Source: Nielsen
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4•MarketConditions
Occupancy•5 ntheself-storagebusiness,owners and operators only succeed when their storage units are rented. However, occupancy is a bit of an art in this industry. Properties that are under-occupied fail to meet their economic potential. On the other hand, storage stores that arecompletelyfullcannotmaximize profits since they must eventually turnawaypotentialnewcustomers. This puts the burden of pinpointing the optimum occupancy level on the self-storage professionals, leavingittoownersandoperatorstofind therightbalancetomaximizeprofits at their self-storage facilities.
but also includes the concessions given and fees assessed for each storage space. At the same facility where 90 of 100 units are rented, if 10 spaces are given at no charge forthemonth,thenthestore’seconomic occupancy level would be 80 percent.
When setting out to determine the right occupancy level at a site, self-storage owners and operators must first understand the concepts of physical and economic occupancy. Standard physical occupancy rates provide a clear picture of the number of customers who are currently tenants at a storage store. Physical occupancy is a function of the percent of rentable square feet at the store or the actual number of rented units compared with the total number of units at a storage property.Forexample,aself-storage facilitywith90occupiedunitsoutof atotalof100unitsatthesitewould yield a physical occupancy rate of 90percent.
AT THE STORE OR THE
Economic Occupancy Economic occupancy, on the other hand, is a more theoretical calculation designed to enable operators to maximize profits at their storage facilities. However, there is no hard and set formula that can optimize occupancy at every storage business. Instead, economic occupancy provides a picture of the bottom line prices a store is able to realize. Determining a facility’s economic occupancy requires calculating the number of occupied units on site,
PHYSICAL OCCUPANCY IS A FUNCTION OF THE
PERCENT OF RENTABLE SQUARE FEET ACTUAL NUMBER OF RENTED UNITS COMPARED WITH THE TOTAL NUMBER OF UNITS... Unlike physical occupancy, economic occupancy at some propertiesmayexceed100percentwhen including late fees that have been
In an ideal situation, occupancy at self-storage stores would be in a complete state of balance where everynewcustomerwhomovesout wouldbeimmediatelyreplacedby anewtenantwaitingtomovehisor her items into the empty unit. However, this situation is a far cry from the day-to-day reality of self-storage operations where occupancy fluctuates not only each month but itcanmoveupordownonadayto-day basis. Since rental rates are one of the leading factors in determining a businesses’ occupancy level, many operators experiment with price changes and new customer incen-
REGIONAL OCCUPANCY RATE TRENDS*
TABLE 5.1
I
assessed and paid. However, surpassing the 100 percent economic occupancy level is a clear sign that rental rates should be increased immediately. In fact, many storage professionals consider an economic occupancy point of 90 or 95 percent as the optimum for the industry. This level leaves open units to serve new customers while still providing asteadyincomestream.Ofcourse, the best economic occupancy level for individual businesses will vary from facility to facility.
REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL
April 2011 Economic Physical 79.9% 84.4% 80.4% 84.0% 78.6% 85.7% 78.4% 80.8% 76.4% 79.5% 81.1% 82.7% 76.5% 80.8% 69.8% 75.2% 79.4% 83.3% 71.2% 76.8% 71.2% 76.8% 75.2% 77.9% 71.8% 75.8% 79.6% 80.7% 75.7% 79.7%
*Includes facilities in rent-up
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5•Occupancy
tives in an effort to improve a site’s overall occupancy level. In fact, some self-storage stores make annual rental rate adjustments that most customers come to expect and accept. Others look at current occupancy levels before making any price adjustments—moving rates up whenoccupancysurpasses90percent or dialing rates down in order to attract new customers who are willingtomoveintothesite’sgrowing number of empty spaces. Failing to reexamine rental rates on a regular basis holds the self-storage store back, making it impossible to optimize occupancy and maximize profits at the facility.
NATIONWIDE, THE
AVERAGE SELF-STORAGE FACILITY BOASTS A
PHYSICAL OCCUPANCY RATE OF 79.7 PERCENT...
Temptation Of 100 Percent Occupancy Occasionally, owners and operators fall prey to the temptation of striving for 100 percent occupancy. Although this number may be reassuring and give storage professionals an added level of comfort at first glance, the truth is that allowing occupancy rates to hit the 100 percent level actually holds a facility back and keeps the business from realizing all of the rent dollars available. Instead of bringing in consistently higher rents, rates may stagnate and fall below their market value. In addition, completely occupied storage facilities often generate a weighty waiting list of potential customers—people who contact the store in search of storage only to realize that there are no available spaces to meet their storage needs. Instead of waiting for a space to become available, these customers are likely to look to competing facilities to immediately solve their storage issues. Nationwide, the average selfstorage facility boasts a physical
TABLE 5.2
OCCUPANCY RATE BY RENTABLE SQUARE FOOTAGE* Square Footage Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99,999 100,000 or more ALL SIZES
April 2011 Economic Physical 77.7% 81.5% 77.1% 79.3% 75.8% 79.9% 68.9% 73.4% 72.3% 79.4% 75.7% 79.7%
TABLE 5.3
OCCUPANCY RATE BY NUMBER OF UNITS*
*Includes facilities in rent-up
46
Self-Storage Almanac 2012
Analyzing occupancy by storage facility size reveals that the smallest properties average the highest occupancy rates. Self-storage stores withlessthan25,000rentablesquare feet boast the top occupancy rates for the category. Likewise, properties with fewer than 100 units have the highest physical and economic occupancy levels overall. However, the largest storage facilities do not shoulder the lowest occupancy numbers.Instead,storagestoreswith 75,000to99,999netsquarefeetand properties with 500 to 999 units are occupancy laggards, posting the lowest rates of both physical and economic occupancy for their respective groupings.
Occupancy By Population
*Includes facilities in rent-up
Number of Units 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more ALL SIZES
occupancy rate of 79.7 percent and an economic occupancy rate of 75.7 percent. Topping the occupancy list, self-storage stores in the North Central region have the highest occupancy in the country. Based on physical occupancy levels, properties in the West North Central subregion of this area have the highest averageoccupancyrate.However, New England-based self-storage stores top the list for the highest overall economic occupancy levels. At theotherendofthescale,thelowest occupancy rates were realized in the East South Central division, which has both the bottom numbers for physical and economic occupancy, totaling 75.2 percent and 69.8percentrespectively.
April 2011 Economic Physical 79.9% 83.0% 78.7% 80.5% 74.7% 79.8% 71.9% 76.4% 72.0% 81.5% 75.7% 79.7%
There appears to be a correlation betweenoccupancyratesandthe population of the area surrounding the self-storage sites. Stores in urban areas posted the highest occupancy levels for the category in 2011, averaging 76.7 percent for economic occupancy and 82.8 percent for physical occupancy. Urban stores werefollowedbysuburbanfacilities
Occupancy•5
CORRELATION BETWEEN OCCUPANCY RATES AND THE
POPULATION OF THE AREA SURROUNDING THE SELF-STORAGE SITES. Any occupancy trends based ontheyearthesitewasdeveloped are much more difficult to identify and interpret. However, the newest stores—those built in 2006 or after— clearly have the lowest occupancy rates of the category. However, the data includes properties going through the rent-up process or absorptionphasewhichgenerallylasts 12to24monthsafteranewfacility opens its doors for business. During this time, a storage store goes from zero customers to a financially sustainable number of tenants. This means the occupancy numbers for stores in this development category maybeskewedbyahighernumber of low-occupancy storage facility start-ups. In other words, the lower occupancy rates may say more aboutthenumberofnewdevelop-
This year, properties developed between1981and1985postedthe highest overall occupancy numbers for the category, averaging 84.7 percent for physical occupancy and 82.4 percent for economic occupancy. This age group was closelyfollowedbythe1996to2000 development range which has an occupancy rate of 83.5 percent for physical occupancy and 80.5 percent for economic occupancy. Excluding newly opened selfstorage businesses from the total reveals a more accurate picture of the current tenancy status of the overall storage industry. Often, low occupancy figures posted by stores that remain in lease-up inaccuratelyweighdowntheoveralloccupancy outlook for the nation. In order to make accurate decisions and predictions about the industry’s current levels of occupancy, thesenewlybuiltstoresmustbere-
moved from the population. When excluding stores working their way through the absorption phase, the numbers reveal a slight uptick in the national average occupancy rate, inching up 1.5 percentage points in the physical category and 1.8 percentage points for economic occupancy for all self-storage businesses in the United States.
Rent-Up Bump The East South Central sub-region of the country showed the biggest bumpinoccupancynumberswhen excluding facilities in rent-up from the count. In this area, self-storage facilities indicated they were 79.0 percent physically occupied and 75.2 percent economically occupied. These occupancy rates represent an increase of 3.8 percentage points and 5.4 percentage points, respectively, over the average occupancy rates that include businesses undergoing rent-up in the region. However, the difference in rateswhenincludingandexcluding stores in the absorption phase was less dramatic in all of the other areas of the country.
OCCUPANCY RATE BY MARKET AREA*
TABLE 5.4
THERE APPEARS TO BE A
ments trying to get off the ground in the category than storage customers’agepreferenceswhenitcomes to choosing a self-storage store.
Market Area Urban Suburban Rural ALL AREAS
April 2011 Economic Physical 76.7% 82.8% 75.6% 79.0% 74.6% 77.1% 75.7% 79.7%
*Includes facilities in rent-up
OCCUPANCY RATE BY YEAR FACILITY BUILT*
TABLE 5.5
which realized a slightly lower occupancy than their inner-city counterparts, posting economic and physical occupancy rates of 75.6 percent and 79.0 percent respectively. Moving down the population ladder, self-storage stores in rural locations grappled with the lowest occupancy numbers for the category coming in with rates of 74.6 percent for economic occupancy and 77.1 percent in terms of physical occupancy.
Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after ALL AREAS
April 2011 Economic Physical 73.2% 83.7% 82.4% 84.7% 74.9% 78.4% 80.0% 80.2% 80.5% 83.5% 75.2% 78.6% 68.2% 73.7% 75.7% 79.7%
*Includes facilities in rent-up
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5•Occupancy
The length of the lease-up periodisuniquetoeachnewself-storage facility across the country and generally lasts approximately 12 to 36 months. Storage businesses usually consider the absorption process complete once they sign enough customers to be financially stable and profitable. The location of the property is a critical factor in estimating how long it will take a storage business to move out of the lease-up phase. For some operators,
85 percent physical occupancy is the benchmark number they aim to meet or surpass in order to complete the rent-up process. The majority of storage stores in the U.S. indicatedthatittookmorethantwo years to graduate from this absorption phase by hitting the 85 percent occupancy benchmark. In fact, an average of 64.4 percent of facilities fell into the two or more year time category for completing the rentup process, the longest time period
THE MAJORITY OF
STORAGE STORES IN THE U.S. INDICATED THAT IT TOOK
MORE THAN TWO YEARS TO GRADUATE FROM THIS
TABLE 5.6
OCCUPANCY RATE EXCLUDING FACILITIES IN “RENT-UP”* REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL
April 2011 Economic Physical 79.9% 84.4% 80.4% 84.0% 78.6% 85.7% 80.2% 82.2% 78.0% 80.5% 83.3% 84.7% 79.4% 83.4% 75.2% 79.0% 81.1% 85.2% 72.6% 78.2% 72.6% 78.2% 77.3% 79.4% 74.4% 77.5% 80.9% 81.8% 77.5% 81.2%
*Rent-Up refers to facilities still in their lease-up stage (first 12 to 36 months)
ABSORPTION PHASE... for all of the categories analyzed. Approximately 74 percent of selfstorage stores in New England and 70 percent of stores operating in the West North Central areas of the nation indicated their rent-up phases lasted longer than 24 months, leading this category. Locations that are situated in underserved areas often move through the absorption period relatively quickly in comparison with
TABLE 5.7
AMOUNT OF TIME TO REACH 85 PERCENT PHYSICAL OCCUPANCY* Percentage of Facilities REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL
Less than 6 Months 1.2% ** 2.5% 0.7% 1.1% 0.4% 1.4% 0.7% 2.1% 1.2% 1.2% 1.3% 1.2% 1.4% 1.1%
**Insufficient data
48
Self-Storage Almanac 2012
6 to 12 Months 4.4% 1.2% 7.5% 2.7% 2.3% 3.0% 4.3% 6.8% 2.1% 5.4% 5.4% 5.7% 4.2% 7.6% 4.3%
13 to 18 Months 5.0% 5.0% 5.0% 4.9% 5.7% 4.5% 7.6% 11.3% 4.2% 1.8% 1.8% 4.6% 6.3% 2.5% 5.0%
19 to 24 Months 5.0% 7.4% 2.5% 9.0% 11.4% 7.4% 3.3% ** 6.3% 9.0% 9.0% 8.0% 8.4% 7.6% 6.8%
More than 24 Months 65.9% 61.7% 70.0% 71.9% 68.2% 74.4% 63.9% 65.4% 62.5% 50.3% 50.3% 63.1% 63.1% 63.2% 64.4%
Purchased After Initial Lease Up 18.6% 24.7% 12.5% 10.8% 11.4% 10.4% 19.5% 15.8% 22.9% 32.3% 32.3% 17.2% 16.8% 17.7% 18.3%
Occupancy•5
the national average for all selfstorage stores. More than 17 percentofstoragefacilitiesnationwide reportedthattheywereabletohit the 85 percent occupancy within 24 months but the bulk of properties in this group, almost 7 percent, said they reached this benchmark sometime between 19 and 24 months after opening day. Meeting the 85 percent occupancy bar within 18 months is a feat that only about one in ten properties achieve nationwide.As far as filling 85 percent ofunitswithinsixmonthsofopening the facility doors for business, that is a very rare occurrence within the self-storage sector—an achievement that only about 1 percent of developments ever realize.
cent of stores hitting the 85 percent occupancy level within the first 24 months of business. More than 11 percent of respondents said they were 85 percent full by month 19,
LOCATIONS THAT ARE SITUATED IN
UNDERSERVED AREAS OFTEN MOVE THROUGH THE ABSORPTION PERIOD
RELATIVELY QUICKLY...
Regional Rent-Up Properties in the Northeast and West regions of the country reported a relatively quick rent-up period compared with their counterparts operating throughout the United States. In the Northeast, the properties operating in the Middle Atlantic area of the country have the fastest rent up period with more than 20 per-
20, 21, 22, 23 or 24 in this region of the country. A total of 3.4 percent of Middle Atlantic-based storage stores were 85 percent full before their one year anniversary. The absorption period was also relativelyquickforpropertiesinNew
England. In this area of the country, morethan3percentofnewdevelopments reported an occupancy rate at or above 85 percent within 12 months of opening for business. Twelve months later, more than 15 percentofnewself-storagestoresin thisareaofthenationwere85percent occupied within 24 months of opening day. Self-storage stores operating in the West also posted impressively quick rent-up periods. In the Mountain states, more than 11 percent of self-storage facilities hit the 85 percent occupancy number within 18 months of opening day. In fact, morethan20percentofnewdevelopmentswere85percentfullbefore theirtwoyearanniversaryinthisdivision of the country. Looking at the area’s neighbor to the West bordering the ocean, almost 9 percent of storage stores in the Pacific sub-region exited leaseupwithinthebusinesses’firstyearof operation. Furthermore, more than 19percentofnewdevelopmentslocated in these states reported they
Type of Discount One Month Free Rental Truck Discounted Monthly Rates Other None
April 2011 Economic Physical 71.8% 77.2% 71.% 76.5% 72.8% 77.7% 73.2% 77.3% 81.4% 84.2%
TABLE 5.9
OCCUPANCY RATES BASED ON MANAGEMENT CHARACTERISTICS Characteristics of Facility Management Full-Time On-Site (Resident) Manager Full-Time (Non-Resident) Manager Management Couple/Team Secondary Assistant or Relief Manager Owner Managed Third-Party Management Other
April 2011 Economic Physical 77.5% 80.8% 73.2% 78.2% 69.6% 73.6% 73.5% 78.9% 77.8% 82.0% 70.6% 75.9% 69.3% 75.5%
TABLE 5.10
TABLE 5.8
OCCUPANCY RATE BY DISCOUNT POLICY
PHYSICAL OCCUPANCY RATE FOR NON-CLIMATE-CONTROLLED FACILITIES ONLY REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL
86.8% 88.5% 82.8% 80.8% 83.4% 76.6% 83.8% 82.5% 84.1% 73.2% 73.2% 78.5% 74.9% 82.1% 80.1%
2012 Self-Storage Almanac
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5•Occupancy
were85percentoccupiedbythe24 month mark.
Impact Of Discounting
TABLE 5.12
TABLE 5.11
The question of when and how to implement a program of rental rate discounting is a controversial topicwithintheself-storageindustry. Acrossthesector,therearegrowing concerns that storage businesses are givingawaymorethanisabsolutely necessaryinordertosignanewten-
50
PHYSICAL OCCUPANCY RATE FOR CLIMATE-CONTROLLED FACILITIES ONLY REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL
83.2% 81.7% 87.7% 80.8% 78.1% 84.6% 79.9% 73.9% 83.0% 77.9% 77.9% 77.1% 76.6% 78.2% 79.5%
ant. Many operators say they rely on discounts and incentives to sign new customers in an increasingly competitive business environment. Others report they feel pressure to match the discount strategies and move-in specials offered by competing stores operating within their competitive market area. Regardless of the motivation, the numbers make it clear that many self-storage businesses are currently in the practice of extending discounted rates tonewtenants. Naturally, owners and operators who enjoy an optimum level ofoccupancywillfeellesspressure to offer discounted rates to either neworexistingcustomers.Thedata showsthatself-storagefacilitiesthat do not have a discounting policy in place posted the highest occupancy rates for both economic and physical occupancy, averaging 81.4 percent and 84.2 percent respectively. These rates are significantly higher than the national averages of75.7percenteconomicand79.7 percent physical occupancy. On the other hand, self-storage businesses that are willing to make
SEASONAL PHYSICAL OCCUPANCY RATE TRENDS BY REGION REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL
Jan-Mar 78.4% 78.2% 78.9% 80.8% 79.5% 82.6% 76.8% 73.2% 78.4% 72.6% 72.6% 76.7% 74.5% 79.8% 76.6%
Self-Storage Almanac 2012
Apr-Jun 80.8% 80.3% 82.3% 77.9% 77.2% 79.0% 79.1% 79.3% 79.0% 74.4% 74.4% 77.6% 74.4% 82.0% 77.7%
Jul-Sept 82.3% 82.4% 81.9% 80.4% 78.6% 83.1% 76.5% 75.0% 77.22% 75.1% 75.1% 77.9% 75.9% 80.7% 78.0%
Oct-Dec 81.1% 81.5% 80.1% 77.1% 77.2% 77.1% 74.6% 74.0% 74.9% 74.0% 74.0% 75.2% 72.7% 78.8% 76.0%
their properties more financially attractivetonewcustomersaremore likely to win the sale and realize a newcustomeratthefacility.Looking at occupancy rates, storage stores offering discounted monthly rental rates had the second highest rate for physical occupancy. However, the numbertwoeconomicoccupancy rate went to stores that indicated they utilize a discounting strategy other than a free month of rent, a rental truck or discounted monthly rentalrates.Thelowestoveralloccupancyrateswerepostedbystorage businessesthatoffernewcustomers the use of a rental truck to entice them to sign a lease. Various management strategies also impact occupancy rates at storage facilities across the nation. Properties run by an owner-manager enjoy the highest occupancy, averaging 82.0 percent for physical occupancy and 77.8 percent for economic occupancy. Full-time, onsite resident managers also posted highrates,with80.8percentofunits physically occupied and an economic occupancy rate of 77.5 percent. Storage facilities managed by a management couple or team posted the lowest physical occupancy rates for the category while properties indicating they use another management strategy altogetherhadthelowesteconomyoccupancy for the group.
Occupancy And Amenities The features and amenities offered by self-storage stores impacted the facility’soccupancy,aswell.Offering customers a safeguard against temperatureextremes,climate-controlis oneofthemostin-demandextrasat storage businesses across the country. However, occupancy rates for stores equipped with climate-control technology are slightly off from
Occupancy•5
Storage facilities in the East South Central portion of the U.S. saw the biggest occupancy increase in the category, adding 7.3 percentage pointstotheiroccupancyratewith non-climate-controlled stores compared with all facilities operating in this area of the country. The East NorthCentraldivisionalsosawasignificant occupancy jump in climatecontrolledfacilitieswhencompared withallfacilitiesoperatinginthedivision, averaging 88.5 percent and 84.0 percent respectively. Occupancy rates rise and fall with the seasons. Peaking in the summer months when most families move, occupancy rates vary as
Climate-Control Fluctuations It is also interesting to track seasonal occupancy fluctuations based on climate-controlled versus non-
TABLE 5.13
Looking at the occupancy rates for non-climatized properties reveals that at 80 percent, the average for the group is slightly higher than the national average for all self-storage facilities in the nation. While this is unexpected since climate-control isoneoftheindustry’stopfeatures, one explanation for the higher occupancy realized by facilities without climate-controlled units may involvethepricedifferentialbetween climate-controlled and non-climatized spaces. It may be that some customerspreferthelowerratesoffered by competing stores over the climate-control protection offered withthemoreexpensiveunit.
much as 1.96 percentage points nationally over the course of a year. Self-storage facilities in the East South Central area of the country have the biggest seasonal variation in occupancy, posting a spread of 2.45 percentage points.
TABLE 5.14
the national average of 79.7 percentat79.5percent.Theonlyareas of the country where stores posted an occupancy bump with climatized units were New England, the South Atlantic, the Mountain states and the West North Central division of the U.S. The West North Central area had the highest occupancy of the category, averaging 87.7 percent and enjoyed the biggest gain over the occupancy rate for all selfstorage facilities in its sub-region.
climatized storage properties. In general, climate-controlled facilities have more stable occupancy rates with smaller fluctuation between the seasons. This category ranges from a high variation of 6.8 percentagepointsinNewEnglandtoalow range of 1.1 percentage points in theSouthAtlanticstates.Occupancy rates peak for the climate-control category in the months of July, August and September.
SEASONAL PHYSICAL OCCUPANCY RATES FOR NON-CLIMATE-CONTROLLED FACILITIES ONLY REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL
Jan-Mar 84.1% 85.7% 80.0% 81.3% 81.6% 80.8% 75.7% 61.5% 79.8% 67.0% 67.0% 77.5% 73.2% 81.8% 77.0%
Apr-Jun 85.6% 86.6% 83.1% 81.5% 80.8% 82.8% 79.4% 82.0% 78.6% 70.7% 70.7% 79.3% 74.9% 83.8% 79.2%
Jul-Sept 86.5% 87.7% 83.5% 82.3% 84.7% 78.4% 75.7% 62.5% 79.5% 69.8% 69.8% 78.6% 75.5% 81.8% 78.5%
Oct-Dec 86.2% 87.7% 82.5% 79.5% 82.6% 74.4% 74.8% 61.5% 78.6% 69.4% 69.4% 77.0% 74.6% 79.4% 77.3%
SEASONAL PHYSICAL OCCUPANCY RATES FOR CLIMATE-CONTROLLED FACILITIES ONLY REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL
Jan-Mar 75.2% 74.3% 78.1% 80.6% 78.8% 83.1% 77.0% 75.2% 78.0% 74.2% 74.2% 75.8% 75.6% 76.2% 76.3%
Apr-Jun 78.1% 77.0% 81.7% 76.7% 75.9% 77.8% 79.1% 78.9% 79.2% 75.4% 75.4% 75.5% 73.9% 78.8% 77.0%
Jul-Sept 79.9% 79.6% 80.8% 79.8% 76.4% 84.6% 76.7% 77.1% 76.5% 76.6% 76.6% 77.2% 76.4% 78.8% 77.7%
Oct-Dec 78.3% 78.2% 78.6% 76.4% 75.3% 77.9% 74.5% 76.2% 73.7% 75.4% 75.4% 73.1% 70.9% 77.6% 75.4%
2012 Self-Storage Almanac
51
5•Occupancy
Self-storage properties that are not equipped with climate-control technology have a wider ranging occupancy rate season-to-season. In the East South Central division, non-climatized facilities posted occupancy rates that varied 20.5 percentage points from high to low, declining from 82 percent in the months of April through June, to 61.5 percent in October through May and January through March. The most stable occupancy levels for non-climate-controlled stores
werefoundintheWestSouthCentral U.S. where occupancy ranged only 1.15 percentage points over the course of the year. In total, occupancywashighestfornon-climatized facilities in April, May and June and lowest in the months of January, February and March for the nationasawhole. The layout of a self-storage facility can also impact its occupancy levels. While multiple stories can makeanotherwisecostprohibitive development feasible, this type of
TABLE 5.15
EFFECT OF MULTIPLE LEVELS ON OCCUPANCY REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL
With Multiple Levels 80.7% 81.6% 78.5% 81.9% 81.0% 84.0% 65.1% 59.4% 70.8% 71.1% 71.1% 78.2% 76.0% 79.5% 75.5%
Without Multiple Levels 85.0% 84.3% 86.9% 80.5% 79.0% 82.5% 82.9% 79.0% 84.5% 78.0% 78.0% 77.7% 75.7% 81.7% 80.7%
TABLE 5.16
EFFECT OF COMPUTERIZED SECURITY ON OCCUPANCY
52
REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL Self-Storage Almanac 2012
With 85.0% 84.9% 85.4% 81.7% 81.2% 82.4% 78.7% 71.9% 81.6% 76.4% 76.4% 78.3% 75.8% 80.7% 78.9%
Without 84.0% 83.1% 85.9% 80.1% 78.2% 82.9% 83.9% 79.6% 86.0% 78.5% 78.5% 76.8% 75.7% 80.7% 81.0%
Percentage Point Difference 0.96% 1.76% -0.50% 1.54% 2.98% -0.47% -5.19% -7.70% -4.42% -2.12% -2.12% 1.51% 0.12% 0.08% -2.13%
facilitydesigntendstoresultinlower occupancy rates nationwide. As a whole,theU.S.averageoccupancy rate for multi-level properties hoveredatapproximately75.5percent while single story facilities were, on average, 80.7 percent full. Self-storage businesses operating in the East South Central states posted the biggest occupancy differentials between climate-controlled and non-climatized properties, ranging from 59.47 percent to 78.95percent—adifferenceof19.55 percentage points. On the other end of the spectrum, occupancy ratesweremostconsistentbetween multi-level and single-story facilities in the Mountain sub-region where the differential amounted to only 0.26 percentage points. Computerized security also had an impact on occupancy rates, thoughinamuchlessdramaticway than the addition of multiple levels to a site. Nationwide, the category averaged an occupancy rate disparity of 2.13 percentage points, with stores without computerized security enjoying a higher level of occupancy. The addition of automated security had the most effect on occupancy in the East South Central portion of the U.S. where storesequippedwithcomputerized security posted occupancy rates of 71.9 percent but those without this feature averaged an occupancy rate of 79.6 percent. Overall, occupancyratesweremoreconsistentin thePacificstateswhereself-storage properties with and without automated security only varied 0.08 occupancy percentage points betweenthetwocategories.
RentalRates•6
However, some self-storage experts warn that most concessions being offered are too deep and argue that many tenants would rent a unit without the price reduction. Rather than providing a one-time discount for new tenants, may operators prefer to sell the property’s features and benefits, focusing more on how the self-storage facility can meetthecustomer’sneedsandless on the monthly price for storage. They caution that too many discounts can negatively impact the storagefacility’sbottomline.
Rental Rates And Occupancy It is important to remember that concessions and discounts not only affect rental rates, but they also influ-
On the other hand, in situations whereratesaretoolow,occupancy willsitat100percent,givingowners and operators zero chance to fill a spacewithanewtenantwhomay bewillingtopaymoreforthesame storage space. When this is the case, the storage business is forced to turn away potential tenants who come into the store looking for a solution to their storage problem. Often, these customers are actually referred by the fully occupied store’s manager
RENTAL RATES BY UNIT SIZE
TABLE 6.1a
Although some industry professionals are wary of moving prices, experimentation with rental rates is an important process at self-storage businesses. Owners and operators frequently utilize a discounting strategy to convince reluctant potential customers to sign on the bottom line. These discounts and incentives can successfully bring in new customers whoarefocusedongettingthebest possible price for storage.
ence the overall occupancy levels at self-storage stores. The concept ofoccupancyisinextricablytiedto rental rates as one often determines the success of the other. When rates become too high, self-storage operators notice that empty units are becoming increasingly difficult to fill with new customers.This difficulty is themarket’swayofsignalingthata downwardrateadjustmentmaybe in order to keep customers coming in the doors.
REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL
5X5 $34.54 $33.83 $36.57 $39.24 $43.09 $33.79 $38.12 $34.07 $40.76 $42.19 $42.19 $43.51 $34.10 $51.48 $40.10
5X10 $48.91 $48.39 $50.29 $56.76 $59.56 $52.32 $46.84 $44.58 $48.06 $52.36 $52.36 $57.23 $44.62 $72.14 $52.42
10X10 $70.57 $70.09 $71.92 $84.56 $86.46 $81.65 $69.30 $62.00 $72.88 $79.59 $79.59 $91.63 $71.28 $116.91 $79.19
10X15 $87.42 $89.74 $80.45 $107.35 $111.77 $100.27 $90.76 $81.75 $95.85 $107.99 $107.99 $106.67 $92.28 $124.51 $100.09
10X25 $114.21 $116.16 $110.50 $151.67 $160.86 $137.39 $137.81 $132.15 $140.08 $161.38 $161.38 $166.66 $130.50 $204.94 $147.35
10X30 $142.31 $149.23 $122.33 $179.10 $177.08 $183.63 $151.76 $136.82 $161.50 $181.89 $181.89 $204.67 $156.70 $250.65 $174.27
20X20 $194.00 $209.80 $115.00 $200.00 ** $200.00 $200.00 ** $200.00 $246.33 $246.33 $245.30 $177.00 $313.60 $232.33
RENTAL RATES BY UNIT SIZE
TABLE 6.1b
I
n the self-storage business, rental rates are far from black and white. Owners and operators must frequently adjust rates to respond to economic conditions and accommodate supply changes. Some self-storage facilities believe they must be the price leader in the area in order to gain new customers.Othersfrequentlymodify rental rates based on the going rates at competing self-storage stores in the area. If nearby self-storage businesses are offering a lower rate for newtenants,manystoreswillofferto matchthepricefornewcustomers whoareconsideringself-storage.
REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL
10X20 $104.33 $99.79 $116.96 $129.42 $135.44 $119.63 $104.43 $94.42 $109.44 $122.90 $122.90 $139.55 $102.56 $184.15 $120.40
**Insufficient data
2012 Self-Storage Almanac
53
6•RentalRates
to competing facilities that are better able to mange the dual forces of occupancy and rental rates. In order to keep self-storage units fully occupied—a level most storage professionals put at the 90 to 95 percent level—owners and operators must pinpoint the optimum rental
rates for their individual storage stores. Rates always differ facilitywide based on conditions like the make up of the market area surrounding the store, the overall economic environment and the general community need for storage. While the appropriate rent will vary from facility to facility, it is important
to remember that operators do not want to find themselves in a situation where the store is 100 percent occupied. This type of situation will not only prevent the store from adequately serving the community’s storage needs, but it also prevents the store from maximizing profits. Any storage facility with a waiting list
TABLE 6.2
RENTAL RATE TRENDS NORTH CENTRAL 2006 2007 2008 2009 2010 2011 NORTHEAST 2006 2007 2008 2009 2010 2011 SOUTH CENTRAL 2006 2007 2008 2009 2010 2011 SOUTHEAST 2006 2007 2008 2009 2010 2011 WEST 2006 2007 2008 2009 2010 2011 NATIONAL 2006 2007 2008 2009 2010 2011
5X5
5X10
10X10
10X15
10X20
10X25
10X30
20X20
$31.69 $23.89 $32.92 $36.21 $33.57 $34.54
$43.23 $40.80 $44.24 $44.61 $44.20 $48.91
$65.04 $60.55 $63.03 $67.01 $66.17 $70.57
$80.89 $73.30 $81.50 $84.97 $80.35 $87.42
$96.44 $88.72 $96.59 $98.61 $95.40 $104.33
$113.71 $104.70 $109.38 $119.67 $115.25 $114.21
$134.75 $123.70 $143.95 $137.01 $132.17 $142.31
$183.71 $153.17 $175.54 $171.61 $166.60 $174.00
$41.76 $41.50 $47.08 $42.77 $45.63 $39.24
$56.98 $56.86 $67.57 $58.50 $59.32 $56.76
$87.51 $85.24 $98.86 $84.63 $89.31 $84.56
$112.50 $104.39 $113.17 $103.31 $116.65 $107.35
$140.73 $132.47 $151.13 $126.00 $132.91 $129.42
$167.08 $160.65 $161.86 $150.85 $176.17 $151.67
$189.67 $184.87 $182.05 $172.36 $183.35 $179.10
** $169.67 $275.00 $241.62 $210.00 $200.00
$28.87 $27.64 $32.49 $35.18 $36.98 $38.12
$37.99 $40.45 $43.47 $49.00 $44.90 $46.84
$58.27 $61.09 $63.69 $64.20 $66.40 $69.30
$77.07 $78.19 $82.09 $84.54 $85.64 $90.76
$88.17 $89.65 $96.16 $99.05 $99.64 $104.43
$122.52 $108.38 $119.09 $127.19 $121.97 $137.81
$121.89 $130.62 $133.86 $140.22 $140.25 $151.76
$158.00 $120.60 $131.64 $171.29 $166.73 $180.00
$38.24 $35.52 $40.76 $46.19 $43.56 $42.19
$52.98 $51.25 $55.04 $60.96 $54.69 $52.36
$79.39 $75.80 $84.18 $85.62 $80.42 $79.59
$103.92 $98.97 $107.95 $115.72 $108.50 $107.99
$125.10 $117.10 $133.86 $132.57 $132.00 $122.90
$145.36 $137.47 $154.08 $182.39 $160.25 $161.38
$166.55 $169.88 $173.30 $195.25 $181.36 $181.89
$189.11 $200.96 $202.95 $243.78 $215.24 $246.33
$40.32 $42.71 $47.22 $46.25 $41.85 $43.51
$56.62 $59.61 $66.99 $61.21 $56.92 $57.23
$88.55 $94.01 $104.71 $88.62 $85.89 $91.63
$113.66 $121.30 $135.54 $111.94 $113.34 $116.67
$144.42 $149.75 $165.62 $131.96 $136.88 $139.55
$164.51 $178.32 $179.19 $161.60 $159.79 $166.66
$186.29 $199.82 $198.44 $183.44 $190.72 $204.67
$247.75 $262.89 $212.73 $249.26 $261.25 $245.30
$37.59 $36.45 $41.30 $42.46 $40.94 $40.10
$50.49 $49.94 $55.75 $55.13 $52.36 $52.42
$77.09 $75.54 $83.54 $78.42 $78.34 $79.19
$99.04 $96.28 $106.33 $101.27 $101.36 $100.09
$121.08 $143.29 $139.96 $118.45 $120.76 $120.40
$142.89 $139.85 $147.88 $149.19 $146.19 $147.35
$162.58 $160.14 $164.36 $167.73 $167.33 $174.27
$198.00 $194.57 $198.36 $232.67 $215.63 $232.33
**Insufficient data
54
Self-Storage Almanac 2012
RentalRates•6
may want to consider a rental rate increase immediately.
Barometer Of The Industry When priced correctly, self-storage rental rates can be used as a barometer of the industry. Rising rates signal a strong demand for storage in the marketplace while falling prices point to a situation of stress often caused by oversupply, waning demand for storage or a general market correction. This year was a mixed bag for self-storage rental rates across the country with some unit sizes posting gains while others continue to fall. Examining rental rates by unit size shows that some size-ranges fared better than others over the past 12 months. As the smallest size category currently analyzed, 5-by-5 units posted a slight decline from 2010, losing $0.84 over the 12-month period. This represents the second consecutive decrease for the unit size category, which gave up $1.52 between 2009 and 2010, indicating that a peak price recovery has not yet been
realized for this unit size category. When coupled with the previous year’s decline, the $0.84 loss in 2011 becomes more significant. Moving on to the 5-by-10 units, this slightly larger size category fared a little better over the past 12 months. After peaking in 2008 with a national average rent of $55.75, the 5-by-10 size is up $0.06 for 2011. Although the increase is small, it represents the first rental price gain for the category after two years of continuous decline—a positive sign for storage operators who are eager for any signals of economic recovery. Going up to the next unit size, rental rates for 10-by-10 spaces were slightly better this year than last. The most common size for the self-storage industry, 10-by-10 units realized an average rent increase of $0.85 for the year. However, it is important to keep in mind that this size group had previous been on a path of decline since reaching a high point of $83.54 in 2008.
TABLE 6.3
RENTAL RATES - CLIMATE-CONTROLLED COMPARISON Unit Size 5x5 5x10 10x10 10x15 10x20 10x25 10x30 20x20
With Climate Control $53.94 $75.90 $116.24 $152.05 $186.54 $233.06 $260.04 $324.55
Without Climate Control $40.10 $52.42 $79.19 $100.09 $120.40 $147.35 $174.27 $232.33
Percentage Difference 34.54% 44.80% 46.79% 51.92% 54.93% 58.17% 49.22% 39.69%
The next unit size tracked saw a decline for the 12 month period. With an average rent of $100.09 per month, the 10-by-15 unit size lost $1.27 over the year. At its current rate, the monthly rents operators are able to pocket with this unit size have dropped to a level that is only slightly higher than the rents charged in 2007. This means that the gains operators realized in 2008, 2009 and 2010 are now gone.
Rental Rate Movement Moving on to the 10-by-20 storage space shows another decline for the year. Average rents for 10-by-20 units only declined $0.36 for the year, but are off $22.89 from their peak of $143.29 in 2007. Toward the end of the unit size range, 10-by-25 units commanded slightly higher rents for this year than last. The 10-by-25 sized units cost tenants an average of $1.16 more per month than they paid in 2010. Although the category lost $3.00 between 2009 and 2010, the current rental rate remains well above the six-year low for this size of $139.85. Moving up to the largest sizes, the 10-by-30 and 20-by-20 storage spaces show an upward trend. Rental rates for the two largest unit sizes, 10by-30 and 20-by-20, both increased over the past 12 months. The current rate of $174.27 for a 10-by-30 unit is a high point for the category and the 20-by-20 average rate of $232.33 is only $0.34 below its six year peak posted in 2009.
TABLE 6.4
RENTAL RATES - CLIMATE-CONTROLLED FACILITIES REGION NORTH CENTRAL NORTHEAST SOUTH CENTRAL SOUTHEAST WEST NATIONAL
5X5 $53.78 $52.92 $53.12 $53.58 $56.58 $53.94
5X10 $73.80 $79.36 $71.88 $75.64 $81.73 $75.90
10X10 $105.93 $119.93 $108.79 $117.69 $130.81 $116.24
10X15 $132.09 $160.42 $140.47 $155.09 $180.79 $152.05
10X20 $161.18 $200.11 $167.86 $191.98 $227.80 $186.54
10X25 $214.33 $241.25 $223.30 $235.36 $345.00 $233.06
10X30 $253.80 $303.33 $253.26 $254.42 $282.83 $260.04
20X20 $279.50 $330.00 ** $326.40 $359.50 $324.55
** Insufficient data
2012 Self-Storage Almanac
55
6•RentalRates
Rental rates are often most impacted by local market conditions, looking at smaller individual regions and divisions of the nation paints a more complete story than owners and operators would be able to glean with only data on the country as a whole. Each region grapples with its own challenges and opportunities and the rental rates of the individual areas all tell different stories. In the Northeast region, owners and operators saw across the board declines in rental rates for every unit size. The rates of four of the eight sizes analyzed are now hovering at record lows for the six year period. Rental rates for the 10-by-25 size lost $24.50 in 2011. Rates for the 10-by-15 units are down $9.30 for the region. While the Northeast posted an overall rental rate loss, facilities in the South Central region commanded higher rates this year than last. Rates
for the region are currently at all time highs for every unit size but one. Although the current levels are high, it is important to keep in mind that this area of the country has shown fairly steady year over year gains for the past five years. This year, rates for the largest unit sizes saw the most movement for the group with 10-by30s gaining $11.51 and 10-by-20s moving up $13.27.
Regional And Divisional Rents Rental rates are also growing in the West where almost every size category posted a rate increase. The one exception is the largest unit size which posted a decline for the year. In this region, the 20-by-20 sized units have given up $15.95 over the course of the past 12 months. However, the remaining unit sizes analyzed realized average rent increases of $4.94 each. The catego-
ry seems to be building momentum and rates for 10-by-30s are currently hovering at peak high levels. However, rental rates for six of the eight sizes being analyzed remain off from their 2008 highs. Moving out to the West Coast of the country, self-storage facilities in the Pacific sub-region are currently commanding the highest rents in the nation. Ranging from $51.48 per month for a 5-by-5 spot to $313.60 per month for a 20-by-20 unit, rental rates in the Pacific run an average of $46.53 higher than the national average for all self-storage stores. Rates were on somewhat of a seesaw in the Southeast region with some moving up while others trended downward. In this region, rents fell for the smallest units while the larger sizes enjoyed price gains. With an average monthly price of
TABLE 6.5
RENTAL RATES BY NUMBER OF UNITS Unit Size 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more
5X5 $31.55 $31.96 $39.52 $46.36 $64.67
5X10 $43.03 $42.84 $53.36 $64.49 $70.21
10X10 $59.84 $63.64 $80.88 $100.99 $110.88
10X15 $84.10 $82.55 $99.36 $121.34 $137.00
10X20 $91.61 $92.63 $120.28 $160.98 $183.50
10X25 $115.00 $104.48 $141.34 $184.73 $225.00
10X30 $121.88 $134.59 $158.52 $216.65 $259.33
20X20 $100.00 $212.23 $199.80 $265.71 $308.00
10X15 $87.60 $91.79 $108.96 $126.97 $104.99
10X20 $99.21 $112.29 $137.90 $167.30 $124.50
10X25 $113.28 $131.95 $161.94 $177.32 $168.76
10X30 $136.44 $160.86 $185.94 $227.84 $183.09
20X20 $223.40 $191.29 $255.55 $168.00 $266.73
10X15 $88.96 $98.47 $107.64 $82.59 $99.77 $97.75 $110.51
10X20 $107.81 $104.33 $131.83 $95.39 $118.69 $120.69 $140.34
10X25 $122.90 $138.70 $135.56 $114.23 $149.52 $146.04 $172.08
10X30 $177.75 $163.38 $166.93 $130.38 $174.51 $182.41 $189.35
20X20 $146.67 $192.80 $205.00 $199.40 $239.86 $219.57 $296.08
TABLE 6.6
RENTAL RATES BY RENTABLE SQUARE FOOTAGE Square Footage Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99,999 100,000 or more
5X5 $33.81 $37.95 $42.91 $47.05 $43.03
5X10 $44.88 $50.07 $57.64 $66.00 $55.35
10X10 $66.14 $75.80 $89.02 $96.05 $79.58
TABLE 6.7
RENTAL RATES BY YEAR FACILITY BUILT
56
Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after
5X5 $39.25 $35.10 $41.31 $31.96 $39.07 $41.75 $44.68
Self-Storage Almanac 2012
5X10 $50.18 $47.35 $54.59 $41.26 $53.80 $52.05 $60.55
10X10 $74.39 $69.32 $85.30 $62.34 $79.07 $79.20 $92.31
RentalRates•6
$246.33, 20-by-20s brought in the highest rents and are now priced higher and successfully bringing in more money each month than at any other time over the past six years. However, six of the remaining seven sizes at Southeastern properties still remain off from their peak rental rates seen in 2009.
unit sizes. Rates for 10-by-25s, 10-by30s and 20-by-20s are not only the lowest in this area, but they also run significantly below the national average. The 20-by-20 spaces alone bring in $117.33 less than the average for the United States as a whole in this part of America.
Impact Of Climatization The rental rate outlook was more positive in the North Central region in 2011. This year, facilities located in this area of the country witnessed rents rise for every unit size except the 10-by-25 spaces. The mid-range sizes, ranging from 5-by-10 to 10-by20, are renting at peak prices for the six year period, as well. The remaining sizes are also moving up, realizing an average gain of $6.17 more than they brought in last year. While there is no single area of the country struggling with the nation’s lowest rental rates across the board, the West North Central subregion brings in the least rent of any other area of the nation for the large
Climate-controlled spaces are one of the most in-demand features at facilities—an amenity that customers willingly dig a little deeper into their wallets to secure. The premium operators bring in for climatized spaces ranges from approximately 35 percent to 58 percent depending on the unit size being analyzed. The mid-sized spaces saw the biggest price improvements in climatecontrolled spaces versus non-climatized units for the year, with 10-by-15, 10-by-20 and 10-by-25 units all bringing in better rates. Rents are more than 50 percent higher for units that are outfitted with climate-control capability compared to those without this amenity.
This year, rental rates for climatized facilities were strong for stores located in the West. In this region, self-storage businesses averaged the nation’s highest rents for climatecontrolled units. Self-storage facilities in the Northeast region also realized high rents that generally beat the national average for all climatecontrolled spaces in the country. Rents for climatized units were lowest in the Northeast and South Central regions. For the smallest unit size, 5-by-5s, the Northeast posted the lowest rates, and for 5-by-10s, the South Central region posted the lowest average rental rates. However, the North Central region is the category laggard for rental rates in the 10-by-10, 10-by-15, 10-by-20, 10by-25 and 10-by-30 unit sizes—making both regions the loss leaders for climate-controlled storage.
Rents By Facility Size On average, self-storage facilities with a large number of units command higher rental rates than their
TABLE 6.8
RENTAL RATES BY MARKET AREA Market Area Urban Suburban Rural
5X5 $46.06 $38.65 $33.78
5X10 $58.73 $53.16 $43.77
10X10 $89.48 $82.94 $60.61
10X15 $109.79 $103.35 $81.81
10X20 $136.11 $124.75 $93.46
10X25 $160.81 $156.79 $102.11
10X30 $192.78 $182.25 $126.09
20X20 $254.19 $234.28 $189.56
10X25 $184.25 $157.71 $170.77 $161.88 $173.56 $120.17 $160.17 $147.60 $189.31 $166.53 $133.68 $133.09 $85.00 $147.35
10X30 $152.62 $192.35 $201.08 $215.26 $207.24 $158.75 $192.52 $177.12 $208.16 $196.99 $151.42 $150.35 $52.50 $174.27
20X20 $186.75 $245.00 $275.94 $247.33 $247.11 ** $251.24 $234.19 $339.50 $275.77 $218.40 $148.33 ** $232.33
TABLE 6.9
RENTAL RATES WHEN VARIOUS PROMOTIONAL MEDIA ARE USED Media Billboards Signage Direct Mailings Telephone Solicitation Flyers Television Internet Yellow Pages Magazines Referrals Newspapers Radio None Other
5X5 $43.38 $43.12 $43.28 $42.36 $43.80 $44.33 $43.21 $40.11 $45.66 $43.90 $38.93 $40.00 $22.20 $40.10
5X10 $53.97 $57.62 $60.15 $62.93 $62.83 $57.00 $58.94 $53.10 $65.38 $59.99 $49.94 $56.00 $31.28 $52.42
10X10 $83.88 $86.38 $93.37 $98.12 $96.94 $86.40 $89.49 $80.09 $102.53 $90.85 $71.58 $81.49 $46.61 $79.19
10X15 $107.60 $107.57 $116.53 $119.78 $120.03 $94.10 $109.66 $101.47 $118.36 $110.32 $93.77 $98.29 $62.00 $100.09
10X20 $135.18 $133.56 $145.98 $155.14 $150.74 $134.30 $136.87 $122.67 $153.83 $138.33 $110.88 $125.98 $69.39 $120.40
**Insufficient data
2012 Self-Storage Almanac
57
6•RentalRates
counterparts with fewer units for rent. While a 10-by-10 unit at a storage store with less than 100 storage spaces rents for an average of $59.84, the same size brings in $110.88 at a site with 1,000 or more storage spaces. The disparity becomes even greater as the units increase in size. Rates for a 20-by-20 storage space at a facility with less than 100 units averages $100 per month; a 20-by-20 spot at a storage property with 1,000 or more units commands $308.00 per month—a price increase of more than 200 percent. A similar pattern emerges when examining rental rates by the store’s rentable square footage. The smallest stores—those measuring less than 25,000 rentable square feet— command the lowest rents for their spaces, with the exception of the 20-by-20 size. Properties with 75,000
to 99,999 net square feet were able to bring in the top rents in almost every size category for this grouping. In fact, they averaged higher priced rental rates than storage stores with 100,000 or more rentable square feet could command. This largest facility size category only realized the highest monthly price for its 20by-20 storage units.
and 1995 brought in the lowest rents in all but two size categories. In addition, units located in self-storage facilities built between 1986 and 1990 commanded the second highest rental rates in four of the six sizes analyzed. Looking at the area surrounding the self-storage facility reveals a very obvious pattern—properties in urban locations bring in the highest rents. In fact, urban storage stores command the top prices in every size category. Suburban stores come in second, realizing the second highest rates for all of the units analyzed. Properties serving rural communities average the lowest rents and the disparity is significant. For the 10-by10 sizes, rural stores average $60.61 per month, suburban sites charge $82.94 and urban locations command $89.48—a difference of 48
Just as there is a clear correlation between facility size and rental rates, there is also a connection between age and storage price. The newest self-storage properties average higher rents than their older counterparts with stores built after 2005 averaging the top rental rates for every size category. However, it would not be accurate to say that the oldest facilities, in turn, command the lowest rents. In fact, properties developed between 1991
TABLE 6.10
RENTAL RATES WHEN VARIOUS PROMOTIONAL MEDIA ARE NOT USED Media Billboards Signage Direct Mailings Telephone Solicitation Flyers Television Internet Yellow Pages Magazines Referrals Newspapers Radio None Other
5X5 $39.87 $36.11 $38.80 $39.74 $37.28 $40.03 $30.25 $40.06 $39.45 $34.10 $40.45 $40.10 $40.60 **
5X10 $52.33 $46.65 $50.14 $51.36 $47.62 $52.37 $40.08 $50.30 $51.42 $43.92 $53.21 $52.14 $53.08 **
10X10 $78.92 $71.18 $75.20 $77.44 $70.96 $79.07 $60.14 $76.26 $77.37 $66.22 $81.73 $79.02 $80.13 **
10X15 $99.79 $90.79 $94.83 $98.08 $89.17 $100.20 $79.30 $94.81 $98.56 $86.56 $102.11 $100.22 $100.83 **
10X20 $119.67 $105.38 $113.02 $117.17 $106.42 $120.18 $88.98 $113.09 $117.79 $99.94 $123.46 $119.99 $121.89 **
10X25 $145.39 $128.81 $138.66 $145.61 $131.88 $147.87 $106.51 $146.39 $142.65 $118.12 $151.49 $148.41 $149.37 **
10X30 $175.52 $147.48 $163.13 $169.49 $152.47 $174.58 $120.58 $162.44 $170.73 $137.67 $181.05 $175.92 $175.49 **
20X20 $237.00 $206.07 $203.81 $229.89 $220.63 $232.33 $169.90 $220.83 $227.10 $165.88 $236.55 $238.63 $232.33 **
**Insufficient data
TABLE 6.11
ACTUAL USAGE OF VARIOUS MEDIA (PERCENTAGE OF FACILITIES) REGION NORTH CENTRAL NORTHEAST SOUTH CENTRAL SOUTHEAST WEST NATIONAL
Direct Telephone Television Internet/ Yellow Billboards Signage Mail Solicitation Flyers Commercial Web Site Pages Magazine Referrals Newspaper Radio None Other 9.9% 10.1% 9.2% 10.2% 9.0% 9.6%
73.9% 72.3% 71.1% 79.5% 78.2% 75.5%
6.1% 8.9% 8.8% 17.0% 11.7% 11.0%
**Insufficient data
58
Self-Storage Almanac 2012
3.5% 3.0% 4.4% 4.7% 4.8% 4.2%
28.7% 30.7% 28.0% 36.5% 35.6% 34.9%
0.9% 0.0% 1.9% 0.6% 1.1% 1.0%
77.4% 81.2% 74.2% 84.2% 87.8% 81.5%
80.4% 76.1% 68.6% 76.5% 79.4% 76.8%
3.5% 5.0% 2.5% 4.1% 3.7% 3.7%
45.7% 49.3% 40.4% 47.2% 40.9% 45.3%
12.2% 16.8% 15.1% 11.1% 11.7% 13.1%
3.5% 4.0% 0.6% 2.9% 5.9% 3.4%
1.7% 1.0% 5.7% 1.2% 0.5% 2.0%
** ** ** ** ** **
RentalRates•6
Effect Of Marketing Well thought out marketing plans are crucial for a self-storage business’ success and it is clear that operators who promote their facilities can dramatically impact the rental rates their properties are able to realize. Of course, the best advertising strategy varies from facility to facility based on the demographics of the store’s market are and the type of customers the business is trying to attract. Years ago, many self-storage businesses relied solely on the Yellow Pages to market their business. However, that strategy has started to fall by the wayside as both customer behavior and available advertising media have changed over time. Rather than grabbing a Yellow Pages book, many storage customers now opt to start their search for a storage facility online. In fact, the Internet now surpasses the Yellow Pages as the most common marketing medium industry-wide. As businesses’ reliance on the Yellow Pages continues to decline, owners and operators are left with the reality that there is no standard self-storage marketing plan or onesize-fits-all advertising strategy guaranteed to produce effective results. Thoughtful marketing plans require both research and experimentation in order to yield a solid promotion program that dramatically improves both customer awareness and the self-storage store’s bottom line. It is also important to note that respondents who indicated they do not use any media to promote their businesses commanded the lowest rental rates across the board for the category. In many cases, the rents were dramatically below those realized by competing stores. Looking
at the 10-by-10 size, storage facilities that did not advertise posted average rents of $46.61 while those who utilized the industry’s most popular marketing media, the Internet and the Yellow Pages, averaged $89.49 and $80.08 respectively—rates that are almost double those of businesses that chose not to use any promotional media at all. These numbers make it clear that a little extra marketing effort can have a large impact on a self-storage store’s overall profitability and success.
Formula For Success Finding the right mix of media to produce the highest possible rental rates can be difficult. Often, it requires trial and error as well as a program of tracking to pinpoint which advertising investments are yielding the best results. Occasionally, the formula for advertising success is not intuitive. This year’s data provides an excellent case in point: With the exception of businesses that did not use any promotional media, storage stores that advertised in newspapers realized the lowest rates for five of the units sizes analyzed. In fact, those facilities that indicated they do not use newspapers to advertise their storage businesses commanded the highest rental rates in five of the eight unit sizes. These five rental rate leaders commanded even higher rates than the facilities that indicated they did not choose to forego using one of the
main promotional media to market their self-storage sites. In other words, not advertising in newspapers produced higher rents than those who chose not to not advertise at all were able to realize. Facilities that indicated they do not utilize the Internet for advertising and marketing commanded the lowest rental rates for every size category with the exception of 20-by20 units. This if proof of the growing importance of online marketing. A first stop for many potential customers who are in need of storage, an excellent web site and top search engine billing is crucial for success. Although a relatively new medium for the industry, owners and operators are becoming increasingly Internet savvy and adapting their marketing strategies to maximize their store’s online presence. As the general public becomes comfortable with the Internet, the importance of well designed online marketing and advertising is likely to grow.
Self-Storage Security Security is often cited as the number one concern of customers when renting a space. Tenants do not want to leave their personal belongings in a location where they worry their items may be at risk of theft or exposure. Security systems can ease these tenants’ fears and help them feel comfortable using self-storage to store their items off-site.
EFFECT OF COMPUTERIZED SECURITY ON RENTAL RATES
TABLE 6.12
percent between the highest and lowest rates for the same unit size.
Unit Size 5x5 5x10 10x10 10x15 10x20 10x25 10x30 20x20
With Computerized Security $43.05 $57.19 $86.84 $109.05 $132.19 $161.39 $187.58 $246.03
Without Computerized Security $33.22 $43.91 $65.42 $80.63 $98.53 $111.76 $131.82 $200.69
Percentage Difference 29.6% 30.2% 32.8% 35.3% 34.2% 44.4% 42.3% 22.6%
2012 Self-Storage Almanac
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6•RentalRates
State-of-the-art security systems are often considered a selling point at facilities. Customers are attracted to
stores that tout top-notch security, they are also willing to pay a premium for the peace of mind it pro-
TABLE 6.13
EFFECT OF COMPUTERIZED ACCOUNTING ON RENTAL RATES Unit Size 5x5 5x10 10x10 10x15 10x20 10x25 10x30 20x20
With Computerized Accounting $42.80 $55.29 $83.13 $103.85 $127.42 $151.48 $179.67 $239.22
Without Computerized Accounting $33.28 $45.88 $69.46 $90.27 $103.50 $132.15 $154.43 $212.27
Percentage Difference 28.6% 20.5% 19.7% 15.0% 23.1% 14.6% 16.3% 12.7%
TABLE 6.14
EFFECT OF COMPUTERIZED LIGHTING & UTILITIES ON RENTAL RATES Unit Size 5x5 5x10 10x10 10x15 10x20 10x25 10x30 20x20
With Computerized Lighting & Utilities $42.50 $57.11 $86.72 $107.89 $130.39 $153.06 $186.47 $219.94
Without Computerized Lighting & Utilities $36.78 $46.93 $70.81 $91.12 $108.40 $139.08 $156.19 $240.42
Percentage Difference 15.6% 21.7% 22.5% 18.4% 20.3% 10.1% 19.4% -8.5%
TABLE 6.15
EFFECT OF COMPUTERIZED ACCESS CONTROL ON RENTAL RATES Unit Size 5x5 5x10 10x10 10x15 10x20 10x25 10x30 20x20
With Computerized Lighting & Utilities $42.83 $58.36 $88.84 $111.46 $136.02 $161.32 $189.51 $258.00
Without Computerized Lighting & Utilities $33.39 $43.11 $64.21 $79.66 $94.76 $115.02 $134.79 $173.08
Percentage Difference 28.3% 35.4% 38.4% 39.9% 43.6% 40.3% 40.6% 49.1%
TABLE 6.16
EFFECT OF MULTIPLE LEVELS ON RENTAL RATES
60
Unit Size 5x5 5x10 10x10 10x15 10x20 10x25 10x30 20x20
With Multiple Levels $52.74 $74.55 $116.97 $131.92 $186.49 $204.66 $247.26 $287.25
Self-Storage Almanac 2012
Without Multiple Levels $35.60 $47.34 $71.14 $93.60 $105.92 $131.17 $153.21 $226.69
Percentage Difference 17.1% 27.2% 45.8% 38.3% 80.6% 73.5% 94.1% 60.6%
vides. Computerized security gives properties an advantage in rental rates. Those with automated security enjoy high rents, ranging from a rent boost of 23 percent up to a premium of more than 44 percent when compared to competing stores that lack this type of technology. Customers were also willing to pay for the convenience and safety of automation in 2011. Automated properties successfully charged higher rents than those that were not equipped with the same features. Computerized access control offers the biggest price bump in rents, with the disparity ranging from 28 percent to 49 percent depending on the unit size. Computerized accounting generated an average rate increase of 13 percent to 28 percent; and computerized lighting offered a rental rate boost ranging from 10 percent to 22 percent. The configuration of the facility is an important consideration for developers who want to maximize rents at their properties. The addition of multiple levels positively impacted rental rates. Since multi-story properties are often located in high rent urban areas, the differential enjoyed could be the result of the storage store’s prime location rather than a signal that customers prefer storing their belongings at storage sites with multiple levels. The rent differential realized by sites with more than one story ranged from 17 percent on the low end up to 94 percent at the top based on the unit size being offered for rent.
CustomerBase•7
Self-storage is a very local business, designed to serve people working and living within a three to file mile radius of the facility. Therefore, it is crucial for owners and operators to learn all they can about the community surrounding their site, both the statistics of the area and the demographics of the population in the immediate vicinity of the storage store. Knowing the customer the store serves provides an excellent competitive advantage in the self-storage marketplace.
Competitive Market Area The area surrounding the storage site will determine much about the customer mix. For instance, storage facilities near military bases will likely have a high concentration of enlisted renters and may want to consider implementing special services that meet this group’s unique needs. They may also want to design marketing materials specifically geared to attract military customers or advertise in military newspapers or
magazines sent to servicemen and women. On the other hand, selfstorage facilities located in the urban core of a major city may want to gear their services toward those who live in nearby apartments and condominiums or attempt to reach out to the businesses operating in the vicinity. In order to effectively target any type of storage customer, the facility owner must collect as much information as possible about the needs and expectations of those they want to serve. In general, there are four main types of customers on which self-storage properties routinely focus their attention—commercial, residential, military and students. Commercial self-storage tenants consist of area businesses that store goods off-site. Often driven by economic factors, these commercial customers frequently realize a cost savings by storing excess inventory or other business essentials at a self-storage store versus keeping the items on-site at the office. Cumbersome but crucial items that require a great deal of storage space, such as medical and legal files, are often good candidates for less expensive off-site storage at area self-storage stores. This year, commercial customers made up 18.7 percent of the total customer mix at self-storage facilities in the U.S. The proportion of commercial tenants is highest in the South Atlantic portion of the country where they account for 22.7 percent of self-storage clients. Also a large segment of the whole, the percentage of business renters at storage properties tops 20 percent in the West South Central and Pacific areas of the nation, as well. The proportion of business customers is lowest in the East South Central and East North Central sub-regions, av-
TENANT MIX
CHART 7.1
D
eveloping a solid knowledge of the market area surrounding a self-storage property is like building a roadmap to success. Gathering as much information as possible is the first step in creating a successful business plan designed to meet both current and future customers’ needs. With this information in hand, owners and operators can construct business strategies focused on the wants and desires of the community they serve while pinpointing the amenities most in demand for the population. From there, they can set out to offer the right services and extras necessary to set their facilities apart from the competition and offer the best possible customer service—meeting the community’s storage needs while propelling the self-storage business forward.
3.1% 75.0%
18.7%
3.2% Commercial
Residential
Military
Students
eraging 12.8 percent and 12.9 percent respectively. Residential storage customers have long made up the bulk of selfstorage renters. Across the country, three quarters of all storage tenants fall into the residential customer category. This group often seeks out a storage solution in times of change such as listing their homes for sale, combining and dissolving households, or undertaking a remodeling project. Often, these transitional periods are accompanied by reluctance and stress. Being fully aware of the emotions and concerns of residential customers can help owners and operators more fully meet their tenants’ needs.
Bulk Of The Industry Currently, residential customers comprise 75 percent of the national tenant mix at self-storage facilities. The proportion of these customers is highest in the East South Central part of the country where self-storage facilities report 81.9 percent of their customers fall into the residential category. Residential renters also account for more 80 percent of the mix at storage stores in the Middle Atlantic and East North Central portions of the United States. 2012 Self-Storage Almanac
61
7•CustomerBase
Military customers are tenants who are currently serving in the armed forces. Often, members of the military need a storage space to keep personal goods and vehicles while they are deployed or stationed abroad. Nationwide, approximately 3.2 percent of customers fall into the military category. The Southeast region boasts the highest proportion of military tenants in the
nation, averaging slightly less than 5 percent of the total tenant mix. New England also has an abundance of military customers. On the low end, the Middle Atlantic area of the country averages the smallest proportion of military self-storage tenants where the group accounts for 1.5 percent of the total customer mix. Also averag-
TABLE 7.1
TENANT MIX BY REGION
62
REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL Number of Units 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more Rentable Square Feet Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99.999 100,000 or more Market Area Urban Suburban Rural Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after
Commercial 14.6% 12.9% 19.6% 15.7% 14.5% 17.6% 18.1% 12.8% 20.6% 22.7% 22.7% 19.8% 19.0% 20.9% 18.7%
Self-Storage Almanac 2012
Customer Base Residential Military Students 78.9% 1.8% 4.7% 80.5% 1.8% 4.8% 74.2% 1.7% 4.5% 79.3% 2.7% 2.3% 81.4% 1.5% 2.6% 76.2% 4.5% 1.7% 77.3% 2.6% 1.9% 81.9% 2.9% 2.4% 75.2% 2.5% 1.7% 69.5% 4.9% 2.9% 69.5% 4.9% 2.9% 73.1% 3.2% 3.8% 73.5% 3.3% 4.3% 72.7% 3.2% 3.2% 75.0% 3.2% 3.1%
16.7% 15.8% 22.2% 18.8% 28.3%
79.5% 79.2% 69.5% 73.7% 66.4%
2.4% 2.3% 3.9% 4.0% 3.7%
1.4% 2.6% 4.4% 3.6% 1.6%
15.5% 17.9% 20.7% 22.5% 20.1%
78.1% 76.7% 72.1% 71.8% 72.6%
3.8% 2.7% 3.4% 2.3% 3.3%
2.5% 2.8% 3.8% 3.4% 4.0%
24.6% 17.9% 12.7%
68.1% 75.8% 82.6%
3.2% 3.8% 2.2%
4.2% 2.6% 2.6%
25.3% 16.3% 22.6% 20.1% 15.2% 16.5% 21.0%
68.3% 77.0% 73.3% 75.1% 77.0% 77.0% 72.8%
2.1% 2.7% 1.1% 2.3% 4.6% 3.1% 3.9%
4.3% 3.9% 3.0% 2.5% 3.2% 3.4% 2.3%
ing less than 2 percent of the total clientele, members of the armed services account for 1.8 percent of customers at self-storage facilities in the East North Central division and 1.7 percent of the whole at properties in the West North Central sections of the United States. Students are the last major category of self-storage renters. When attending schools located outside of their home county or state, students may choose to store their goods at self-storage facilities between semesters or while traveling abroad. In 2011, this category of customers accounted for 3.1 percent of renters at self-storage stores across the country. The highest proportion of student renters can be found at storage properties in the East North Central area where they make up 4.8 percent of all tenants. Students also populate storage stores in the West North Central and Mountain subregions of the country, averaging more than four percent of the total customer base in both locations. Many areas see a lower proportion of student renters. Averaging 1.7 percent each, both New England and the West South Central states have the fewest student customers in the country. These regional lows are almost 50 percent less than the nationwide storage average for the category.
Sizing Up Customers Analyzing the tenant mix by the number of units at a storage property shows a higher proportion of commercial tenants rent at large facilities than small. Self-storage stores with 1,000 or more spaces boast a tenant mix consisting of 28.3 percent commercial customers; the smallest facilities with fewer than 100
CustomerBase•7
units have a population of only 16.7 percent commercial renters.
a 72.6 percent share of residential customers.
The same pattern emerges when examining self-storage stores by rentable square footage. Storage facilities with 50,000 or more square feet average a commercial presence in excess of 20 percent. The remaining size categories, less than 25,000 square feet and 50,000 to 74,999 square feet average a customer mix that includes 15.5 percent and 17.9 percent commercial customers on site respectively.
The pattern for military and student customers is much less clear with high and lows scattered throughout the self-storage facility sizes. This may indicate that the size of the property is less of a concern for these two groups than other factors like price and convenience.
IMPACT THE TENANT MIX AT SELF-STORAGE PROPERTIES ACROSS THE NATION. Conversely, small self-storage stores have a larger proportion of residential renters than their larger counterparts. Storage facilities with fewer than 100 units boast a customer mix consisting of an average of 79.5 percent residential customers. Those with 100 to 299 storage units also have a high proportion of residential tenants at 72.9 percent. Those storage stores with 1,000 or more units have a residential customer base of only 66.4 percent. Following the same trend, stores with less than 25,000 rentable square feet have a mix of 78.1 percent residential renters. The proportion decreases as the facility size increases. Properties with 74,999 to 99,999 net square feet draw 71.8 percent of their renters from the residential category. Storage stores with 100,000 or more rentable square feet have
Location seems to impact the tenant mix at self-storage properties across the nation. This year, business customers make up a higher proportion of the tenant mix at urban stores than suburban or rural facilities. In fact, nearly one in four customers renting a unit at an urban self-storage location falls into the commercial tenant grouping.
AVERAGE RENTAL PERIOD IN MONTHS
TABLE 7.2
LOCATION SEEMS TO
Location, Location, Location
REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL Number of Units 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more Rentable Square Feet Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99.999 100,000 or more Market Area Urban Suburban Rural Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after
Commercial 32.9 33.0 32.5 31.4 29.9 33.6 27.2 21.4 29.7 33.9 33.9 29.8 33.0 25.5 30.9
Customer Base Residential Military Students 17.4 8.6 4.1 17.0 8.9 4.6 18.8 7.9 2.7 16.7 10.3 5.6 18.7 7.4 6.7 13.7 14.5 3.4 15.6 6.0 2.5 17.2 8.8 2.2 14.8 4.6 2.6 17.4 10.5 2.9 17.4 10.5 2.9 15.8 8.9 3.9 16.0 7.9 3.9 15.6 10.1 3.9 16.5 8.8 3.6
31.8 38.4 29.1 26.3 15.9
17.9 19.2 14.0 16.0 11.0
5.4 8.0 10.1 10.1 6.2
2.3 2.8 4.5 4.2 2.4
32.0 37.5 27.1 25.4 24.0
16.9 19.2 14.0 19.2 12.9
7.4 11.3 8.3 9.7 8.3
3.3 3.8 3.7 4.2 3.4
32.2 31.5 28.2
16.4 17.4 15.1
9.7 8.6 8.0
4.1 3.7 2.5
36.5 48.6 33.4 35.6 31.3 27.4 19.6
19.2 20.3 19.2 18.6 16.4 15.0 13.0
8.5 9.9 6.0 9.8 8.5 9.9 8.4
4.1 4.0 2.7 3.5 4.2 3.6 3.3
2012 Self-Storage Almanac
63
7•CustomerBase
The highest proportion of residential customers can be found at rural self-storage facilities. In rural areas, owners and operators fill 82.6 percent of their customer rolls with residential customers while suburban stores average 75.8 percent and urban sites have 68.1 percent of customers falling into the residential category. The customer base for the other major tenant categories also varies by the location of the area in which the self-storage site is located. For instance, military customers rent in the highest concentrations at suburban locations where they make up 3.8 percent of the tenant mix. Students, on the other hand, are more common at urban storage stores than suburban or rural sites.
Commercial, residential and military customers do not show a clear preference in facility age by tenant mix. However, student renters seem to show a trend toward older, established facilities over newly built self-storage developments. This group accounts for 4.3 percent of the population at stores built prior to 1981. For facilities developed between 1981 and 1985, the percentage drops to 3.9 percent. Declining further, students make up 2.3 percent of customers renting at selfstorage stores built after 2005.
Average Tenancy Periods Estimating how long a storage customer is likely to remain a tenant at a facility is difficult since individual needs vary widely. However, there are some rental period patterns
common among each of the different customer categories that have emerged over time. Commercial customers tend to have the longest terms in storage. In 2011, these renters posted an average stay of 30.9 months nationwide. Tenancy in this category ranges from a low of 21.4 months in the East South Central portion of the United States to a high of 33.9 months enjoyed by facilities in the South Atlantic area of the country. As the lion’s share of storage customers, owners and operators have long tracked the tenancy of residential renters. Posting stays that average about half as long as their commercial counterparts, customers from the residential category remain tenants at storage facilities
TABLE 7.3a
CORE BASED STATISTICAL AREA DATA
Total REGION Population Abilene, TX Metro 162,717 Akron, OH Metro 708,705 Albany, GA Metro 161,093 Albany-Schenectady-Troy, NY Metro 846,846 Albuquerque, NM Metro 887,012 Alexandria, LA Metro 155,719 Allentown-Bethlehem-Easton, PA-NJ Metro 838,287 Altoona, PA Metro 129,684 Amarillo, TX Metro 251,656 Ames, IA Metro 91,556 Anchorage, AK Metro 388,317 Anderson, IN Metro 132,845 Anderson, SC Metro 161,919 Ann Arbor, MI Metro 346,405 Anniston-Oxford, AL Metro 123,914 Appleton, WI Metro 221,004 Asheville, NC Metro 420,087 Athens-Clarke County, GA Metro 190,610 Atlanta-Sandy Springs-Marietta, GA Metro 5,482,487 Atlantic City-Hammonton, NJ Metro 276,262
Total Households 60,674 285,563 59,779 343,758 349,474 59,276 326,871 52,944 93,090 33,805 139,324 53,034 66,003 138,887 51,478 85,990 180,381 72,275 1,973,025 103,528
Average Household Income $50,443 $61,458 $51,251 $68,124 $54,708 $50,011 $72,186 $49,251 $53,740 $59,228 $69,794 $55,738 $48,126 $75,334 $50,280 $67,154 $53,808 $52,354 $70,452 $68,938
Owner Occupied Housing Units 57.8% 60.9% 53.2% 63.8% 62.2% 67.2% 73.1% 69.2% 56.4% 61.0% 45.5% 72.2% 64.4% 62.2% 67.5% 74.7% 62.7% 58.4% 62.3% 66.7%
Renter Occupied Housing Units 27.2% 30.2% 31.8% 22.3% 22.0% 20.3% 19.3% 22.6% 29.5% 30.5% 28.1% 19.4% 21.7% 31.7% 21.6% 18.8% 22.1% 32.4% 28.8% 18.5%
Unoccupied Housing Units 15.1% 8.8% 15.0% 13.9% 12.0% 12.5% 7.6% 8.2% 9.8% 8.6% 14.4% 8.5% 13.9% 6.0% 10.9% 6.4% 15.3% 9.2% 8.9% 14.7% (Continued)
Source: Nielsen
64
Self-Storage Almanac 2012
CustomerBase•7
TABLE 7.3b
CORE BASED STATISTICAL AREA DATA
Total REGION Population Auburn-Opelika, AL Metro 140,587 Augusta-Richmond County, GA-SC Metro 529,846 Austin-Round Rock-San Marcos, TX Metro 1,784,275 Bakersfield-Delano, CA Metro 830,774 Baltimore-Towson, MD Metro 2,747,435 Bangor, ME Metro 153,319 Barnstable Town, MA Metro 220,019 Baton Rouge, LA Metro 787,921 Battle Creek, MI Metro 134,398 Bay City, MI Metro 103,520 Beaumont-Port Arthur, TX Metro 382,802 Bellingham, WA Metro 199,204 Bend, OR Metro 167,362 Billings, MT Metro 159,136 Binghamton, NY Metro 246,111 Birmingham-Hoover, AL Metro 1,156,314 Bismarck, ND Metro 113,271 Blacksburg-Christiansburg-Radford, VA Metro 164,160 Bloomington, IN Metro 189,916 Bloomington-Normal, IL Metro 169,626 Boise City-Nampa, ID Metro 627,642 Boston-Cambridge-Quincy, MA-NH Metro 4,575,412 Boulder, CO Metro 304,244 Bowling Green, KY Metro 125,321 Bremerton-Silverdale, WA Metro 245,593 Bridgeport-Stamford-Norwalk, CT Metro 919,495 Brownsville-Harlingen, TX Metro 407,352 Brunswick, GA Metro 101,024 Buffalo-Niagara Falls, NY Metro 1,108,092 Burlington, NC Metro 160,714 Burlington-South Burlington, VT Metro 211,216 Canton-Massillon, OH Metro 403,369 Cape Coral-Fort Myers, FL Metro 619,395 Cape Girardeau-Jackson, MO-IL Metro 91,524 Carson City, NV Metro 60,201 Casper, WY Metro 77,834 Cedar Rapids, IA Metro 261,571 Champaign-Urbana, IL Metro 225,703 Charleston et al, SC Metro 680,929 Charleston, WV Metro 307,919 Charlotte-Gastonia-Rock Hill, NC-SC Metro 1,835,982 Charlottesville, VA Metro 205,081 Chattanooga, TN-GA Metro 519,225 Cheyenne, WY Metro 92,020 Chicago-Joliet-Naperville, IL-IN-WI Metro 9,561,117
Total Households 58,536 200,616 661,515 255,274 1,056,343 64,102 94,831 297,004 52,593 42,546 144,967 77,352 67,021 64,948 99,848 460,076 46,028 65,675 77,394 64,754 230,303 1,756,302 120,935 49,004 93,333 336,732 120,499 41,553 456,593 64,023 82,327 161,146 264,437 36,546 22,907 31,618 106,170 89,620 262,971 133,104 711,665 82,138 209,702 36,024 3,429,825
Average Household Income $53,373 $49,958 $75,050 $53,529 $93,620 $45,511 $73,466 $54,928 $53,365 $57,297 $55,854 $59,450 $72,449 $61,423 $55,272 $56,822 $54,493 $50,366 $48,315 $70,335 $56,155 $96,697 $79,502 $53,645 $74,122 $129,122 $46,233 $59,152 $59,791 $53,679 $68,675 $52,749 $72,752 $47,967 $65,341 $61,496 $62,913 $63,146 $59,851 $45,850 $67,781 $66,437 $54,539 $64,682 $81,001
Owner Occupied Housing Units 60.1% 61.0% 60.7% 48.5% 70.5% 61.4% 48.3% 63.5% 71.4% 78.9% 60.3% 51.6% 55.4% 69.6% 69.6% 66.1% 70.9% 64.3% 59.2% 71.2% 59.8% 66.2% 49.7% 66.1% 58.9% 69.5% 54.0% 57.9% 63.0% 67.6% 65.6% 66.7% 55.3% 67.3% 58.8% 60.9% 73.6% 69.1% 59.8% 68.3% 63.4% 63.2% 61.9% 60.1% 68.7%
Renter Occupied Housing Units 29.3% 27.3% 31.6% 31.9% 22.2% 16.6% 11.5% 23.5% 20.1% 13.8% 27.3% 22.9% 19.9% 17.7% 19.1% 21.9% 15.9% 25.6% 25.4% 21.5% 24.2% 27.8% 31.3% 19.7% 30.2% 24.3% 21.4% 19.3% 25.0% 23.7% 20.3% 24.2% 18.5% 16.0% 34.1% 22.2% 19.2% 22.7% 24.9% 19.8% 27.9% 22.2% 28.5% 26.3% 24.3%
Unoccupied Housing Units 10.6% 11.7% 7.7% 17.6% 6.7% 17.7% 37.7% 13.0% 8.5% 7.3% 12.4% 18.8% 24.7% 12.8% 11.3% 12.0% 13.2% 10.2% 15.4% 7.3% 13.6% 5.7% 19.0% 14.2% 10.9% 6.2% 24.6% 22.8% 10.7% 8.7% 14.1% 9.1% 26.3% 16.7% 7.2% 16.9% 7.2% 8.2% 15.3% 11.9% 8.8% 14.6% 9.6% 13.6% 6.7% (Continued)
Source: Nielsen
2012 Self-Storage Almanac
65
7•CustomerBase
TABLE 7.3c
CORE BASED STATISTICAL AREA DATA
Total REGION Population Chico, CA Metro 219,027 Cincinnati-Middletown, OH-KY-IN Metro 2,182,726 Clarksville, TN-KY Metro 275,012 Cleveland, TN Metro 118,240 Cleveland-Elyria-Mentor, OH Metro 2,069,998 Coeur d'Alene, ID Metro 145,769 College Station-Bryan, TX Metro 216,838 Colorado Springs, CO Metro 630,560 Columbia, MO Metro 170,027 Columbia, SC Metro 759,810 Columbus, GA-AL Metro 291,713 Columbus, IN Metro 76,424 Columbus, OH Metro 1,813,346 Corpus Christi, TX Metro 421,971 Corvallis, OR Metro 76,935 Crestview-Fort Walton Beach-Destin, FL Metro 192,907 Cumberland, MD-WV Metro 102,551 Dallas-Fort Worth-Arlington, TX Metro 6,620,337 Dalton, GA Metro 133,503 Danville, IL Metro 78,961 Danville, VA Metro 106,161 Davenport-Moline-Rock Island, IA-IL Metro 379,714 Dayton, OH Metro 831,343 Decatur, AL Metro 155,160 106,127 Decatur, IL Metro Deltona-Daytona Beach-Ormond Beach, FL Metro 509,981 Denver-Aurora-Broomfield, CO Metro 2,575,765 Des Moines-West Des Moines, IA Metro 582,921 Detroit-Warren-Livonia, MI Metro 4,336,906 Dothan, AL Metro 150,160 Dover, DE Metro 157,944 Dubuque, IA Metro 96,661 Duluth, MN-WI Metro 275,802 Durham-Chapel Hill, NC Metro 507,044 Eau Claire, WI Metro 163,077 El Centro, CA Metro 167,477 El Paso, TX Metro 767,683 Elizabethtown, KY Metro 122,309 Elkhart-Goshen, IN Metro 204,255 Elmira, NY Metro 85,467 Erie, PA Metro 285,491 Eugene-Springfield, OR Metro 351,613 Evansville, IN-KY Metro 354,858 Fairbanks, AK Metro 99,085 Fargo, ND-MN Metro 209,473
Total Households 85,568 852,326 100,731 47,253 834,845 55,414 80,066 235,106 68,269 297,462 112,824 30,400 723,550 152,315 31,525 78,089 40,661 2,364,635 46,634 31,959 45,011 154,050 340,394 62,243 44,338 209,933 993,115 231,030 1,665,939 61,335 58,868 37,903 115,473 202,441 64,278 47,451 242,551 47,557 73,139 33,912 109,997 143,926 144,392 34,616 88,757
Average Household Income $55,955 $64,899 $54,081 $48,405 $66,435 $56,211 $49,031 $68,250 $50,494 $55,669 $54,251 $61,749 $66,239 $49,244 $52,980 $61,504 $45,145 $71,883 $50,962 $52,074 $44,983 $61,067 $60,570 $51,954 $61,310 $54,403 $76,252 $68,181 $71,153 $46,864 $59,626 $63,025 $51,965 $64,732 $54,120 $45,616 $47,990 $53,051 $62,364 $54,950 $51,019 $53,178 $56,390 $71,341 $58,939
Owner Occupied Housing Units 57.7% 65.5% 64.4% 66.1% 65.7% 58.8% 47.1% 58.5% 57.1% 64.1% 60.6% 77.7% 63.4% 49.3% 48.1% 56.0% 63.9% 61.6% 68.4% 70.7% 63.9% 71.4% 63.8% 72.0% 66.1% 63.9% 60.2% 70.5% 70.2% 68.4% 71.5% 76.1% 56.8% 63.0% 67.5% 49.1% 49.7% 63.1% 73.1% 71.3% 65.7% 61.5% 68.2% 42.1% 66.5%
Renter Occupied Housing Units 26.9% 25.9% 24.6% 21.3% 25.1% 17.1% 30.8% 27.3% 26.5% 25.5% 24.6% 17.4% 28.5% 31.8% 42.4% 31.7% 19.8% 31.0% 23.3% 20.3% 18.6% 21.2% 28.2% 19.2% 24.2% 18.5% 28.0% 21.3% 21.0% 18.9% 22.0% 15.3% 14.9% 27.2% 20.5% 31.8% 41.1% 23.5% 21.3% 20.7% 24.5% 23.9% 20.7% 43.9% 22.5%
Unoccupied Housing Units 15.4% 8.6% 11.0% 12.7% 9.2% 24.1% 15.0% 12.0% 10.9% 10.4% 14.7% 4.9% 8.1% 15.6% 9.5% 12.4% 16.2% 7.3% 8.2% 9.0% 17.5% 7.3% 8.0% 8.8% 9.7% 13.9% 10.9% 8.2% 8.8% 12.7% 6.5% 8.5% 25.2% 9.8% 12.0% 19.1% 9.2% 13.5% 5.6% 8.0% 9.8% 9.0% 11.1% 14.0% 11.0% (Continued)
Source: Nielsen
66
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CustomerBase•7
TABLE 7.3d
CORE BASED STATISTICAL AREA DATA
Total REGION Population Farmington, NM Metro 127,684 Fayetteville, NC Metro 344,146 Fayetteville-Springdale-Rogers, AR-MO Metro 483,659 Flagstaff, AZ Metro 125,111 Flint, MI Metro 430,734 Florence, SC Metro 208,417 Florence-Muscle Shoals, AL Metro 144,995 Fond du Lac, WI Metro 96,263 Fort Collins-Loveland, CO Metro 297,348 Fort Smith, AR-OK Metro 298,693 Fort Wayne, IN Metro 420,126 Fresno, CA Metro 935,798 Gadsden, AL Metro 108,102 Gainesville, FL Metro 267,951 Gainesville, GA Metro 192,560 Glens Falls, NY Metro 130,373 Goldsboro, NC Metro 116,548 Grand Forks, ND-MN Metro 98,693 Grand Junction, CO Metro 148,940 Grand Rapids-Wyoming, MI Metro 774,526 Great Falls, MT Metro 83,260 Greeley, CO Metro 266,138 Green Bay, WI Metro 312,425 Greensboro-High Point, NC Metro 738,711 Greenville, NC Metro 184,844 Greenville-Mauldin-Easley, SC Metro 703,079 Gulfport-Biloxi, MS Metro 248,767 Hagerstown-Martinsburg, MD-WV Metro 272,265 Hanford-Corcoran, CA Metro 150,635 Harrisburg-Carlisle, PA Metro 564,472 Harrisonburg, VA Metro 128,168 Hartford-West Hartford-East Hartford, CT Metro 1,218,287 Hattiesburg, MS Metro 152,424 Hickory-Lenoir-Morganton, NC Metro 368,462 Hinesville-Fort Stewart, GA Metro 74,153 Holland-Grand Haven, MI Metro 270,029 Honolulu, HI Metro 949,035 Hot Springs, AR Metro 106,496 Houma-Bayou Cane-Thibodaux, LA Metro 203,380 Houston-Sugar Land-Baytown, TX Metro 6,036,648 Huntington-Ashland, WV-KY-OH Metro 288,835 Huntsville, AL Metro 421,973 Idaho Falls, ID Metro 131,201 Indianapolis-Carmel, IN Metro 1,784,042 Iowa City, IA Metro 156,628
Total Households 43,085 127,342 180,627 45,017 170,714 81,462 61,006 37,649 117,961 114,752 166,030 288,588 44,248 108,928 63,195 53,006 45,394 38,411 59,605 287,313 34,405 91,808 123,343 294,819 74,036 277,366 96,655 106,223 39,390 227,812 46,672 478,235 57,753 144,684 24,273 95,044 316,989 46,769 73,800 2,091,573 121,979 168,978 45,890 699,551 62,877
Average Household Income $60,368 $52,965 $50,909 $53,614 $55,528 $47,256 $49,907 $64,096 $71,278 $46,515 $61,917 $56,495 $49,057 $51,826 $62,287 $57,917 $48,339 $53,544 $66,632 $60,617 $47,627 $64,397 $62,154 $56,234 $48,582 $55,071 $49,233 $62,806 $51,603 $59,488 $59,756 $91,550 $45,094 $51,455 $48,372 $65,181 $78,085 $50,315 $51,597 $71,073 $44,815 $65,028 $58,963 $68,496 $68,983
Owner Occupied Housing Units 72.5% 45.5% 64.4% 45.9% 66.4% 67.5% 67.8% 74.5% 53.3% 66.8% 72.8% 46.1% 69.5% 54.3% 67.6% 55.0% 51.0% 59.0% 70.7% 71.8% 54.7% 66.4% 66.7% 62.7% 58.4% 61.8% 52.1% 67.8% 50.4% 65.7% 63.5% 71.4% 64.0% 67.5% 41.2% 76.8% 40.1% 68.0% 65.6% 59.3% 66.5% 65.3% 64.5% 68.0% 66.8%
Renter Occupied Housing Units 16.3% 43.0% 23.2% 20.6% 22.4% 22.9% 19.7% 16.5% 26.4% 21.9% 19.4% 39.4% 21.1% 36.8% 26.2% 15.2% 36.8% 23.6% 20.4% 18.2% 21.4% 24.9% 18.2% 28.2% 30.4% 24.9% 24.2% 20.4% 42.3% 24.5% 24.8% 22.6% 26.2% 20.7% 43.9% 14.9% 48.4% 17.8% 14.9% 29.9% 22.3% 24.3% 17.7% 23.0% 24.3%
Unoccupied Housing Units 11.2% 11.5% 12.4% 33.5% 11.2% 9.6% 12.5% 9.0% 20.2% 11.2% 7.8% 12.6% 9.5% 8.9% 6.2% 29.8% 12.2% 17.5% 8.9% 10.0% 17.3% 8.7% 15.1% 9.1% 11.2% 13.4% 18.7% 11.9% 7.4% 9.7% 11.7% 5.9% 9.8% 11.8% 14.9% 8.2% 11.5% 14.2% 14.7% 10.8% 11.2% 10.4% 17.9% 9.0% 8.9% (Continued)
Source: Nielsen
2012 Self-Storage Almanac
67
7•CustomerBase
TABLE 7.3e
CORE BASED STATISTICAL AREA DATA
REGION Ithaca, NY Metro Jackson, MI Metro Jackson, MS Metro Jackson, TN Metro Jacksonville, FL Metro Jacksonville, NC Metro Janesville, WI Metro Jefferson City, MO Metro Johnson City, TN Metro Johnstown, PA Metro Jonesboro, AR Metro Joplin, MO Metro Kalamazoo-Portage, MI Metro Kankakee-Bradley, IL Metro Kansas City, MO-KS Metro Kennewick-Pasco-Richland, WA Metro Killeen-Temple-Fort Hood, TX Metro Kingsport-Bristol-Bristol, TN-VA Metro Kingston, NY Metro Knoxville, TN Metro Kokomo, IN Metro La Crosse, WI-MN Metro Lafayette, IN Metro Lafayette, LA Metro Lake Charles, LA Metro Lake Havasu City-Kingman, AZ Metro Lakeland-Winter Haven, FL Metro Lancaster, PA Metro Lansing-East Lansing, MI Metro Laredo, TX Metro Las Cruces, NM Metro Las Vegas-Paradise, NV Metro Lawrence, KS Metro Lawton, OK Metro Lebanon, PA Metro Lewiston, ID-WA Metro Lewiston-Auburn, ME Metro Lexington-Fayette, KY Metro Lima, OH Metro Lincoln, NE Metro Little Rock-North Little Rock-Conway, AR Metro Logan, UT-ID Metro Longview, TX Metro Longview, WA Metro Los Angeles-Long Beach-Santa Ana, CA Metro
Total Population 102,516 158,093 548,160 111,364 1,378,416 179,238 160,495 145,928 199,151 144,538 124,348 175,621 327,589 114,539 2,109,813 250,995 388,283 309,196 187,853 716,105 98,977 133,195 197,954 262,978 198,908 195,512 607,666 517,292 456,002 248,714 221,256 1,967,395 119,623 114,020 136,580 61,076 107,342 481,084 111,845 304,802 694,996 128,367 222,679 104,839 13,086,642
Total Households 39,508 58,585 203,772 43,410 536,100 57,350 62,788 55,669 83,390 58,643 49,466 68,418 129,457 41,569 832,102 86,351 132,011 134,171 72,208 300,836 40,800 53,304 75,486 101,501 76,588 77,157 234,830 193,532 180,421 66,144 76,200 719,724 46,478 40,576 54,019 25,124 45,074 199,433 43,651 120,635 280,161 38,673 85,060 40,419 4,224,732
Average Household Income $58,284 $60,379 $51,796 $48,572 $63,907 $43,213 $63,104 $55,991 $43,565 $46,319 $44,881 $47,634 $56,687 $60,917 $66,134 $59,334 $58,332 $45,615 $70,095 $53,171 $63,357 $59,436 $54,890 $62,020 $55,018 $47,999 $54,638 $65,337 $59,527 $47,218 $41,705 $68,978 $58,242 $50,252 $61,282 $51,842 $57,713 $64,938 $54,325 $66,799 $55,682 $58,704 $53,593 $54,718 $82,522
Owner Occupied Housing Units 59.5% 73.1% 58.1% 71.1% 60.5% 35.3% 69.9% 72.6% 63.6% 71.5% 59.8% 69.3% 64.6% 70.4% 65.5% 60.8% 57.1% 67.8% 60.1% 62.7% 72.1% 72.1% 63.9% 66.7% 59.7% 54.0% 58.7% 72.0% 67.6% 55.4% 55.0% 48.7% 53.1% 53.4% 73.3% 65.4% 72.3% 57.4% 70.7% 66.8% 62.7% 69.3% 65.9% 68.0% 49.9%
Renter Occupied Housing Units 34.6% 15.1% 30.3% 18.6% 28.2% 33.3% 22.3% 15.3% 20.7% 17.2% 30.2% 22.4% 22.6% 21.8% 24.4% 22.8% 29.1% 21.1% 18.9% 27.6% 19.9% 19.7% 27.9% 24.3% 22.6% 20.3% 21.6% 24.5% 25.3% 26.9% 28.1% 35.1% 42.4% 27.7% 21.5% 22.8% 19.1% 33.9% 21.8% 26.9% 26.5% 22.6% 23.5% 20.0% 44.8%
Unoccupied Housing Units 5.9% 11.9% 11.6% 10.4% 11.3% 17.2% 7.8% 12.1% 9.0% 11.3% 10.0% 8.3% 12.9% 7.9% 9.6% 8.7% 13.8% 11.1% 20.9% 9.7% 8.0% 8.2% 8.1% 9.0% 17.6% 25.6% 19.7% 3.6% 7.2% 17.8% 11.9% 13.5% 4.5% 10.6% 5.2% 11.9% 8.6% 8.7% 7.5% 6.3% 10.9% 8.1% 10.6% 11.9% 4.2% (Continued)
Source: Nielsen
68
Self-Storage Almanac 2012
CustomerBase•7
TABLE 7.3f
CORE BASED STATISTICAL AREA DATA
REGION Louisville-Jefferson County, KY-IN Metro Lubbock, TX Metro Lynchburg, VA Metro Macon, GA Metro Madera-Chowchilla, CA Metro Madison, WI Metro Manchester-Nashua, NH Metro Manhattan, KS Metro Mankato-North Mankato, MN Metro Mansfield, OH Metro McAllen-Edinburg-Mission, TX Metro Medford, OR Metro Memphis, TN-MS-AR Metro Merced, CA Metro Miami-Fort Lauderdale-Pompano Beach, FL Metro Michigan City-La Porte, IN Metro Midland, TX Metro Milwaukee-Waukesha-West Allis, WI Metro Minneapolis-St. Paul-Bloomington, MN-WI Metro Missoula, MT Metro Mobile, AL Metro Modesto, CA Metro Monroe, LA Metro Monroe, MI Metro Montgomery, AL Metro Morgantown, WV Metro Morristown, TN Metro Mount Vernon-Anacortes, WA Metro Muncie, IN Metro Muskegon-Norton Shores, MI Metro Myrtle Beach-North Myrtle Beach-Conway, SC Metro Napa, CA Metro Naples-Marco Island, FL Metro Nashville-Davidson-Murfreesboro-Franklin, TN Metro New Haven-Milford, CT Metro New Orleans-Metairie-Kenner, LA Metro New York et al, NY-NJ-PA Metro Niles-Benton Harbor, MI Metro North Port-Bradenton-Sarasota, FL Metro Norwich-New London, CT Metro Ocala, FL Metro Ocean City, NJ Metro Odessa, TX Metro Ogden-Clearfield, UT Metro Oklahoma City, OK Metro
Total Population 1,268,171 280,366 246,605 220,109 150,638 568,472 405,605 126,915 93,614 123,437 765,408 204,327 1,317,756 251,008 5,602,280 111,757 132,416 1,556,402 3,333,364 109,489 419,245 518,992 175,281 145,546 377,713 124,503 137,845 122,945 114,520 174,095 284,231 136,277 334,535 1,611,035 862,919 1,218,842 19,079,958 169,707 713,934 272,978 327,503 96,628 139,449 545,406 1,259,733
Total Households 513,920 109,691 98,088 84,922 43,309 233,692 154,335 46,975 35,938 47,988 216,737 81,397 497,810 73,938 2,106,105 42,561 48,771 620,463 1,292,077 44,525 162,582 164,301 67,633 55,628 145,015 50,724 55,943 45,999 45,720 65,969 123,215 48,413 134,158 634,819 335,254 465,401 6,881,900 67,751 314,524 107,902 136,062 41,465 50,225 173,466 498,370
Average Household Income $61,364 $49,507 $56,130 $50,771 $56,997 $69,824 $84,395 $54,725 $64,435 $52,791 $39,736 $55,409 $56,782 $54,046 $71,078 $58,559 $66,944 $73,840 $79,478 $53,880 $48,286 $63,342 $49,661 $65,180 $52,066 $45,662 $44,044 $67,355 $48,452 $52,340 $52,444 $92,669 $82,426 $60,992 $80,166 $56,871 $100,905 $56,079 $72,652 $80,342 $49,016 $79,966 $60,942 $74,206 $57,222
Owner Occupied Housing Units 69.8% 49.9% 69.4% 59.7% 50.2% 65.7% 71.4% 55.1% 74.8% 67.7% 58.0% 61.2% 60.4% 49.3% 55.6% 78.1% 65.4% 64.4% 70.9% 54.3% 55.8% 59.9% 59.0% 78.1% 59.2% 68.8% 72.7% 60.5% 58.5% 69.6% 55.2% 56.2% 53.6% 67.5% 63.6% 59.8% 61.6% 57.5% 62.8% 68.2% 63.8% 39.4% 67.0% 68.2% 62.8%
Renter Occupied Housing Units 21.9% 36.3% 19.5% 23.3% 21.7% 26.4% 21.7% 32.3% 16.6% 23.7% 23.1% 29.7% 28.7% 40.1% 29.4% 14.3% 26.8% 29.4% 23.1% 21.7% 29.1% 33.9% 24.3% 14.6% 27.0% 20.9% 18.8% 23.3% 32.4% 19.6% 18.6% 32.3% 16.8% 24.7% 30.4% 26.3% 30.2% 16.1% 17.9% 19.5% 17.3% 11.0% 23.5% 19.4% 26.5%
Unoccupied Housing Units 8.3% 13.8% 11.1% 12.2% 20.4% 7.9% 6.8% 12.6% 8.6% 8.6% 19.0% 9.2% 9.6% 10.6% 13.4% 7.6% 7.8% 6.2% 6.0% 16.3% 15.1% 6.1% 16.6% 7.3% 11.4% 10.2% 8.5% 16.2% 9.1% 10.9% 26.2% 11.5% 29.5% 7.8% 5.9% 11.2% 8.0% 21.4% 19.3% 9.0% 14.8% 49.6% 9.5% 8.0% 10.7% (Continued)
Source: Nielsen
2012 Self-Storage Almanac
69
7•CustomerBase
TABLE 7.3g
CORE BASED STATISTICAL AREA DATA
REGION Olympia, WA Metro Omaha-Council Bluffs, NE-IA Metro Orlando-Kissimmee-Sanford, FL Metro Oshkosh-Neenah, WI Metro Owensboro, KY Metro Oxnard-Thousand Oaks-Ventura, CA Metro Palm Bay-Melbourne-Titusville, FL Metro Palm Coast, FL Metro Panama City-Lynn Haven-Panama City Beach, FL Metro Parkersburg-Marietta-Vienna, WV-OH Metro Pascagoula, MS Metro Pensacola-Ferry Pass-Brent, FL Metro Peoria, IL Metro Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Metro Phoenix-Mesa-Glendale, AZ Metro Pine Bluff, AR Metro Pittsburgh, PA Metro Pittsfield, MA Metro Pocatello, ID Metro Port St. Lucie, FL Metro Portland-South Portland-Biddeford, ME Metro Portland-Vancouver-Hillsboro, OR-WA Metro Poughkeepsie-Newburgh-Middletown, NY Metro Prescott, AZ Metro Providence-New Bedford-Fall River, RI-MA Metro Provo-Orem, UT Metro Pueblo, CO Metro Punta Gorda, FL Metro Racine, WI Metro Raleigh-Cary, NC Metro Rapid City, SD Metro Reading, PA Metro Redding, CA Metro Reno-Sparks, NV Metro Richmond, VA Metro Riverside-San Bernardino-Ontario, CA Metro Roanoke, VA Metro Rochester, MN Metro Rochester, NY Metro Rockford, IL Metro Rocky Mount, NC Metro Rome, GA Metro Sacramento--Arden-Arcade--Roseville, CA Metro Saginaw-Saginaw Township North, MI Metro Salem, OR Metro
Total Population 255,265 872,711 2,145,795 163,902 117,713 818,227 554,761 97,732 171,126 163,103 150,179 461,494 372,727 6,028,225 4,334,998 99,547 2,355,071 126,949 92,356 416,416 523,762 2,258,398 669,518 220,882 1,594,941 555,714 158,716 161,831 210,298 1,194,998 126,326 411,907 172,591 433,666 1,266,725 4,201,834 310,397 185,224 1,025,686 351,905 152,217 91,100 2,153,802 197,006 397,910
Total Households 101,835 340,531 803,819 65,059 48,222 263,438 231,961 42,878 71,777 68,110 55,725 173,501 149,812 2,286,682 1,539,230 35,506 985,733 55,025 33,447 168,800 217,648 866,108 230,861 92,719 621,805 148,715 62,116 76,006 80,515 455,009 50,768 155,248 67,834 165,767 492,526 1,283,192 131,515 72,326 395,656 133,360 58,373 33,805 790,154 76,653 142,111
Average Household Income $70,085 $64,916 $64,828 $63,912 $51,066 $84,305 $59,425 $58,444 $56,075 $50,486 $54,196 $59,368 $66,782 $84,008 $69,188 $43,173 $56,399 $71,188 $58,509 $62,053 $70,622 $69,686 $84,772 $53,865 $74,464 $65,452 $55,005 $58,620 $66,646 $72,539 $54,735 $66,883 $56,951 $70,562 $69,532 $65,430 $58,675 $69,655 $61,982 $65,361 $48,676 $51,854 $72,821 $55,118 $58,825
Owner Occupied Housing Units 67.3% 67.7% 62.3% 68.0% 72.0% 54.2% 61.2% 65.0% 50.1% 68.7% 62.9% 61.3% 72.0% 69.3% 60.0% 51.5% 67.3% 59.6% 73.1% 60.5% 59.2% 62.7% 70.0% 58.9% 65.9% 65.2% 63.5% 54.7% 68.8% 64.5% 57.0% 73.9% 62.0% 55.8% 67.4% 53.2% 64.3% 75.9% 64.9% 70.9% 59.0% 59.5% 55.5% 71.1% 61.9%
Renter Occupied Housing Units 27.0% 23.7% 26.0% 22.5% 18.6% 33.6% 21.9% 18.4% 28.7% 16.6% 26.0% 26.9% 19.7% 24.3% 27.4% 23.4% 21.5% 15.5% 15.6% 22.5% 15.9% 29.0% 22.5% 19.4% 26.2% 20.5% 22.7% 12.4% 24.0% 28.1% 21.2% 21.2% 20.6% 31.3% 22.1% 28.0% 22.7% 15.0% 23.9% 23.8% 27.8% 27.9% 27.7% 18.2% 27.5%
Unoccupied Housing Units 5.7% 8.5% 11.7% 9.5% 9.4% 4.7% 13.3% 16.7% 21.2% 14.7% 11.1% 11.8% 8.2% 6.1% 11.3% 25.1% 10.9% 24.9% 11.3% 17.0% 23.6% 7.4% 7.4% 21.7% 7.9% 6.2% 13.8% 25.7% 7.2% 7.4% 21.8% 4.9% 17.4% 12.9% 9.6% 18.8% 13.0% 9.1% 11.2% 5.3% 13.2% 12.6% 14.3% 10.7% 10.6% (Continued)
Source: Nielsen
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CustomerBase•7
TABLE 7.3h
CORE BASED STATISTICAL AREA DATA
REGION Salinas, CA Metro Salisbury, MD Metro Salt Lake City, UT Metro San Angelo, TX Metro San Antonio-New Braunfels, TX Metro San Diego-Carlsbad-San Marcos, CA Metro San Francisco-Oakland-Fremont, CA Metro San Jose-Sunnyvale-Santa Clara, CA Metro San Luis Obispo-Paso Robles, CA Metro Sandusky, OH Metro Santa Barbara-Santa Maria-Goleta, CA Metro Santa Cruz-Watsonville, CA Metro Santa Fe, NM Metro Santa Rosa-Petaluma, CA Metro Savannah, GA Metro Scranton--Wilkes-Barre, PA Metro Seattle-Tacoma-Bellevue, WA Metro Sebastian-Vero Beach, FL Metro Sheboygan, WI Metro Sherman-Denison, TX Metro Shreveport-Bossier City, LA Metro Sioux City, IA-NE-SD Metro Sioux Falls, SD Metro South Bend-Mishawaka, IN-MI Metro Spartanburg, SC Metro Spokane, WA Metro Springfield, IL Metro Springfield, MA Metro Springfield, MO Metro Springfield, OH Metro St. Cloud, MN Metro St. George, UT Metro St. Joseph, MO-KS Metro St. Louis, MO-IL Metro State College, PA Metro Steubenville-Weirton, OH-WV Metro Stockton, CA Metro Sumter, SC Metro Syracuse, NY Metro Tallahassee, FL Metro Tampa-St. Petersburg-Clearwater, FL Metro Terre Haute, IN Metro Texarkana, TX-Texarkana, AR Metro Toledo, OH Metro Topeka, KS Metro
Total Population 405,932 122,040 1,141,537 109,175 2,127,318 3,098,405 4,377,656 1,850,571 266,292 79,844 415,102 276,264 150,495 475,079 346,773 552,058 3,475,241 141,795 117,297 124,280 392,144 151,002 243,170 319,378 286,765 471,278 207,218 693,899 441,604 137,596 184,695 143,835 121,032 2,822,935 149,229 123,147 682,983 106,149 643,301 372,718 2,784,237 167,721 139,335 669,215 234,505
Total Households 121,512 46,125 373,720 42,207 746,442 1,089,054 1,614,122 608,593 101,270 32,767 140,328 96,586 60,873 178,774 131,886 229,562 1,379,473 63,554 46,775 47,918 153,553 57,049 94,604 121,689 111,988 185,993 87,213 269,228 178,540 54,832 69,579 49,559 47,009 1,119,295 54,867 52,815 215,960 40,657 256,437 149,650 1,154,158 65,087 52,553 270,849 96,006
Average Household Income $79,232 $59,323 $69,521 $54,163 $63,072 $83,109 $105,818 $112,234 $69,031 $63,055 $75,599 $93,167 $75,982 $83,684 $60,815 $54,948 $78,201 $61,504 $68,864 $58,998 $49,858 $55,861 $62,403 $55,853 $53,176 $61,488 $68,051 $65,514 $50,837 $55,646 $62,328 $63,074 $53,902 $62,429 $58,100 $47,073 $66,378 $45,004 $60,790 $48,308 $62,624 $50,738 $50,261 $60,381 $57,567
Owner Occupied Housing Units 44.3% 62.4% 57.5% 55.5% 62.4% 52.4% 54.6% 54.7% 50.7% 64.4% 42.6% 56.6% 71.6% 50.7% 55.1% 62.5% 57.7% 54.3% 74.8% 65.4% 61.5% 65.7% 73.9% 64.6% 68.1% 63.7% 72.8% 65.2% 70.1% 67.6% 72.4% 62.7% 69.5% 66.7% 61.2% 68.7% 59.4% 59.7% 64.9% 51.3% 60.7% 66.4% 63.0% 66.1% 69.5%
Renter Occupied Housing Units 42.0% 19.7% 29.7% 30.0% 27.2% 37.3% 37.6% 40.5% 35.6% 16.0% 41.7% 34.4% 18.7% 28.3% 29.6% 24.7% 33.6% 18.1% 16.8% 21.4% 25.5% 24.4% 19.0% 21.5% 22.1% 27.8% 19.4% 24.6% 20.5% 23.3% 17.5% 16.4% 20.2% 22.0% 22.4% 19.3% 34.7% 28.8% 21.5% 29.0% 26.5% 21.4% 25.2% 22.5% 19.9%
Unoccupied Housing Units 13.6% 17.9% 10.9% 14.5% 10.4% 8.4% 7.2% 4.8% 13.6% 19.6% 7.7% 9.0% 9.6% 21.0% 10.8% 12.8% 8.1% 16.5% 8.4% 13.3% 13.0% 10.0% 7.2% 14.0% 9.8% 8.5% 7.8% 10.2% 9.4% 9.1% 10.1% 20.9% 10.2% 10.9% 16.4% 11.9% 5.9% 11.5% 13.6% 12.0% 12.9% 12.1% 11.8% 11.4% 10.6% (Continued)
Source: Nielsen
2012 Self-Storage Almanac
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for approximately 16.5 months. On the high end, properties in the West North Central and Middle Atlantic areas averaged rental periods of 18.8 months and 18.7 months respectively for residential tenants. On the low side, New England storage stores reported an average residential tenancy of 13.7 months. The average storage period continues to decline when analyzing
the remaining customer categories. Military renters tend to remain at facilities for an average of 8.8 months. However, it is interesting to note that this category varies widely, ranging from 14.5 months in New England to an average of 4.6 months in the West South Central division. Students posted the shortest tenancies of all the major types of self-storage customers. With a na-
tional average stay of 3.6 months, the rental period for students measures a length of time approximately equivalent to one summer or one term. Student renters in the Middle Atlantic portion of the United States stay the longest amount of time in storage, averaging 6.7 months at a facility. Student customers in the East South Central division posted the shortest tenancy with an average of 2.2 months at a self-storage site.
TABLE 7.3i
CORE BASED STATISTICAL AREA DATA
REGION Trenton-Ewing, NJ Metro Tucson, AZ Metro Tulsa, OK Metro Tuscaloosa, AL Metro Tyler, TX Metro Utica-Rome, NY Metro Valdosta, GA Metro Vallejo-Fairfield, CA Metro Victoria, TX Metro Vineland-Millville-Bridgeton, NJ Metro Virginia Beach-Norfolk-Newport News, VA-NC Metro Visalia-Porterville, CA Metro Waco, TX Metro Warner Robins, GA Metro Washington-Arlington-Alexandria, DC-VA-MD-WV Metro Waterloo-Cedar Falls, IA Metro Wausau, WI Metro Wenatchee-East Wenatchee, WA Metro Wheeling, WV-OH Metro Wichita Falls, TX Metro Wichita, KS Metro Williamsport, PA Metro Wilmington, NC Metro Winchester, VA-WV Metro Winston-Salem, NC Metro Worcester, MA Metro Yakima, WA Metro York-Hanover, PA Metro Youngstown-Warren-Boardman, OH-PA Metro Yuba City, CA Metro Yuma, AZ Metro Source: Nielsen
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Self-Storage Almanac 2012
Total Population 386,150 990,951 950,129 206,473 203,978 291,189 132,773 410,263 115,833 163,895 1,689,760 429,817 238,591 130,482 5,592,714 166,596 126,125 111,314 144,117 149,505 628,875 117,298 363,161 131,239 519,102 799,041 242,398 433,745 542,505 166,447 198,583
Total Households 136,813 385,262 374,428 81,751 74,533 116,203 48,530 135,489 42,191 54,878 632,118 125,675 86,619 48,974 2,103,896 66,021 50,323 40,208 60,236 56,538 245,794 47,313 156,417 52,105 208,375 304,475 78,846 171,112 222,887 56,150 68,447
Average Household Income $96,361 $58,173 $54,750 $49,387 $56,641 $55,778 $44,945 $76,490 $56,867 $64,994 $63,676 $50,727 $55,742 $63,308 $103,906 $57,504 $62,315 $56,840 $46,909 $52,870 $64,760 $52,478 $58,226 $55,441 $55,278 $82,578 $51,503 $67,022 $50,658 $58,566 $47,813
Owner Occupied Housing Units 63.7% 57.5% 62.8% 61.4% 70.0% 64.3% 56.8% 55.3% 63.9% 70.4% 55.4% 45.7% 61.8% 59.9% 66.0% 74.1% 74.4% 53.4% 65.7% 60.8% 67.4% 60.5% 54.2% 59.1% 68.4% 70.9% 58.1% 76.7% 67.0% 54.4% 48.2%
Renter Occupied Housing Units 29.8% 27.2% 26.1% 23.3% 23.4% 18.5% 23.7% 37.1% 19.1% 17.3% 30.7% 32.8% 28.7% 26.1% 26.6% 18.4% 17.6% 23.5% 19.8% 26.7% 22.7% 16.9% 20.3% 19.5% 22.6% 22.4% 29.7% 18.3% 20.6% 25.9% 25.2%
Unoccupied Housing Units 6.5% 11.1% 11.1% 15.4% 6.6% 17.2% 13.2% 7.7% 16.9% 12.3% 12.9% 17.6% 9.5% 14.0% 6.3% 7.6% 8.0% 23.1% 14.5% 12.5% 9.9% 22.6% 25.5% 21.4% 9.0% 6.7% 7.2% 5.0% 12.4% 15.1% 26.6%
CustomerBase•7
Since they are relatively stable and consistent long-term renters, commercial tenants are highly sought after customers at self-storage facilities. Storage stores surrounded by a large number of commercial enterprises neighboring their site are presented with an excellent opportunity to attract these prized renters. The New York City metropolitan area boasts the largest number of businesses operating within the area’s borders, topping 817,000 commercial enterprises. The Los AngelesLong Beach metro also has a high number of businesses in the region with almost 524,000 working in the metro area. Chicago has the third highest number of business establishments with more than 337,000 in the greater Chicagoland area. The top five list is rounded out with the Miami-Fort Lauderdale metro and the Philadelphia area, which each count more than 235,000 businesses operating within their boundaries. Ranking at numbers six through ten for American metro areas by the number of business establishments operating within the area are Dallas, Washington D.C., Atlanta, Houston and San Francisco. In addition to an ample supply of business customers, areas surrounded by a large number of households can also create favorable conditions for a self-storage business. When designed to attract these tenants, area facilities have an excellent opportunity to lease storage space to nearby residents. Operating in a location with a strong and growing population provides businesses with an ample supply of customers to fill storage spaces. Along with population numbers, estimating both the area’s income and type of housing stock all play a role in pin-
TABLE 7.4a
BUSINESS ESTABLISHMENTS BY RANKING
Stable Commercial Customers
Business Core Based Statistical Area Establishments New York et al, NY-NJ-PA Metro 817,817 Los Angeles-Long Beach-Santa Ana, CA Metro 523,549 Chicago-Joliet-Naperville, IL-IN-WI Metro 337,621 Miami-Fort Lauderdale-Pompano Beach, FL Metro 255,495 Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Metro 235,244 Dallas-Fort Worth-Arlington, TX Metro 230,434 Washington-Arlington-Alexandria, DC-VA-MD-WV Metro 213,635 Atlanta-Sandy Springs-Marietta, GA Metro 206,547 Houston-Sugar Land-Baytown, TX Metro 204,416 San Francisco-Oakland-Fremont, CA Metro 198,565 Boston-Cambridge-Quincy, MA-NH Metro 197,546 Detroit-Warren-Livonia, MI Metro 152,619 Seattle-Tacoma-Bellevue, WA Metro 143,582 Phoenix-Mesa-Glendale, AZ Metro 132,106 Riverside-San Bernardino-Ontario, CA Metro 119,115 Minneapolis-St. Paul-Bloomington, MN-WI Metro 118,540 San Diego-Carlsbad-San Marcos, CA Metro 115,659 Tampa-St. Petersburg-Clearwater, FL Metro 104,279 Baltimore-Towson, MD Metro 100,647 Denver-Aurora-Broomfield, CO Metro 99,562 St. Louis, MO-IL Metro 98,586 Pittsburgh, PA Metro 95,324 Orlando-Kissimmee-Sanford, FL Metro 88,525 Portland-Vancouver-Hillsboro, OR-WA Metro 88,300 Sacramento--Arden-Arcade--Roseville, CA Metro 79,831 Cleveland-Elyria-Mentor, OH Metro 79,606 Kansas City, MO-KS Metro 75,018 Las Vegas-Paradise, NV Metro 72,172 Cincinnati-Middletown, OH-KY-IN Metro 70,955 Charlotte-Gastonia-Rock Hill, NC-SC Metro 69,798 San Jose-Sunnyvale-Santa Clara, CA Metro 69,151 San Antonio-New Braunfels, TX Metro 67,582 Austin-Round Rock-San Marcos, TX Metro 65,363 Columbus, OH Metro 65,086 Nashville-Davidson-Murfreesboro-Franklin, TN Metro 62,719 Providence-New Bedford-Fall River, RI-MA Metro 62,596 Indianapolis-Carmel, IN Metro 59,857 Milwaukee-Waukesha-West Allis, WI Metro 57,152 Virginia Beach-Norfolk-Newport News, VA-NC Metro 54,994 Jacksonville, FL Metro 53,780 Hartford-West Hartford-East Hartford, CT Metro 50,482 New Orleans-Metairie-Kenner, LA Metro 50,441 Oklahoma City, OK Metro 49,901 Bridgeport-Stamford-Norwalk, CT Metro 46,286 Louisville-Jefferson County, KY-IN Metro 46,025 Richmond, VA Metro 45,757 Memphis, TN-MS-AR Metro 44,312 Salt Lake City, UT Metro 43,075 Raleigh-Cary, NC Metro 42,321 Birmingham-Hoover, AL Metro 41,565 (Continued) Source: Nielsen
2012 Self-Storage Almanac
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Top Metro Areas With more than 6.8 million households, the New York City metropolitan area is the most populous in the U.S. The Los Angeles metro area, which is home to 4,224,732 households, follows with the second highest population number. Topping the list for income, the Bridgeport, Connecticut metropolitan area ranks number one with an average household income of $129,122. Although significantly less, the San Jose metro earns the number two spot with its average household income of $112,234. Only three additional metro areas listed also boast six figure average household incomes: New York City, San Francisco and Washington D.C. Housing is an important factor when selecting a site for development. Metropolitan areas have a mix of single family and multi-unit housing options to meet the needs of the population. These areas also boast a combination of both owners and renters occupying the homes. Owners and tenants alike can make excellent customers. A high number of vacant properties in a single area can signal anything from the fact the area supports many seasonal or part-time residents to overall economic distress lingering throughout the metropolitan area. Having as much information as possible on a community and area being served by the self-storage facility gives the operator a competitive advantage. Tailoring the site’s amenities and programs to meet the community’s unique needs creates an overall focus on customer service and an excellent self-storage experience for the customer.
BUSINESS ESTABLISHMENTS BY RANKING
TABLE 7.4b
pointing the highest potential sites for self-storage businesses.
Core Based Statistical Area Rochester, NY Metro Buffalo-Niagara Falls, NY Metro Tulsa, OK Metro New Haven-Milford, CT Metro Albuquerque, NM Metro Honolulu, HI Metro Oxnard-Thousand Oaks-Ventura, CA Metro Albany-Schenectady-Troy, NY Metro North Port-Bradenton-Sarasota, FL Metro Baton Rouge, LA Metro Cape Coral-Fort Myers, FL Metro Greensboro-High Point, NC Metro Omaha-Council Bluffs, NE-IA Metro Allentown-Bethlehem-Easton, PA-NJ Metro Tucson, AZ Metro Worcester, MA Metro Grand Rapids-Wyoming, MI Metro Fresno, CA Metro Knoxville, TN Metro Dayton, OH Metro Poughkeepsie-Newburgh-Middletown, NY Metro Charleston et al, SC Metro Little Rock-North Little Rock-Conway, AR Metro Syracuse, NY Metro Springfield, MA Metro Columbia, SC Metro Santa Rosa-Petaluma, CA Metro Portland-South Portland-Biddeford, ME Metro Akron, OH Metro Madison, WI Metro Scranton--Wilkes-Barre, PA Metro Boise City-Nampa, ID Metro Wichita, KS Metro Colorado Springs, CO Metro Greenville-Mauldin-Easley, SC Metro Toledo, OH Metro Bakersfield-Delano, CA Metro El Paso, TX Metro Jackson, MS Metro Des Moines-West Des Moines, IA Metro Harrisburg-Carlisle, PA Metro Anchorage, AK Metro Palm Bay-Melbourne-Titusville, FL Metro Youngstown-Warren-Boardman, OH-PA Metro Deltona-Daytona Beach-Ormond Beach, FL Metro Spokane, WA Metro Chattanooga, TN-GA Metro Augusta-Richmond County, GA-SC Metro Stockton, CA Metro Lexington-Fayette, KY Metro Source: Nielsen
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Business Establishments 39,762 38,999 36,406 35,422 35,172 32,827 32,493 32,402 31,744 31,725 31,348 31,172 31,122 30,033 29,994 29,831 28,692 28,508 28,487 27,901 27,800 27,745 27,458 27,259 27,121 26,156 25,443 25,154 24,497 24,492 24,484 24,122 23,837 23,718 23,386 23,297 23,282 22,617 22,611 22,428 22,381 22,101 21,935 21,811 21,172 20,745 20,190 19,991 19,977 19,545
SiteInformation•8
A highly visible self-storage location may reduce the need for expensive advertising efforts. In a prominent, high-traffic spot, the physical building can act as a billboard for the business, increasing awareness among passersby and the community of the storage store. Properties situated along busy highways also enjoy the ability to place signage along especially prominent, well-traveled locations and can exploit the convenience they offer since they fall within many customers’ day-to-day travel patterns. However, even a property that at first glance appears to be a perfect fit for a self-storage facility may not be an excellent candidate for development. Besides a high traffic count property, several other factors are crucial in selecting a successful self-storage site. These include the shape of the plot, traffic patterns surrounding the site, current zoning laws, and overall market saturation.
Feasibility And Demand Studies With so many dynamics and details at play, self-storage professionals must commit time and resources to researching and analyzing properties under consideration. Developers
often solicit the advice of outside professionals to help them determine the feasibility of specific sites for self-storage development. It is important to remember that these demand analyses and feasibility studies are generally only the starting point in the self-storage development lifecycle. Other factors such as the specifics of the facility layout and included amenities must also be considered in order to realize a solid and successful investment.
A
HIGHLY VISIBLE SELF-STORAGE LOCATION MAY
REDUCE THE NEED FOR EXPENSIVE ADVERTISING EFFORTS. Many cities and municipalities require a minimum number of parking spots at self-storage properties. In addition, certain regulations, like accessibility features and access guidelines must also be considered. When development is complete, the parking area should be able to accommodate every customer who comes to the site without giving away too much valuable real estate space. For 2011, the average number of parking spaces at self-storage properties across the U.S. came in at 12, up slightly from last year’s average of 10.6. As expected, larger storage stores are equipped with more spaces to successfully accommodate all of their customers. Self-storage facilities with 1,000 or more units
for rent averaged 24 on-site parking spaces. At 10.6 per storage facility, the number of parking spots at urban self-storage stores was almost 12 percent lower than the national average. This stands to reason considering the comparative scarcity of land available for convenient parking in urban locations versus suburban and rural areas.
TABLE 8.1
S
elf-storage is a real estate venture. Although a well run self-storage site can produce a very reliable income stream, one of the best indicators of a storage facility’s worth remains a function of the value of the real estate on which the business is built. As the old mantra goes, the three things that matter in property are location, location, location. For the self-storage industry, an excellent location is crucial not only in the valuation of the facility, but also in optimizing the potential of the day-to-day business operations.
AVERAGE NUMBER OF PARKING SPACES AT FACILITY OFFICE REGION Average Division Number NORTH CENTRAL 9.6 East North Central 9.0 West North Central 11.5 NORTHEAST 14.5 Middle Atlantic 14.4 New England 14.8 SOUTH CENTRAL 10.6 East South Central 12.2 West South Central 9.9 SOUTHEAST 10.9 South Atlantic 10.9 WEST 14.3 Mountain 18.4 Pacific 8.7 NATIONAL 12.0 Number of Units 1 to 99 14.3 100 to 299 13.0 300 to 499 9.4 500 to 999 10.3 1,000 or more 24.0 Rentable Square Footage Less than 25,000 13.2 25,000 to 49,999 11.5 50,000 to 74,999 10.2 75,000 to 99,999 11.5 100,000 or more 10.4 Market Area Urban 10.6 Suburban 11.5 Rural 14.5 Year Facility Built Prior to 1981 18.6 1981 to 1985 12.5 1986 to 1990 10.1 1991 to 1995 9.3 1996 to 2000 12.3 2001 to 2005 11.5 2006 or after 12.1 2012 Self-Storage Almanac
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8•SiteInformation
On average, slightly more than 21 vehicles enter a self-storage facility each day. Properties in the Southeast region see the most traffic with approximately 29 vehicles coming onto the facility grounds daily. In contrast, self-storage stores in New England averaged the least number
of vehicles with fewer than 10 cars and trucks entering the storage site each day.
Traffic Patterns As would be expected, the size of the self-storage facility impacted the average number of vehicles entering the site per day. The small-
est size categories, businesses with fewer than 100 units and less than 25,000 rentable square feet, saw approximately 7.6 and 11.5 vehicles enter the site every day, respectively. At the opposite end of the spectrum, the largest stores with 1,000 or more units and 100,000 or more rentable square feet averaged 47.3 and
Average Number of Vehicles Entering the Facility Daily 19.8 20.1 18.8 13.3 15.7 9.8 20.3 21.4 19.8 29.1 29.1 20.6 18.8 23.2 21.4
REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL Number of Units 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more Rentable Square Footage Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99,999 100,000 or more Market Area Urban Suburban Rural Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after
7.6 13.7 23.4 33.5 47.3 11.5 19.4 28.8 31.0 33.7 25.7 21.5 15.8 16.7 14.5 21.4 22.4 21.2 22.1 25.6
PRIMARY COMPETITIVE MARKET (5-MILE RADIUS)
TABLE 8.3
TABLE 8.2
TRAFFIC FLOW Average Number Average Number Average REGION of Existing of New Facilities Number of Division Competitors Under Construction Conversions NORTH CENTRAL 11.2 ** 0.1 East North Central 13.4 ** ** West North Central 4.6 0.1 0.1 NORTHEAST 3.7 ** ** Middle Atlantic 3.9 ** 0.1 New England 3.5 ** ** SOUTH CENTRAL 7.3 0.2 0.1 East South Central 5.6 0.1 0.1 West South Central 8.1 0.2 0.1 SOUTHEAST 5.5 0.1 0.1 South Atlantic 5.5 0.1 0.1 WEST 10.3 0.4 0.3 Mountain 9.9 0.7 0.3 Pacific 10.9 ** 0.3 NATIONAL 7.7 0.2 0.1 Number of Units 1 to 99 10.4 0.1 0.1 100 to 299 6.8 0.4 0.1 300 to 499 6.7 0.1 0.1 500 to 999 8.0 0.1 0.1 1,000 or more 10.4 0.1 1.1 Rentable Square Footage Less than 25,000 8.1 0.3 0.1 25,000 to 49,999 7.4 0.1 0.1 50,000 to 74,999 7.4 0.1 ** 75,000 to 99,999 9.2 ** 0.2 100,000 or more 6.6 0.1 0.4 Market Area Urban 9.0 0.1 0.2 Suburban 7.3 0.3 0.2 Rural 6.8 0.1 0.1 Year Facility Built Prior to 1981 10.6 0.1 0.1 1981 to 1985 9.0 ** 0.1 1986 to 1990 6.6 0.1 0.1 1991 to 1995 5.7 0.2 0.1 1996 to 2000 6.1 0.1 0.2 2001 to 2005 7.0 0.5 0.1 2006 or after 9.7 0.1 0.2 **Insufficient data
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Self-Storage Almanac 2012
SiteInformation•8
It is interesting to note that newer facilities logged a higher number of vehicles visiting each day than older sites with the numbers for the category growing by approximately 53 percent between facilities built before 1981 and facilities built after 2005. Urban sites reported a higher average of daily vehicle traffic than rural or suburban properties. Thoroughly analyzing a site’s market area is one of the most crucial steps in the development process. While an excellent parcel may become available for sale, an oversaturated market may make an otherwise ideal property unable to support a storage development. In 2011, self-storage stores indicated that they were competing with 7.7 self-storage properties within the five-mile radius surrounding their facilities—a figure that is slightly down from the 8.2 average posted last year. The average number of new facilities under construction within a market area held steady at 0.2 but the average number of conversions fell slightly to 0.1 between 2010 and 2011. Storage businesses in the East North Central division faced the stiffest competition this year, averaging approximately 74 percent more existing facilities within their market area than the national average. Properties in the Pacific states are not far behind with approximately 42 percent more competitors than the average for the United States. The Northeast remains the least saturated area of the country, posting an average of 3.9 competitors for facilities in the Middle Atlantic division and 3.5 competing stores in New England.
Competitive Outlook Self-storage businesses located in urban areas averaged more competitors than rural or suburban self-storage stores. The smallest stores with less than 25,000 rentable square feet deal with more competitors than the national average while the largest facilities of 100,000 or more square feet average 6.6 competitors—a figure that is 14 percent lower than the national average. The competition level appears fairly well dispersed when analyzing facilities by age. However, it does appear that the older, more established self-storage businesses face more competitors than newer stores. In fact, storage facilities built prior to 1981 averaged more than 10 com-
peting properties in the market areas, a figure which is almost 38 percent more than the nationwide average for all self-storage sites. Maximizing the self-storage facility layout to ensure the necessary bottom line profitability number is feasible is a critical consideration for a successful project. While a small piece of land may not initially appear to support the size of facility necessary to green light the development, creative and well designed layouts can be developed to accommodate a surprisingly large number of units. Nationally, self-storage facilities averaged 566 traditional units spread out over 51,119 rentable
AVERAGE FACILITY SIZE
TABLE 8.4
33.7 cars and trucks, respectively, per day each.
REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL Market Area Urban Suburban Rural Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after
Units Self-Storage RV/Boat 334 34 330 29 347 52 369 23 386 24 317 22 313 38 261 21 338 44 440 28 440 28 570 46 499 55 548 35 566 35
Rentable Sq. Ft. Self-Storage RV/Boat 45,724 14,087 45,179 11,664 47,286 22,167 39,834 11,581 42,243 13,043 35,904 10,120 40,895 17,613 32,777 10,391 44,664 20,352 53,924 11,946 53,924 11,946 53,616 22,198 48,644 26,912 60,067 16,413 51,119 16,380
573 484 356
34 33 40
55,784 46,598 38,955
14,324 15,668 19,429
391 411 471 417 492 487 560
30 29 26 33 37 43 36
33,089 38,560 45,874 39,765 46,916 51,755 57,929
12,750 12,231 12,184 14,575 16,663 19,551 18,563
2012 Self-Storage Almanac
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8•SiteInformation
square feet. Storage stores in the West posted the highest number of individual units in the country—an average almost double the number of storage spaces at properties in the South Central region. Like the number of units, the square footage of facilities ran larger in the West than other regions of the country. The Pacific division boasted the largest developments spanning more than 60,000 rentable square feet. On the other hand, properties in the East South Central division were almost half that size, measuring 32,777 rentable square feet. When analyzing facility sizes by market area, it is clear that rural developments trend toward smaller sizes than their urban and suburban counterparts. In fact, rural properties were approximately 38 percent smaller than urban stores in terms of the number of units and were off by 30 percent when comparing rentable square feet across the two market areas.
Age Correlation The data for 2011 shows a clear correlation between the facility size and the age of the development. Facilities built before 1981 averaged 391 traditional storage units and 33,089 rentable square feet. On the newer end of the scale, sites that were developed between 2001 and 2005 averaged 487 rentable units and 51,755 square feet. Storage facilities built in 2006 or later boasted an average of 560 units comprising a total of 57,929 square feet. Across the U.S., facilities averaged 35 RV and boat units, down dramatically from last year’s average of 53 units. The West continues to lead the nation in the number of RV and boat units, averaging 38 spaces per facility. However, this number is also down from 2011’s regional average of 76 units. One of the trends in self-storage development involves building up in order to include all the units necessary to make a project financially
feasible. Approximately 18.2 percent of facilities nationwide have multiple levels. Storage stores in the Pacific region, where land prices run consistently higher than the national average, have the highest rate of additional levels, averaging 43.2 percent. The Middle Atlantic and East South Central regions come in at a distant second and third with multiple levels being utilized in approximately 22.6 percent and 18.5 percent of self-storage developments. The West South Central division has the lowest rate of multiple levels, where approximately 8.5 percent of selfstorage sites are equipped with a second story. The addition of multiple levels is significantly more common at large storage facilities than at small selfstorage stores. While 2.6 percent of properties with 100 to 299 units have additional stories, more than half of all facilities with 1,000 or more units are topped with multiple levels. Building up is also a more frequent space solution at urban storage
TABLE 8.5
FACILITY AGE REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL Market Area Urban Suburban Rural
Prior to 1981 10.2% 4.5% 26.7% 1.9% 3.2% ** 4.7% ** 6.8% 2.2% 2.2% 11.4% 15.7% 5.4% 6.1%
1981 to 1985 5.1% 4.5% 6.7% 15.4% 16.1% 14.3% 7.0% 3.7% 8.5% 15.7% 15.7% 13.6% 15.7% 10.8% 11.5%
10.0% 4.4% 4.3%
16.7% 8.8% 9.6%
**Insufficient data
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Self-Storage Almanac 2012
Year Facility Opened 1986 to 1991 to 1996 to 1990 1995 2000 11.9% 5.1% 27.1% 11.4% 6.8% 25.0% 13.3% ** 33.3% 11.5% 17.3% 17.3% 6.5% 19.4% 22.6% 19.0% 14.3% 9.5% 4.7% 11.6% 24.4% 7.4% 14.8% 22.2% 3.4% 10.2% 25.4% 15.7% 10.1% 14.6% 15.7% 10.1% 14.6% 10.2% 5.7% 14.8% 7.8% 7.8% 9.8% 13.5% 2.7% 21.6% 10.7% 9.6% 19.3% 13.3% 10.0% 8.5%
5.8% 8.8% 16.0%
12.5% 24.4% 19.1%
2001 to 2005 20.3% 25.0% 6.7% 26.9% 22.6% 33.3% 25.6% 33.3% 22.0% 10.1% 10.1% 27.3% 25.5% 29.7% 21.7%
2006 or After 20.3% 22.7% 13.3% 9.6% 9.7% 9.5% 22.1% 18.5% 23.7% 31.5% 31.5% 17.0% 17.6% 16.2% 21.1%
16.7% 23.1% 25.5%
25.0% 20.6% 17.0%
SiteInformation•8
Going Up When developers decide to use multiple levels at a self-storage project then they must also select a method to access the additional floors. For 2011, elevators hold the top spot for most common manner of access. More than 70 percent of properties with multiple levels have an elevator on site for customer use. Stairs are available for tenant use in half of self-storage properties nationwide, making it the second most common method of access. Lifts, a less expensive alternative to elevators, are used in 13.2 percent of storage stores and drive-up ramps are utilized in 16.2 percent of storage properties across the country. Larger facilities are more likely to have elevators than smaller sites, which are more likely to rely on stairs to help customers move their household goods between floors. It is interesting to note that the largest developments, those with 100,000 or more rentable square feet, often utilize drive-up ramps as a means of entering and exiting the additional levels. In fact, more than 44 percent of facilities in this size range are equipped with an access ramp. Although a relatively new industry, the self-storage business model has been used in the U.S. for more than 40 years. Over time, the average self-storage development has transformed dramatically as cus-
tomers’ demands and expectations have changed. New construction designs and building techniques have also altered the self-storage landscape throughout the years.
Storage Development Eras Most states boast self-storage facilities representing every development era, from the earliest first-generation sites to today’s state-of-the-art self-storage stores. While there is not a single age category that typifies the industry, more respondents indicated that their properties were built between 2001 and 2005 than any other age group. The 2006 or later age category is a close second with 21.1 percent of respondents indicating their facility falls into this grouping.
APPROXIMATELY
18.2 PERCENT OF FACILITIES NATIONWIDE HAVE MULTIPLE LEVELS. Regionally, almost one-third of respondents in the Southeastern United States indicated their properties were built after 2005. Older sites were most common in the West North Central and Mountain divisions of the country. Keeping in line with the national trend, developments in urban areas tended to fall into the 2001 or newer age categories. Rural and suburban self-storage facilities, on the other hand, were most commonly built in the 1996 to 2000 and 2001 to 2005 year categories. Automation is another trend which has become fairly common-
place throughout the industry. This feature involves the use of technology to reduce the manager or operator’s daily work load by relying on computers to complete various day-to-day activities at the self-storage facility. A variety of tasks can be automated such as lighting, security and access control.
TABLE 8.6
stores than at sites located in rural areas where land costs tend to be much lower comparatively. In addition, newer facilities are more likely to have multiple levels than older self-storage stores. Within the oldest development category—self-storage facilities built before 1981—second stories are used in 8.7 percent of storage sites versus 30.4 percent of storage businesses built after 2005.
PERCENTAGE OF FACILITIES WITH MULTIPLE LEVELS REGION Percentage Division of Facilities NORTH CENTRAL 13.6% East North Central 13.6% West North Central 13.3% NORTHEAST 19.2% Middle Atlantic 22.6% New England 14.3% SOUTH CENTRAL 11.6% East South Central 18.5% West South Central 8.5% SOUTHEAST 16.9% South Atlantic 16.9% WEST 28.4% Mountain 17.6% Pacific 43.2% NATIONAL 18.2% Number of Units 1 to 99 ** 100 to 299 2.6% 300 to 499 20.0% 500 to 999 41.6% 1,000 or more 55.6% Rentable Square Footage Less than 25,000 5.7% 25,000 to 49,999 12.9% 50,000 to 74,999 28.4% 75,000 to 99,999 48.8% 100,000 or more 22.0% Market Area Urban 25.0% Suburban 21.3% Rural 4.3% Year Facility Built Prior to 1981 8.7% 1981 to 1985 9.3% 1986 to 1990 17.5% 1991 to 1995 8.3% 1996 to 2000 16.7% 2001 to 2005 19.8% 2006 or after 30.4% **Insufficient data
2012 Self-Storage Almanac
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8•SiteInformation
In 2011, the most commonly automated system at self-storage properties was accounting and bookkeeping. Almost 70 percent of storage stores nationwide reported a computerized accounting system in use at their sites. Computerized rent payment and automated security were also extremely popular and were utilized by more than 62 per-
SOME OF THE
LOWEST RATES OF AUTOMATION WERE SEEN IN THE NEW ENGLAND DIVISION... cent of storage facilities in the U.S. Other than kiosks, which were avail-
able in an average of 2.7 percent of self-storage businesses nationwide, all of the automation processes analyzed were reported in use at more than half of the self-storage properties surveyed. The highest rates of automation were reported in the Pacific area of the nation where almost 90 per-
TABLE 8.7
HOW CUSTOMERS ACCESS MULTI-LEVEL FACILITIES (PERCENTAGE OF MULTI-LEVEL FACILITIES) REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL Number of Units 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more Rentable Square Footage Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99,999 100,000 or more Market Area Urban Suburban Rural Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after **Insufficient data
80
Self-Storage Almanac 2012
Elevator 50.0% 66.7% ** 50.0% 57.1% 33.3% 90.0% 80.0% ** 86.7% 86.7% 68.0% 77.8% 62.5% 70.6%
Stairs 62.5% 66.7% 50.0% 50.0% 42.9% 66.7% 30.0% 20.0% 40.0% 40.0% 40.0% 60.0% 55.6% 62.5% 50.0%
Lift 37.5% 33.3% 50.0% ** ** ** ** ** ** 13.3% 13.3% 16.0% 33.3% 6.3% 13.2%
Drive-Up Ramp 37.5% 33.3% 50.0% 40.0% 42.9% 33.3% 10.0% 20.0% ** ** ** 12.0% ** 18.8% 16.2%
** 33.3% 61.1% 76.2% 80.0%
** 66.7% 55.6% 50.0% 20.0%
** 33.3% 5.6% 14.3% 20.0%
** ** 27.8% 11.9% 20.0%
42.9% 72.7% 95.2% 70.0% 33.3%
57.1% 63.6% 61.9% 35.0% 33.3%
28.6% 18.2% 9.5% 10.0% 11.1%
14.3% 18.2% ** 20.0% 44.4%
60.0% 76.5% **
46.7% 55.9% 25.0%
20.0% 8.8% **
20.0% 14.7% **
** 25.0% 57.1% 33.3% 66.7% 81.3% 79.2%
50.0% 50.0% 57.1% 66.7% 50.0% 50.0% 45.8%
50.0% 25.0% 14.3% 0.0% 16.7% 6.3% 12.5%
** 25.0% 28.6% 33.3% 16.7% 12.5% 12.5%
SiteInformation•8
cent of storage facilities have automated access control and more than 83 percent of storage sites are equipped with automated security and computerized rent payment
capability. Some of the lowest rates of automation were seen in the New England division where 23.8 percent of facilities were equipped with access control and 28.6 per-
cent of developments had some form of automated lights in use. In 2011, newer self-storage facilities were much more likely to be
TABLE 8.8
ELECTRONIC FACILITY AUTOMATIONS REGION Division Security NORTH CENTRAL 47.5% East North Central 52.3% West North Central 33.3% NORTHEAST 44.2% Middle Atlantic 45.2% New England 42.9% SOUTH CENTRAL 60.5% East South Central 55.6% West South Central 62.7% SOUTHEAST 78.7% South Atlantic 78.7% WEST 69.3% Mountain 58.8% Pacific 83.8% NATIONAL 62.6% Number of Units 1 to 99 18.9% 100 to 299 47.8% 300 to 499 73.3% 500 to 999 90.1% 1,000 or more 88.9% Rentable Square Footage Less than 25,000 36.6% 25,000 to 49,999 70.6% 50,000 to 74,999 79.7% 75,000 to 99,999 87.8% 100,000 or more 73.2% Market Area Urban 68.3% Suburban 71.3% Rural 40.4% Year Facility Built Prior to 1981 43.5% 1981 to 1985 46.5% 1986 to 1990 57.5% 1991 to 1995 52.8% 1996 to 2000 68.1% 2001 to 2005 63.0% 2006 or after 78.5%
Accounting/ Bookkeeping 79.7% 81.8% 73.3% 59.6% 61.3% 57.1% 55.8% 51.9% 57.6% 78.7% 78.7% 72.7% 68.6% 78.4% 69.5%
Access Control 49.2% 52.3% 40.0% 40.4% 51.6% 23.8% 54.7% 40.7% 61.0% 67.4% 67.4% 75.0% 64.7% 89.2% 59.6%
Lights 52.5% 61.4% 26.7% 42.3% 51.6% 28.6% 51.2% 51.9% 50.8% 50.6% 50.6% 67.0% 60.8% 75.7% 53.7%
Computerized Rent Payment 64.4% 65.9% 60.0% 59.6% 58.1% 61.9% 54.7% 59.3% 52.5% 70.8% 70.8% 70.5% 60.8% 83.8% 64.4%
Kiosks 5.1% 2.3% 13.3% ** ** ** 2.3% ** 3.4% 1.1% 1.1% 4.5% 3.9% 5.4% 2.7%
50.9% 60.9% 74.4% 85.1% 77.8%
20.8% 42.6% 72.2% 84.2% 88.9%
43.4% 44.3% 51.1% 69.3% 77.8%
30.2% 53.0% 73.3% 85.1% 88.9%
** 2.6% 1.1% 5.9% **
58.5% 71.8% 82.4% 80.5% 65.9%
38.2% 62.4% 81.1% 82.9% 56.1%
45.5% 51.8% 62.2% 70.7% 48.8%
43.1% 71.8% 79.7% 82.9% 68.3%
2.4% 2.4% 2.7% 4.9% 2.4%
74.2% 73.1% 57.4%
61.7% 70.6% 38.3%
55.0% 58.8% 43.6%
65.8% 71.9% 50.0%
3.3% 2.5% 2.1%
60.9% 65.1% 65.0% 61.1% 66.7% 69.1% 83.5%
39.1% 37.2% 65.0% 41.7% 61.1% 60.5% 81.0%
52.2% 48.8% 50.0% 36.1% 50.0% 58.0% 65.8%
43.5% 58.1% 60.0% 61.1% 61.1% 65.4% 79.7%
** 2.3% ** ** 5.6% 1.2% 5.1%
**Insufficient data
2012 Self-Storage Almanac
81
8•SiteInformation
TABLE 8.9
automated than older properties. More than 80 percent of storage businesses developed after 2005 have automated accounting and access control. Looking at self-storage stores developed before 1981, those features were automated an average of 60.9 percent and 39.1 percent respectively.
82
PERCENTAGE OF FACILITIES WITH CLIMATE-CONTROLLED UNITS REGION Percentage Division of Facilities NORTH CENTRAL 64.4% East North Central 65.9% West North Central 60.0% NORTHEAST 75.0% Middle Atlantic 74.2% New England 76.2% SOUTH CENTRAL 79.1% East South Central 85.2% West South Central 76.3% SOUTHEAST 77.5% South Atlantic 77.5% WEST 45.5% Mountain 52.9% Pacific 35.1% NATIONAL 67.9% Number of Units 1 to 99 60.4% 100 to 299 62.6% 300 to 499 74.4% 500 to 999 75.2% 1,000 or more 66.7% Rentable Square Footage Less than 25,000 60.2% 25,000 to 49,999 61.2% 50,000 to 74,999 74.3% 75,000 to 99,999 78.0% 100,000 or more 87.8% Market Area Urban 77.5% Suburban 65.0% Rural 60.6% Year Facility Built Prior to 1981 52.2% 1981 to 1985 62.8% 1986 to 1990 62.5% 1991 to 1995 63.9% 1996 to 2000 68.1% 2001 to 2005 69.1% 2006 or after 78.5% Self-Storage Almanac 2012
Climate-Control Climate-controlled units remain an important feature—especially at self-storage facilities located in areas of the country that regularly experience temperature extremes. Nationally, self-storage facilities tended to have a most spaces equipped with climate-control in small versus large sizes. Self-storage stores reported the highest number of climate-controlled spaces in the medium sizes, with an average of 70.8 in the 10-by-10 size and 40.0 in the 10-by-15 size per facility. Looking at the climate-control data by percentages reveals that large climatized units are much less common than small to medium size units outfitted with this technology. In fact, facilities reported that they offer 10-by-10 climate-controlled units five times more frequently than climatized 20-by-20 spaces. This pattern of distribution is fairly uniform across all regions of the United States with the exception of New England where owners and operators reported a higher percentage of the large climate-controlled units. This year, approximately 67.9 percent of facilities indicated that they offer climate-controlled units. Approximately three-quarters of all facilities in the Northeast, South Central and Southeast regions equip their spaces with some form of climate-control. In the West, less than half of the storage stores surveyed offered climatized storage spaces. In terms of rentable square footage, the smaller facilities were less likely to offer climate-controlled units than the larger facilities. For those stores with less than 25,000 rentable square feet, approximately 60 percent of respondents indicated that they offered some form of climatization. The number for climate-con-
trolled self-storage sites with 100,000 or more rentable square feet was 87.8 percent. Urban storage stores have a higher rate of climatization than rural and suburban properties. In addition, newer facilities were significantly more likely to be equipped with climate-controlled units than older stores. Approximately 52 percent of properties developed before 1981 offered this feature to customers while more than 78 percent of facilities built after 2005 were able to extend this benefit to tenants.
Methods Of Climate-Control While a clear majority of facilities across the country are equipped with climate-controlled units, the methods of climate-control vary region by region. Air conditioning was most common in the Southeast where 72.5 percent of storage stores utilized this technology to control the temperature of individual units. More than 60 percent of storage stores in the South Central region also offered this type of climate-control. By contrast, only 12.5 percent of stores in New England reported units equipped with air conditioning. Dehumidification was most common in the West North Central area of the country where 22.2 percent of stores equip units with this technology. It is also popular in New England and the Pacific states where more than 10 percent of facilities utilized this method of climate-control. Humidification is most common in the Middle Atlantic and West South central areas of the nation.
Unit Mix Just as individual regions of the country have different needs when it comes to climatization, they also offer a unique unit mix to meet their customers’ demands. The most common unit size at self-storage proper-
SiteInformation•8
ties across the United States is 10by-10. Regionally, the 10-by-10 unit was the most popular size in every category with the exception of the East North Central division where the 10-by-20 is slightly more common. The 5-by-10 and 10-by-20 units follow in popularity. On average, the least common unit size for 2011 is the 20-by-20. Based on distribution of unit sizes, 10-by-10 units make up more than one-quarter of all spaces at the average facility. The 5-by-10 and 10-
by-20 sizes follow in popularity comprising 19 percent and 15.2 percent of units respectively. It is interesting to note that the unit distribution remains fairly uniform throughout every region of the United States. On-site resident managers who live at the site remain a popular choice in self-storage management. Having an employee at the property 24 hours a day may give reluctant customers the additional confidence they need to feel comfortable storing their goods
at a storage store. Approximately 34.3 percent of self-storage facilities nationwide are equipped with on-site apartments to allow for a live-in manager. Apartments are most common in the Pacific states where more than 63 percent of all storage properties indicated they are equipped with a manager’s apartment. The Mountain division follows posting an on-site apartment frequency rate of 58.5 percent. This option is least common in the West North Central and Middle Atlantic sections of the country.
TABLE 8.10
DISTRIBUTION OF CLIMATE-CONTROLLED UNITS BY REGION REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL
5X5 17.6 10.5 31.7 36.9 41.0 24.7 21.5 25.8 18.9 43.3 43.3 38.3 42.6 33.6 34.3
5X10 27.9 27.8 28.2 44.0 49.3 24.7 41.6 41.5 41.6 71.4 71.4 61.7 67.5 54.2 54.4
10X10 42.9 40.0 50.3 58.4 65.6 31.7 64.6 62.3 65.7 87.5 87.5 71.0 82.3 58.6 70.8
Unit Size 10X15 32.5 34.5 27.0 26.8 27.1 25.7 38.5 35.5 40.2 45.2 45.2 44.6 51.1 37.1 40.0
10X20 30.2 31.4 25.5 25.3 25.1 26.0 28.1 32.0 25.7 30.3 30.3 24.5 31.6 18.3 28.4
10X25 8.4 8.3 9.0 25.3 17.0 50.0 13.5 19.9 9.1 12.1 12.1 40.0 ** 40.0 13.9
10X30 12.4 12.4 ** 24.0 11.0 50.0 7.6 7.6 7.6 9.7 9.7 14.8 11.0 18.5 10.5
20X20 2.0 2.0 ** 29.0 8.0 50.0 3.0 ** 3.0 10.3 10.3 6.0 ** 6.0 11.2
10X30 7.1% 7.4% ** 8.9% 4.5% 17.7% 3.5% 3.4% 3.6% 3.1% 3.1% 4.9% 3.8% 6.9% 4.0%
20X20 1.2% 1.2% ** 10.8% 3.3% 17.7% 1.4% ** 1.4% 3.3% 3.3% 2.0% ** 2.3% 4.3%
**Insufficient data
TABLE 8.11
PERCENTAGE DISTRIBUTION OF CLIMATE-CONTROLLED UNITS BY REGION REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL
5X5 10.1% 6.3% 18.5% 13.7% 16.8% 8.7% 9.8% 11.5% 8.9% 14.0% 14.0% 12.7% 14.9% 12.6% 13.0%
5X10 16.1% 16.7% 16.4% 16.3% 20.2% 8.7% 19.1% 18.5% 19.7% 23.1% 23.1% 20.5% 23.6% 20.4% 20.7%
10X10 24.7% 24.0% 29.3% 21.6% 26.9% 11.2% 29.6% 27.7% 31.0% 28.3% 28.3% 23.6% 28.8% 22.0% 26.9%
Unit Size 10X15 18.7% 20.7% 15.7% 9.9% 11.1% 9.1% 17.6% 15.8% 19.0% 14.6% 14.6% 14.8% 17.9% 13.9% 15.2%
10X20 17.4% 18.8% 14.9% 9.4% 10.3% 9.2% 12.8% 14.2% 12.1% 9.8% 9.8% 8.1% 11.0% 6.9% 10.8%
10X25 4.8% 4.9% 5.2% 9.4% 7.0% 17.7% 6.2% 8.8% 4.3% 3.9% 3.9% 13.3% ** 15.0% 5.3%
**Insufficient data
2012 Self-Storage Almanac
83
8•SiteInformation
The largest self-storage properties by number of units are significantly more likely to offer on-site manager’s quarters than the smallest storage stores. In fact, approximately 50 percent of facilities with 1,000 or more spaces also boast an apartment at the property. Examining the facility sizes by square footage shows that an on-site apartment is slightly more common at properties with 50,000 to 74,999 rentable square feet than at stores with 75,000 or more square feet of storage space.
Delinquency And Lien Sales Given the current economic environment and the high unemployment rate, it is no wonder that delinquency continues to be an issue at many self-storage stores. Across the country, more than 85 percent of storage facilities indicated they had an incident of late or non-payment resulting in a lien sale—up from 73.3 percent in 2010. The average number of incidents was 9.1 per self-storage store.
Regionally, the area with the highest percentage of self-storage facilities forced to sell or dispose of a delinquent tenant’s goods was found in the Southeast region where 94.4 percent of stores reported an incident. The highest number of occurrences overall was posted in the Pacific division where all sites averaged 13.5 issues. With the lowest delinquency rate, 74.6 percent of operators in the West South Central region had to deal with the sale or disposal of a delinquent tenant’s
TABLE 8.12
TYPE OF CLIMATE CONTROL USED BY REGION (PERCENTAGE OF FACILITIES) Type of Climate Control REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL
AC De-Humidifier Evap Humidifiers 42.1% 10.5% ** 2.6% 34.5% 6.9% ** 3.4% 66.7% 22.2% ** ** 30.8% 7.7% ** 5.1% 43.5% 4.3% ** 8.7% 12.5% 12.5% ** ** 60.3% 5.9% ** 4.4% 60.9% 4.3% ** 4.3% 60.0% 6.7% ** 4.4% 72.5% 7.2% ** 4.3% 72.5% 7.2% ** 4.3% 52.5% 7.5% 10.0% ** 44.4% 3.7% 14.8% ** 69.2% 15.4% ** ** 55.1% 7.5% 1.6% 3.5%
Cooling 2.6% 3.4% ** 12.8% 17.4% 6.3% 17.6% 17.4% 17.8% 11.6% 11.6% 10.0% 3.7% 23.1% 11.8%
Heater 42.1% 34.5% 66.7% 38.5% 47.8% 25.0% 41.2% 47.8% 37.8% 24.6% 24.6% 22.5% 14.8% 38.5% 33.5%
Desiccant De-Humidification ** ** ** ** ** ** ** ** ** 1.4% 1.4% ** ** ** 0.4%
**Insufficient data
TABLE 8.13
DISTRIBUTION OF UNITS BY REGION
84
REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL Self-Storage Almanac 2012
5X5 18 15 26 24 28 18 16 21 13 35 35 31 23 41 25
5X10 43 38 58 50 63 30 52 52 51 99 99 79 68 93 68
10X10 58 56 65 63 80 37 98 97 99 122 122 92 79 111 91
Unit Size 10X15 10X20 38 61 37 62 39 59 39 38 47 49 27 23 53 50 52 54 53 48 59 58 59 58 46 59 41 59 52 59 48 54
10X25 13 12 16 10 12 8 11 13 10 12 12 16 17 15 13
10X30 13 11 20 8 9 5 13 10 15 14 14 17 14 21 14
20X20 1 1 0 1 0 3 1 0 1 2 2 3 2 4 2
Other 46 21 118 91 16 200 16 15 16 24 24 51 40 66 41
SiteInformation•8
goods. Stores in New England reported the lowest number of disposals, averaging 5.4 per site. The size of the store impacted the number of lien sales at a site. Facili-
ties with the highest number of units were also faced with the largest number of instances of owners or operators having to sell or dispose of a tenant’s items in storage. Conversely, self-storage stores with the
smallest number of spaces posted the fewest incidents. Location also impacted the number of instances of disposing of foreclosing on a customer. A small-
TABLE 8.14
PERCENTAGE DISTRIBUTION OF UNITS BY REGION REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL
5X5 6.1% 5.9% 6.4% 7.3% 9.1% 5.1% 5.2% 6.8% 4.4% 8.3% 8.3% 7.9% 6.8% 9.0% 7.1%
5X10 14.8% 15.1% 14.4% 15.4% 20.8% 8.4% 16.7% 16.6% 16.8% 23.3% 23.3% 19.9% 19.8% 20.1% 19.0%
10X10 20.0% 22.0% 16.1% 19.4% 26.2% 10.6% 31.8% 31.0% 32.2% 28.6% 28.6% 23.4% 23.0% 23.9% 25.6%
Unit Size 10X15 10X20 13.0% 21.1% 14.7% 24.5% 9.8% 14.7% 12.1% 11.9% 15.5% 16.0% 7.7% 6.6% 17.0% 16.1% 16.5% 17.1% 17.3% 15.6% 13.9% 13.7% 13.9% 13.7% 11.6% 15.0% 11.9% 17.2% 11.3% 12.8% 13.6% 15.2%
10X25 4.5% 4.8% 3.9% 3.2% 4.0% 2.2% 3.5% 4.1% 3.2% 2.7% 2.7% 4.1% 4.9% 3.2% 3.5%
10X30 4.6% 4.4% 5.0% 2.3% 3.0% 1.5% 4.3% 3.1% 4.8% 3.3% 3.3% 4.4% 4.2% 4.5% 3.8%
20X20 0.2% 0.3% 0.0% 0.5% 0.1% 0.9% 0.3% 0.0% 0.4% 0.5% 0.5% 0.6% 0.5% 0.8% 0.5%
Other 15.8% 8.4% 29.6% 28.0% 5.4% 57.0% 5.1% 4.7% 5.3% 5.7% 5.7% 13.0% 11.7% 14.3% 11.6%
10X25 3.9% 2.5% 3.1% 2.8% 6.3% 3.5%
10X30 5.1% 2.7% 3.5% 3.7% 4.8% 3.8%
20X20 0.3% 0.4% 0.3% 0.4% 1.2% 0.5%
Other 9.0% 7.9% 19.0% 11.5% 2.9% 11.2%
10X25 2.7% 3.8% 4.7%
10X30 3.3% 4.1% 4.0%
20X20 0.5% 0.4% 0.6%
Other 9.4% 15.4% 5.9%
10X25 4.2% 1.4% 5.0% 7.0% 2.5% 3.5% 3.8%
10X30 4.5% 1.9% 4.3% 4.0% 4.1% 4.7% 3.4%
20X20 1.3% 0.2% 0.9% 0.6% 0.5% 0.2% 0.5%
Other 8.6% 35.1% 8.2% 4.9% 10.6% 8.4% 7.9%
TABLE 8.15
PERCENTAGE DISTRIBUTION OF UNITS BY SQUARE FOOTAGE Square Footage Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99,999 100,000 or more NATIONAL
5X5 8.6% 6.1% 7.2% 7.6% 6.7% 7.2%
5X10 20.0% 22.1% 17.0% 20.3% 16.8% 19.1%
10X10 24.3% 28.5% 23.7% 26.3% 26.6% 25.8%
Unit Size 10X15 10X20 13.9% 14.8% 12.6% 17.2% 13.2% 12.9% 13.5% 14.0% 15.8% 19.0% 13.7% 15.2%
TABLE 8.16
PERCENTAGE DISTRIBUTION OF UNITS BY MARKET AREA Market Area Urban Suburban Rural
5X5 8.4% 7.0% 4.7%
5X10 21.0% 18.4% 16.5%
10X10 26.4% 24.2% 27.9%
Unit Size 10X15 10X20 14.0% 14.3% 12.8% 14.0% 15.0% 20.8%
TABLE 8.17
PERCENTAGE DISTRIBUTION OF UNITS BY YEAR FACILITY BUILT Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after
5X5 8.1% 5.1% 9.1% 4.8% 8.1% 6.4% 7.7%
5X10 23.7% 17.7% 24.3% 20.7% 16.8% 20.6% 17.1%
10X10 20.9% 16.5% 23.7% 30.9% 24.4% 25.2% 31.0%
Unit Size 10X15 10X20 11.9% 16.8% 8.8% 13.2% 11.6% 12.9% 8.8% 18.3% 15.2% 17.9% 15.1% 16.0% 15.3% 13.3%
2012 Self-Storage Almanac
85
er percentage of operators in rural areas reported conducting a lien sale compared with those managing facilities in suburban and urban locations. In addition, rural sites also posted fewer incidents of sale or disposal of a delinquent tenant’s personal items than suburban facilities. Storage businesses in urban locations had the highest number of incidents, averaging 12.3 for the year.
experts emphasize the importance of preventing late payment whenever possible. There are several delinquency prevention methods in widespread use throughout the industry. Currently, the most common involves assessing late fees to customers who do not pay their rents on time. Nationwide, more than 78
Delinquency Prevention Measures
TABLE 8.19
8•SiteInformation
TABLE 8.18
Self-storage professionals agree that a lien sale should always be a last resort. Instead of focusing on clearing units via foreclosure, industry
86
PERCENTAGE OF FACILITIES WITH AN APARTMENT ON SITE Percentage of Facilities With An Apartment On Site 29.9% 33.3% 11.1% 11.6% 10.3% 13.5% 34.2% 27.7% 37.7% 29.5% 29.5% 60.7% 58.5% 63.6% 34.3%
REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL Number of Units 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more Rentable Square Footage Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99,999 100,000 or more
5.0% 9.0% 23.3% 31.2% 50.0% 8.8% 15.6% 34.5% 24.2% 20.6%
Self-Storage Almanac 2012
percent of self-storage facilities use late fees to prevent delinquencies. Lien sale warnings are a close second, averaging 74.7 percent. Posted notices are less common in the industry and are used at approximately 56.4 percent of self-storage stores throughout the nation.
SALE AND DISPOSAL OF DELINQUENT TENANT GOODS REGION Percentage of Facilities Division Reporting Incidents NORTH CENTRAL 86.4% East North Central 84.1% West North Central 93.3% NORTHEAST 78.8% Middle Atlantic 77.4% New England 81.0% SOUTH CENTRAL 77.9% East South Central 85.2% West South Central 74.6% SOUTHEAST 94.4% South Atlantic 94.4% WEST 87.5% Mountain 84.3% Pacific 91.9% NATIONAL 85.6% Number of Units 1 to 99 71.7% 100 to 299 79.1% 300 to 499 96.7% 500 to 999 93.1% 1,000 or more 88.9% Rentable Square Footage Less than 25,000 78.0% 25,000 to 49,999 88.2% 50,000 to 74,999 94.6% 75,000 to 99,999 92.7% 100,000 or more 85.4% Market Area Urban 89.2% Suburban 88.1% Rural 76.6% Year Facility Built Prior to 1981 87.0% 1981 to 1985 81.4% 1986 to 1990 92.5% 1991 to 1995 94.4% 1996 to 2000 93.1% 2001 to 2005 84.0% 2006 or after 74.7%
Average Number of Incidents 7.7 7.3 8.9 7.5 8.9 5.4 6.2 6.1 6.3 12.6 12.6 10.4 8.1 13.5 9.1 2.8 4.8 9.1 16.8 21.4 5.3 8.4 11.3 15.9 13.1 12.3 9.4 4.6 5.6 8.0 10.8 8.5 11.8 7.2 9.8
SiteInformation•8
When looking at the data by facility size, the numbers show that the larger facilities are more likely to utilize a delinquency prevention tactic than smaller stores. Nearly all storage businesses with 1,000 or more units offer their customers regular monthly billing statements. However, just over half of stores with less than 100 units offer the same service to their tenants.
The area surrounding the selfstorage property also impacts the prevention method most commonly used. Approximately 88 percent of storage stores in urban areas rely on late fees. A similar percentage of suburban and rural storage sites also utilize this prevention method. However, it is interesting to note that urban stores are significantly more likely to offer a monthly billing state-
ment than counterparts located in other demographic areas. In addition, suburban-based storage sites use automatic and electronic payment at a much higher rate than sites in urban or rural communities to prevent late payment and ensure ongoing business success.
TABLE 8.20
DELINQUENCY PREVENTION BY REGION (PERCENTAGE OF FACILITIES) REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL
Regular Billing Statements 67.0% 69.0% 53.3% 54.5% 57.6% 50.0% 56.6% 62.3% 53.8% 76.0% 76.0% 71.8% 69.2% 75.3% 66.3%
Preventative Measures Automatic/ Electronic Late Lien Sale Payment Fees Warning 69.6% 85.2% 78.3% 70.0% 85.0% 77.0% 66.7% 86.7% 86.7% 60.4% 72.3% 70.3% 66.1% 74.6% 69.5% 52.4% 69.0% 71.4% 50.3% 67.9% 60.4% 56.6% 75.5% 66.0% 47.2% 64.2% 57.5% 69.6% 81.3% 78.9% 69.6% 81.3% 78.9% 75.0% 84.0% 83.0% 68.2% 81.3% 80.4% 84.0% 87.7% 86.4% 65.5% 78.5% 74.7%
Posted Notices 55.7% 58.0% 40.0% 52.5% 54.2% 50.0% 44.0% 56.6% 37.7% 67.3% 67.3% 59.6% 58.9% 60.5% 56.4%
Notice of Legal Action 67.8% 67.0% 73.3% 62.4% 61.0% 64.3% 52.2% 62.3% 47.2% 75.4% 75.4% 72.9% 68.2% 79.0% 66.8%
Other 10.4% 10.0% 13.3% 11.9% 15.3% 7.1% 10.7% 7.5% 12.3% 12.3% 12.3% 12.2% 12.1% 12.3% 11.6%
TABLE 8.21
DELINQUENCY PREVENTION BY NUMBER OF UNITS (PERCENTAGE OF FACILITIES)
Number of Units 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more
Regular Billing Statements 55% 58% 63% 71% 100%
Preventative Measures Automatic/ Electronic Late Lien Sale Payment Fees Warning 28% 79% 58% 47% 88% 77% 70% 89% 83% 86% 90% 91% 89% 89% 89%
Posted Notices 32% 37% 49% 51% 44%
Notice of Legal Action 40% 59% 73% 75% 78%
Other 11% 28% 24% 24% **
Notice of Legal Action 65% 66% 61%
Other 18% 28% 21%
** Insufficient data
TABLE 8.22
DELINQUENCY PREVENTION BY MARKET AREA (PERCENTAGE OF FACILITIES)
Market Area Urban Suburban Rural
Regular Billing Statements 71% 63% 55%
Preventative Measures Automatic/ Electronic Late Lien Sale Payment Fees Warning 61% 88% 75% 70% 88% 85% 49% 85% 77%
Posted Notices 57% 39% 35%
2012 Self-Storage Almanac
87
9•Security
C
reating a safe and secure environment is crucial for success in the self-storage industry. In a business that relies on tenants paying for off-site storage, it is important to remember that customers are only willing to store in locations where they believe their personal belongings will be pro-
TABLE 9.1
THEFTS AND BREAK-INS
88
Percentage Average of Facilities Number REGION Reporting of Division Incidents Incidents NORTH CENTRAL 8.5% 2.0 East North Central 6.8% 1.6 West North Central 13.3% 2.6 NORTHEAST 1.9% 1.2 Middle Atlantic 3.2% 1.3 New England 0.0% 1.0 SOUTH CENTRAL 2.3% 1.8 East South Central 0.0% 1.0 West South Central 3.4% 2.2 SOUTHEAST 11.2% 2.0 South Atlantic 11.2% 2.0 WEST 9.1% 2.6 Mountain 7.8% 3.1 Pacific 10.8% 1.8 NATIONAL 7.0% 2.0 Number of Units 1 to 99 3.8% 1.4 100 to 299 7.0% 1.9 300 to 499 7.8% 1.6 500 to 999 5.9% 1.8 1,000 or more 11.1% 15.0 Rentable Square Footage Less than 25,000 4.9% 1.6 25,000 to 49,999 3.5% 1.9 50,000 to 74,999 6.8% 1.4 75,000 to 99,999 12.2% 2.3 100,000 or more 12.2% 4.3 Market Area Urban 10.8% 2.2 Suburban 5.0% 1.5 Rural 5.3% 2.6 Year Facility Built Prior to 1981 8.7% 1.8 1981 to 1985 9.3% 1.7 1986 to 1990 10.0% 3.3 1991 to 1995 5.6% 4.2 1996 to 2000 8.3% 1.8 2001 to 2005 1.2% 1.2 2006 or after 8.9% 2.0 Self-Storage Almanac 2012
tected and safe. Many need a reassuring feeling of comfort and safety in order to add their signatures to a lease agreement. In addition to making it difficult to sell storage, properties that lack adequate security measures put themselves in a position of high risk—risk of customers experiencing a loss and risk of the owner facing legal repercussions. On the other hand, stores with state-of-the-art security systems not only offer excellent protection for items in storage but they also have a tangible competitive advantage in the highly competitive self-storage marketplace.
A Precious Asset Security is a precious asset in the selfstorage business and it can be the single most important selling point in closing a deal with a potential new renter at a self-storage store. Knowing its value, some owners and operators are very intentional when it comes to using security as a selling feature of the facility. They make an effort to point out safety measures like access control and surveillance cameras in order to showcase the safety they offer for their customers’ stored belongings. Although marketing security is an effective strategy for defining a store’s benefits and helping to set it apart from competing facilities, it is important to refrain from offering a customer any type of security guarantee. No self-storage store completely evades risk of crime or loss. Even the safest, best protected storage business may experience a break-in or theft and a promise of safety may leave the owner or operator legally liable after an incident or loss. Theft remains one of the top fears of reluctant self-storage ten-
ants. Many new customers harbor serious concerns and worry about the safety of their goods while stored away from home. Although crimes occasionally occur, it is important to remember that theft and break-ins are far from everyday occurrences at self-storage stores. Approximately one in 15 storage facilities nationwide reported a theft or break-in this year. Of those stores that dealt with an incident, the average number of thefts reported was two per storage facility. The highest percentage of theft and break-ins occurred in the West North Central area of the country. In this sub-region, more than 13 percent of operators experienced an incident in 2011. The Southeast region also had a higher than average proportion of self-storage stores reporting a theft or break-in with more than one in ten operators experiencing an issue in this area.
Decline In Theft It is important to note that the proportion of self-storage facilities reporting theft and break-in is significantly down from 2010. Last year, 18.2 percent of respondents nationwide experienced a theft or breakin at their site—a rate two and a half times greater than the average of 7.0 percent posted in 2011. In the Mountain states, approximately 7.8 percent of self-storage facilities faced a theft or break-in this year—a figure well in line with the national average. However, operators in theses states who experienced a problem reported the highest average number of incidents in the nation at 3.1 per storage facility. Averaging 2.6 per storage store, facilities in the West North Central division also faced a relatively high number of incidents of theft and break-in this year.
Security•9
There appears to be a strong correlation between the size of the store and both the proportion and number of thefts occurring at the site. Looking at the number of units, approximately 3.8 percent of selfstorage stores with less than 100 spaces reported an incident. The proportion increases to seven percent as the number of units at the store grows to 100 to 299. For facilities with more than 1,000 storage spaces, more than 11 percent reported an incident of theft—equivalent to more than one in ten. The same pattern exists when analyzing the proportion of stores experiencing a break-in by a property’s rentable square footage. Almost four percent of storage stores with less than 25,000 net rentable square feet had a theft or breakin this year. However, more than 12 percent of facilities with 100,000 or more square feet experienced an incident at their sites, making large stores three times more likely to report a theft this year
Small Versus Large Looking at the average number of
thefts or break-ins reported in 2011 reveals a similar trend: smaller stores generally report fewer incidents of theft or break-ins than do large facilities. While properties with under 25,000 rentable square feet reported an average of 1.6 incidents, those measuring 100,000 or more square feet averaged 4.3 occurrences per impacted store.
NO SELF-STORAGE STORE
COMPLETELY EVADES RISK OF CRIME OR LOSS.
category to facilities with 100 to 299 storage spaces, the number of incidents increases to 1.9. However, the largest facilities, with 1,000 or more storage units, posted an average of 15 incidents. The area surrounding the store also had an impact on the number of thefts at a site. This year, almost 11 percent of urban storage facilities reported an incident of theft. The proportion was approximately half that at suburban and rural storage stores. However, the highest average number of incidents occurred at rural sites which experienced approximately 2.6 break-ins per self-storage store this year. Urban storage facilities, on the other hand, reported only 2.2 incidents while suburban facilities lagged the category with an average number of 1.5 incidents per storage store.
Varying Security Measures The trend is more dramatic when looking at theft by number of units at a self-storage property. The smallest stores, those with less than 100 storage units, averaged 1.4 incidents of theft this year. Moving up one size
Security measures used at self-storage facilities vary widely based on the individual needs of the storage store. Standards like automated lighting and perimeter fencing remain two of the usual stock of safety
TABLE 9.2
SECURITY MEASURES USED BY REGION Perimeter Cameras/ REGION Fencing Video Division Walls Surveillence NORTH CENTRAL 83.5% 74.8% East North Central 84.0% 77.0% West North Central 80.0% 60.0% NORTHEAST 82.2% 75.2% Middle Atlantic 84.7% 76.3% New England 78.6% 73.8% SOUTH CENTRAL 88.1% 82.4% East South Central 83.0% 86.8% West South Central 90.6% 80.2% SOUTHEAST 91.2% 87.1% South Atlantic 91.2% 87.1% WEST 93.1% 89.4% Mountain 91.6% 86.9% Pacific 95.1% 92.6% NATIONAL 88.6% 83.1%
Motion Detectors 9.6% 10.0% 6.7% 14.9% 15.3% 14.3% 13.8% 15.1% 13.2% 26.3% 26.3% 17.6% 14.0% 22.2% 17.2%
Security Patrol Service 7.8% 6.0% 20.0% 5.9% 3.4% 9.5% 5.7% 9.4% 3.8% 8.2% 8.2% 6.9% 8.4% 4.9% 6.9%
Guard Dogs 2.6% 2.0% 6.7% ** ** ** 1.9% ** 2.8% 1.8% 1.8% 3.2% 3.7% 2.5% 2.0%
Wired Door Alarms 3.5% 4.0% ** 11.9% 13.6% 9.5% 5.0% 5.7% 4.7% 12.9% 12.9% 13.3% 5.6% 23.5% 9.7%
Preventative Measures Wireless Door Computerized Tenant Tenant Alarms Gate Access Photo ID Fingerprinting 1.7% 73.9% 14.8% 0.9% 2.0% 79.0% 13.0% ** ** 40.0% 26.7% 6.7% 1.0% 67.3% 25.7% ** 1.7% 72.9% 23.7% ** ** 59.5% 28.6% ** 1.9% 76.1% 20.1% 2.5% 3.8% 71.7% 17.0% 1.9% 0.9% 78.3% 21.7% 2.8% 1.2% 82.5% 31.6% 2.3% 1.2% 82.5% 31.6% 2.3% 1.1% 84.0% 17.0% 1.1% 1.9% 77.6% 10.3% 1.9% ** 92.6% 25.9% ** 1.4% 78.1% 21.9% 1.5%
Padlock Security Stickers 4.3% 4.0% 6.7% 9.9% 8.5% 11.9% 10.7% 11.3% 10.4% 20.5% 20.5% 10.6% 11.2% 9.9% 11.9%
Local Crime Digital Restrictive Prevention Video Background Signage Program Recorder Checks Biometrics 13.9% 0.9% 66.1% ** 0.9% 15.0% 1.0% 70.0% ** 1.0% 6.7% ** 40.0% ** ** 14.9% 6.9% 68.3% 2.0% ** 13.6% 6.8% 69.5% 1.7% ** 16.7% 7.1% 66.7% 2.4% ** 15.7% 5.7% 73.0% 1.3% ** 13.2% 9.4% 73.6% ** ** 17.0% 3.8% 72.6% 1.9% ** 31.6% 18.1% 80.7% 1.8% ** 31.6% 18.1% 80.7% 1.8% ** 18.1% 7.4% 77.7% ** 0.5% 15.0% 9.3% 72.0% ** ** 22.2% 4.9% 85.2% * 1.2% 19.6% 8.4% 74.3% 1.0% 0.3%
**Insufficient data
2012 Self-Storage Almanac
89
9•Security
features at self-storage facilities nationwide. However, a growing number of owners and operators are branching out and experimenting with new systems to keep their selfstorage stores safe and secure. Extensive programs like tenant fingerprinting and background checks are occasionally utilized to help prevent customer fraud. These safeguards generally involve cross-referencing the tenant’s information with data on file with the State Bureau of Criminal Identification (BCI) and the Federal Bureau of Investigation (FBI). Costs vary depending on the depth of the background check.
irises, voice patterns, facial features or hand measurements each time he or she enters the property. Although biometrics systems are extremely expensive relative to standard security systems, costs continue to come down making this top-notch safeguard increasingly accessible to self-storage facilities across the country.
IN FACT,
MORE THAN 90 PERCENT OF STORAGE FACILITIES IN THIS SUB-REGION
ARE EQUIPPED
Biometrics involves measuring and analyzing the customer’s biological data. At self-storage facilities, this may include utilizing technology to measure a customer’s physical and biological characteristics based on size, pattern or DNA. Storage facilities using biometrics may measure a tenant’s eye retinas and
WITH FENCING, VIDEO SURVEILLANCE AND COMPUTERIZED GATE ACCESS CONTROL.
Walls And Fences Nationally, the most common security tactic is constructing walls or fencing around the perimeter of the site. Video surveillance is also a common protection with more than 83 percent of facilities in the nation indicating their sites are outfitted with security cameras. More than 78 percent of storage properties in the national utilize computerized gate access to control entry and exit at their site, as well. The least common security measures in force this year include guard dogs, wireless door alarms, tenant fingerprinting, background checks and biometrics—all of which average a utilization rate of two percent or less industry-wide. It is interesting to note that wired door alarms are significantly more common than wireless alarms. In fact, on a national basis 2.7 percent of storage stores indicated they were equipped with wireless door alarms, but 19.5 percent of facilities offer the hard-wired variety.
TABLE 9.3
SECURITY MEASURES BASED ON SQUARE FOOTAGE (PERCENTAGE OF FACILITIES) Perimeter Cameras/ Fencing Video Square Footage Walls Surveillence Less than 25,000 62.6% 46.3% 25,000 to 49,999 88.2% 71.8% 50,000 to 74,999 86.5% 83.8% 75,000 to 99,999 80.5% 82.9% 100,000 or more 78.0% 68.3% All Sizes 77.2% 66.5%
Motion Detectors 21.1% 29.4% 52.7% 43.9% 39.0% 34.1%
Security Patrol Service 22.8% 4.7% 16.2% 2.4% 9.8% 13.5%
Guard Dogs 8.1% 3.5% ** ** ** 3.6%
Wired Door Alarms 9.8% 10.6% 28.4% 41.5% 29.3% 19.5%
Preventative Measures Wireless Door Computerized Tenant Tenant Alarms Gate Access Photo ID Fingerprinting 3.3% 30.9% 26.0% 1.6% 2.4% 64.7% 48.2% 1.2% 1.4% 83.8% 48.6% 2.7% 2.4% 78.0% 65.9% 7.3% 4.9% 48.8% 51.2% 7.3% 2.7% 56.9% 43.1% 3.0%
Padlock Security Stickers 23.6% 18.8% 27.0% 26.8% 24.4% 23.6%
Local Crime Digital Restrictive Prevention Video Background Signage Program Recorder Checks Biometrics 26.0% 12.2% 23.6% 2.4% 0.8% 32.9% 15.3% 50.6% 3.5% ** 45.9% 21.6% 74.3% ** ** 48.8% 17.1% 75.6% 2.4% ** 58.5% 19.5% 58.5% ** 2.4% 37.9% 16.2% 50.0% 1.9% 0.5%
**Insufficient data
TABLE 9.4
SECURITY MEASURES BASED ON NUMBER OF UNITS (PERCENTAGE OF FACILITIES) Perimeter Cameras/ Fencing Video Number of Units Walls Surveillence 1 to 99 49.1% 28.3% 100 to 299 73.9% 56.5% 300 to 499 87.8% 73.3% 500 to 999 85.1% 89.1% 1,000 or more 88.9% 88.9% All Sizes 77.2% 66.3%
Motion Detectors 15.1% 19.1% 36.7% 56.4% 44.4% 33.7%
**Insufficient data
90
Self-Storage Almanac 2012
Security Patrol Service 13.2% 15.7% 12.2% 11.9% 11.1% 13.3%
Guard Dogs 11.3% 4.3% 2.2% 1.0% ** 3.8%
Wired Door Alarms 9.4% 7.0% 14.4% 39.6% 55.6% 19.3%
Preventative Measures Wireless Door Computerized Tenant Tenant Alarms Gate Access Photo ID Fingerprinting ** 17.0% 22.6% ** 5.2% 44.3% 34.8% 1.7% 2.2% 66.7% 41.1% 3.3% 1.0% 81.2% 64.4% 5.0% 11.1% 66.7% 66.7% 11.1% 2.7% 56.5% 43.5% 3.0%
Padlock Security Stickers 20.8% 20.9% 15.6% 34.7% 33.3% 23.6%
Local Crime Digital Restrictive Prevention Video Background Signage Program Recorder Checks Biometrics 18.9% 11.3% 13.2% 3.8% ** 27.8% 9.6% 30.4% 1.7% ** 41.1% 18.9% 61.1% 2.2% ** 54.5% 24.8% 78.2% 1.0% 2.0% 44.4% 22.2% 66.7% ** ** 37.5% 16.6% 49.5% 1.9% 0.5%
Security•9
Properties in the Pacific states are some of the most secure in the nation. This area of the country leads the category in six of the security measures analyzed, topping the list for the highest proportion of selfstorage facilities equipped with perimeter fencing, video surveillance cameras, wired door alarms, computerized gate access, digital video recorder (DVR) usage and biometrics. In fact, more than 90 percent of storage facilities in this sub-region are equipped with fencing, video surveillance and computerized gate access control. Protecting a facility with a security patrol service is most common in the West North Central division of the country where approximately one in five stores utilizes this security measure. The region also claims the highest proportion of storage stores which choose to secure their facilities with guard dogs and require tenant fingerprinting, averaging 6.7 percent for both security measures.
The Southeast region tops the list in usage of three security measures—motion detectors, padlock security stickers and restrictive signage. More than 80 percent of selfstorage stores in this area also use perimeter wall fencing, video surveillance cameras, computerized gate access and digital video recording devices.
Safety By Size The size of the self-storage property impacts the preventive security measures used to protect the site. In general, the largest storage stores are more likely to utilize a safety device than their smaller counterparts. The exception to this is guard dogs and security patrol services which averaged a higher proportion of facilities using these measures at small stores than at large sites. When looking at the age of the self-storage facility, it is clear that some security measures are more common at newly developed sites.
For example, requiring a tenant’s photo identification is mandated at more than 57 percent of storage facilities built after 2005. For the oldest category—properties developed prior to 1981—only 6.4 percent of self-storage stores have the same tenant identification requirement in place. Posting restrictive signage and participating in a local crime prevention program are also much more common at facilities built after 2006 than in those constructed prior to 1981. On the other end of the spectrum, the oldest facilities led the category for several crime prevention measures. Properties developed prior to 1981 boasted higher than 90 percent participation in perimeter fencing and video surveillance. This age group also had the most storage facilities equipped with digital video recording devices. Based on this year’s security measure participation rates, rural
TABLE 9.5
SECURITY MEASURES BASED ON YEAR FACILITY BUILT (PERCENTAGE OF FACILITIES)
Year Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after All Sizes
Perimeter Cameras/ Fencing Video Walls Surveillance 92.6% 90.4% 91.7% 81.3% 92.1% 83.2% 89.1% 72.7% 88.4% 84.5% 84.1% 78.8% 81.0% 84.5% 88.3% 82.7%
Motion Detectors 4.3% 11.5% 12.9% 14.5% 10.3% 18.2% 59.5% 17.6%
Security Patrol Service 8.5% 5.2% 7.9% 9.1% 5.8% 6.8% 8.3% 7.1%
Guard Dogs ** 2.1% 1.0% 5.5% 2.6% 3.0% 1.2% 2.1%
Wired Door Alarms 2.1% 4.2% 5.0% 7.3% 7.1% 15.2% 29.8% 9.9%
Preventative Measures Wireless Door Computerized Tenant Tenant Alarms Gate Access Photo ID Fingerprinting ** 83.0% 6.4% ** 1.0% 71.9% 20.8% 1.0% 2.0% 84.2% 14.9% 2.0% 1.8% 63.6% 32.7% ** 1.3% 79.4% 18.1% 1.3% 2.3% 76.5% 19.7% 0.8% 1.2% 77.4% 57.1% 6.0% 1.4% 77.5% 22.5% 1.5%
Padlock Security Stickers 5.3% 13.5% 12.9% 23.6% 8.4% 8.3% 22.6% 12.1%
Local Crime Digital Restrictive Prevention Video Background Signage Program Recorder Checks Biometrics 6.4% 1.1% 81.9% ** ** 17.7% 7.3% 72.9% 1.0% ** 17.8% 5.0% 76.2% ** ** 14.5% 12.7% 58.2% 3.6% ** 15.5% 8.4% 77.4% 0.6% 0.6% 25.8% 3.8% 65.9% 1.5% 0.8% 44.0% 28.6% 77.4% 1.2% ** 20.1% 8.6% 73.6% 1.0% 0.3%
**Insufficient data
TABLE 9.6
SECURITY MEASURES BASED ON MARKET AREA (PERCENTAGE OF FACILITIES)
Market Area Urban Suburban Rural All Sizes
Perimeter Cameras/ Fencing Video Walls Surveillance 79.2% 70.8% 85.0% 73.8% 62.8% 50.0% 77.5% 66.8%
Motion Detectors 41.7% 35.6% 20.2% 33.7%
Security Patrol Service 13.3% 13.8% 13.8% 13.6%
Guard Dogs 3.3% 1.9% 8.5% 4.0%
Wired Door Alarms 25.8% 17.5% 12.8% 19.0%
Preventative Measures Wireless Door Computerized Tenant Tenant Alarms Gate Access Photo ID Fingerprinting 1.7% 57.5% 48.3% 4.2% 3.8% 66.3% 48.8% 2.5% 2.1% 40.4% 26.6% 2.1% 2.7% 57.0% 43.0% 2.9%
Padlock Security Stickers 32.5% 19.4% 18.1% 23.3%
Local Crime Digital Restrictive Prevention Video Background Signage Program Recorder Checks Biometrics 47.5% 21.7% 54.2% 2.5% 0.8% 43.1% 15.0% 59.4% 1.9% 0.6% 19.1% 12.8% 26.6% 1.1% ** 38.5% 16.6% 49.5% 1.9% 0.5%
**Insufficient data
2012 Self-Storage Almanac
91
9•Security
self-storage facilities are equipped with the fewest safety features of all market areas. Properties in rural locations were the category laggards in almost every type of crime prevention method analyzed including perimeter fencing, video surveil-
IN TERMS OF CRIME PREVENTION MEASURES.
(VANDALISM, TRESPASSING, DISORDERLY CONDUCT, ETC.)
GRAFFITI CRIMES
Percentage Average of Facilities Number REGION Reporting of Division Incidents Incidents NORTH CENTRAL 5.1% 2.0 East North Central 6.8% 2.0 West North Central ** ** NORTHEAST 3.8% 2.0 Middle Atlantic 3.2% 2.0 New England 4.8% 2.0 SOUTH CENTRAL ** ** East South Central ** ** West South Central ** ** SOUTHEAST ** ** South Atlantic ** ** WEST 5.7% 2.4 Mountain 7.8% 2.3 Pacific 2.7% 3.0 NATIONAL 2.7% 2.2 Number of Units 1 to 99 ** ** 100 to 299 2.6% 2.3 300 to 499 2.2% 2.0 500 to 999 4.0% 2.3 1,000 or more ** ** Rentable Square Footage Less than 25,000 1.6% 2.5 25,000 to 49,999 1.2% 2.0 50,000 to 74,999 4.1% 2.0 75,000 to 99,999 2.4% 3.0 100,000 or more 2.4% 2.0 Market Area Urban 4.2% 2.2 Suburban 1.9% 2.3 Rural 2.1% 2.0 Year Facility Built Prior to 1981 8.7% 2.5 1981 to 1985 2.3% 2.0 1986 to 1990 2.5% 3.0 1991 to 1995 ** ** 1996 to 2000 4.2% 2.0 2001 to 2005 1.2% 2.0 2006 or after 2.5% 2.0
Percentage Average of Facilities Number REGION Reporting of Division Incidents Incidents NORTH CENTRAL 3.4% 2.5 East North Central 2.3% 3.0 West North Central 6.7% 2.0 NORTHEAST ** ** Middle Atlantic ** ** New England ** ** SOUTH CENTRAL 1.2% 3.0 East South Central ** ** West South Central 1.7% 3.0 SOUTHEAST 2.2% 2.5 South Atlantic 2.2% 2.5 WEST 10.2% 4.4 Mountain 3.9% 2.0 Pacific 18.9% 5.1 NATIONAL 3.8% 3.8 Number of Units 1 to 99 1.9% 3.0 100 to 299 0.9% 2.0 300 to 499 4.4% 3.5 500 to 999 5.9% 4.8 1,000 or more 22.2% 2.5 Rentable Square Footage Less than 25,000 3.3% 2.8 25,000 to 49,999 6.0% 4.0 50,000 to 74,999 1.4% 3.0 75,000 to 99,999 7.3% 5.7 100,000 or more 2.4% 2.0 Market Area Urban 8.4% 3.9 Suburban 2.5% 3.5 Rural ** ** Year Facility Built Prior to 1981 4.3% 3.0 1981 to 1985 4.7% 4.0 1986 to 1990 10.0% 5.3 1991 to 1995 ** ** 1996 to 2000 2.8% 2.0 2001 to 2005 2.5% 3.5 2006 or after 3.8% 3.3
**Insufficient data
92
WELL EQUIPPED
Self-Storage Almanac 2012
TABLE 9.8
TABLE 9.7
OTHER PHYSICAL CRIMES
BOTH URBAN AND SUBURBAN PROPERTIES REMAIN
**Insufficient data
lance, motion detection, wired door alarms, computerized gate access, requiring tenant photo identification, fingerprinting, padlock security stickers, restrictive signage, crime prevention program participation and background checks. However, this area had the highest percentage of facilities utilizing security patrol services and guard dogs. Both urban and suburban properties remain well equipped in terms of crime prevention measures. Owners and operators in these types of locations posted higher than average participation rates in equipping their properties with fencing, surveillance cameras, motion detectors, computerized gate access, requiring a photo identification, restrictive signage, use of a digital video recorder and biometrics.
Infrequent Physical Crime Physical crimes, such as vandalism and trespassing, are rare occurrences at self-storage facilities in the United States. Nationally, only 2.7 percent of storage stores reported a physical crime and these sites averaged approximately 2.2 incidents each. Proportionally, self-storage stores in the West North Central and Mountain states saw the most instances of physical crimes at their sites. However, self-storage facilities located in the Pacific sub-region averaged 3.0 instances per affected site—the highest percentage for the category. With this type of crime, storage stores in urban settings are proportionally more likely to report an incident than facilities in suburban or rural locations. While approximately two percent of facilities outside of urban locales reported a physical crime like vandalism or trespassing, 4.2 percent of urban stores experienced an episode—a rate twice
Security•9
Storage stores in the Pacific division reported a much higher rate of graffiti crimes than their counterparts operating in other areas of the United States. In fact almost one in five facilities in this division reported a graffiti crime in 2011. This area of the country also averaged the highest number of incidents for the year, posting more than five per storage store. In addition to the location of the storage facility, the number of units at the property also seemed to impact the store’s risk of graffiti crime. While 1.9 percent of storage facilities with fewer than 100 units reported finding graffiti on the site, more than 22 percent of operators at storage stores with 1,000 or more units reported an incident. However, the number of incidents occurring at each site was fairly evenly distributed throughout the category.
Illegal Substance Storage Storing illegal substances at selfstorage stores is a serious offense. Tenants who covertly store drugs or hazardous materials in a self-storage unit expose the property to fire and environmental contamination. Although hazardous and illegal sub-
STORAGE OF ILLEGAL DRUGS/ HAZARDOUS MATERIALS Percentage Average of Facilities Number REGION Reporting of Division Incidents Incidents NORTH CENTRAL 1.7% 2.0 East North Central 2.3% 2.0 West North Central ** ** NORTHEAST ** ** Middle Atlantic ** ** New England ** ** SOUTH CENTRAL 1.2% 2.0 East South Central ** ** West South Central 1.7% 2.0 SOUTHEAST ** ** South Atlantic ** ** WEST ** ** Mountain ** ** Pacific ** ** NATIONAL 0.5% 2.0 Number of Units 1 to 99 ** ** 100 to 299 ** ** 300 to 499 1.1% 2.0 500 to 999 ** ** 1,000 or more ** ** Rentable Square Footage Less than 25,000 ** ** 25,000 to 49,999 ** ** 50,000 to 74,999 ** ** 75,000 to 99,999 ** ** 100,000 or more 2.4% 2.0 Market Area Urban 1.7% 2.0 Suburban ** ** Rural ** ** Year Facility Built Prior to 1981 ** ** 1981 to 1985 ** ** 1986 to 1990 5.0% 2.0 1991 to 1995 ** ** 1996 to 2000 ** ** 2001 to 2005 ** ** 2006 or after ** ** **Insufficient data
lem with illegal material storage. This category is also down from last year when 2.6 percent of stores nationwide grappled with this problem. Deception on the part of the customer is much more common at self-storage facilities. This fraud may
TABLE 9.10
Graffiti is more than a nuisance at self-storage facilities, it is a crime that owners and operators spend time and money eradicating from their properties. Vandalism can also give a negative impression to potential customers coming to view the site for the first time, leaving them to wonder whether the property is truly safe and secure. Approximately 3.8 percent of stores nationwide reported an incident of graffiti this year, down from last year’s average of 5.5 percent.
stance storage is a very rare occurrence at self-storage stores, when such incidents arise, cleaning the site and removing any contaminants can be a long and expensive undertaking. On average, fewer than one percent of self-storage facilities in America reported a prob-
TABLE 9.9
that of storage stores operating in less populated areas.
INCIDENTS OF CUSTOMER FRAUD/DECEPTION Percentage Average of Facilities Number REGION Reporting of Division Incidents Incidents NORTH CENTRAL 6.8% 2.0 East North Central 9.1% 2.0 West North Central ** ** NORTHEAST 3.8% 3.0 Middle Atlantic 3.2% 3.0 New England 4.8% 3.0 SOUTH CENTRAL 3.5% 3.0 East South Central 7.4% 3.5 West South Central 1.7% 2.0 SOUTHEAST 5.6% 4.8 South Atlantic 5.6% 4.8 WEST 9.1% 3.5 Mountain 11.8% 3.8 Pacific 5.4% 2.5 NATIONAL 5.9% 3.4 Number of Units 1 to 99 7.5% 2.5 100 to 299 7.0% 2.8 300 to 499 4.4% 4.8 500 to 999 4.0% 3.0 1,000 or more 11.1% 10.0 Rentable Square Footage Less than 25,000 8.9% 3.5 25,000 to 49,999 2.4% 3.0 50,000 to 74,999 2.7% 2.0 75,000 to 99,999 4.9% 2.5 100,000 or more 7.3% 6.0 Market Area Urban 3.4% 3.3 Suburban 5.0% 3.8 Rural 10.6% 3.2 Year Facility Built Prior to 1981 8.7% 3.5 1981 to 1985 2.3% 2.0 1986 to 1990 7.5% 3.0 1991 to 1995 8.6% 5.0 1996 to 2000 9.7% 4.0 2001 to 2005 2.5% 2.5 2006 or after 5.1% 2.3 **Insufficient data
2012 Self-Storage Almanac
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9•Security
TABLE 9.11
involve a scheme like fraudulently renting a unit under a false name or paying rent with a stolen credit card. Occasionally, scams like customers renting units to move in unwanted items or garbage and then never paying a bill cycle through the industry. In a case like this, the custom-
INCIDENTS OF CUSTOMERINIATED LAWSUITS Percentage Average of Facilities Number REGION Reporting of Division Incidents Incidents NORTH CENTRAL ** ** East North Central ** ** West North Central ** ** NORTHEAST ** ** Middle Atlantic ** ** New England ** ** SOUTH CENTRAL ** ** East South Central ** ** West South Central ** ** SOUTHEAST ** ** South Atlantic ** ** WEST 1.1% 3.0 Mountain ** ** Pacific 2.7% 3.0 NATIONAL 0.3% 3.0 Number of Units 1 to 99 ** ** 100 to 299 0.9% 3.0 300 to 499 ** ** 500 to 999 ** ** 1,000 or more * * Rentable Square Footage Less than 25,000 0.8% 3.0 25,000 to 49,999 ** ** 50,000 to 74,999 ** ** 75,000 to 99,999 ** ** 100,000 or more ** ** Market Area Urban ** ** Suburban ** ** Rural 1.1% 3.00 Year Facility Built Prior to 1981 ** ** 1981 to 1985 ** ** 1986 to 1990 ** ** 1991 to 1995 ** ** 1996 to 2000 1.4% 3.0 2001 to 2005 ** ** 2006 or after ** ** **Insufficient data
94
Self-Storage Almanac 2012
er fully intends to allow the store to foreclose on the unit in hopes that the owner will dispose of the discarded property inside. Although the deception varies from facility-to-facility, approximately one in 20 stores reported an incident of fraud this year. Most common in the Mountain states, almost 12 percent of facilities in this division faced an case of customer fraud in 2011. Self-storage stores operating in the East North Central and East South Central sub-regions both saw a larger than average proportion of facilities affected by this type of crime, averaging 9.1 percent and 7.4 percent respectively.
Locations Of Deception The location of the facility also seems to make some stores more vulnerable to deception. Approximately 3.4 percent of urban storage properties and 5.0 percent of suburban storage facilities reported at least one incident of customer fraud or deception. More than 10 percent of rural facilities experienced a crime of customer fraud this year—more than twice the proportion posted at other facility types. In terms of the number of incidents of this type of crime, the national average for 2011 was 3.4 per facility. Storage facilities operating in the Southeast reported the highest average number of incidents at 4.8 per storage store. Properties in the East North Central and Wet South Central portions of the United States saw the fewest incidents, averaging 2.0 per facility. In general, the numbers show that the larger the facility, the more instances of customer fraud at a site. For example, stores with fewer than 100 units averaged 3.5 incidents of deception. Storage facilities with
more than 1,000 spaces, on the other hand, reported 10 incidents of customer fraud each. The same pattern holds true when examining stores by their net rentable square footage. Properties measuring less than 25,000 rentable square feet averaged 3.5 incidents of customer deception; stores with 100,000 or more square feet posted an average of six instances per property. Angry customers occasionally turn to the courts to help them settle their differences with a storage business. Although very rare, customers occasionally initiate lawsuits against self-storage facilities and their owners or operators. Driven by a variety of factors such as loss or damage to their items while in storage, lawsuits can be very costly—especially when including attorneys’ fees and court costs in the grand total. Across the country, fewer than 1 percent of self-storage businesses were confronted with a lawsuit. This figure is also significantly down from last year when almost two percent of self-storage facilities reported a customer-initiated lawsuit at their sites.
Searches And Subpoenas Search warrants and subpoenas are more common on network television crime dramas than at self-storage facilities in the United States. Nationwide, 1.6 percent of stores indicated they were served with a search warrant. Compared to last year, the proportion of storage facilities facing a subpoena or search warrant fell 5 percentage points over the 12 month period. Although rare, being served is most common in the Pacific portion of the nation where 5.4 percent of stores reported being subpoenaed or searched. Self-storage stores in
Security•9
The location of the store also affected the proportion of facilities reporting a subpoena or search warrant. Self-storage stores in urban areas were the most likely to be served with a search warrant or subpoena. In fact, the proportion of urban storage businesses that reported subpoenas and search warrants executed at their sites was almost twice that of suburban and rural facilities that were subpoenaed or searched in 2011. Although rare, the possibility of employee theft and fraud should never be discounted. Situations such as credit card and identification theft as well as incidents of employees stealing from customers can occur on a very infrequent basis. When employees steal from the business or tenants, the repercussions are long lasting as customers generally lose all trust in the storage business and owners start to doubt and second
Across the country, few storage stores reported cases of employee theft or fraud. For 2011, approximately one in every 200 stores—less than 1 percent—recounted an in-
cident. Self-storage stores in the Pacific states led the category with 5.4 percent of facilities reporting a an instance of an employee committing theft or fraud at the site. Of those who faced a problem, the number of instances of theft by staff members at the facility averaged two for the year.
SERVED WITH SEARCH WARRANT/SUBPOENA
EMPLOYEE THEFT & FRAUD
Percentage Average of Facilities Number REGION Reporting of Division Incidents Incidents NORTH CENTRAL 1.7% 2.0 East North Central 2.3% 2.0 West North Central ** ** NORTHEAST 1.9% 2.0 Middle Atlantic 3.2% 2.0 New England ** ** SOUTH CENTRAL 1.2% 2.0 East South Central ** ** West South Central 1.7% 2.0 SOUTHEAST ** ** South Atlantic ** ** WEST 3.4% 3.0 Mountain 2.0% 2.0 Pacific 5.4% 3.5 NATIONAL 1.6% 2.5 Number of Units 1 to 99 ** ** 100 to 299 ** ** 300 to 499 2.2% 2.0 500 to 999 3.0% 3.0 1,000 or more 11.1% 2.0 Rentable Square Footage Less than 25,000 0.8% 2.0 25,000 to 49,999 1.2% 2.0 50,000 to 74,999 ** ** 75,000 to 99,999 4.9% 3.5 100,000 or more 4.9% 2.0 Market Area Urban 2.5% 3.0 Suburban 1.3% 2.0 Rural 1.1% 2.0 Year Facility Built Prior to 1981 ** ** 1981 to 1985 ** ** 1986 to 1990 5.0% 3.5 1991 to 1995 5.7% 2.0 1996 to 2000 1.4% 2.0 2001 to 2005 ** ** 2006 or after 1.3% 2.0
Percentage Average of Facilities Number REGION Reporting of Division Incidents Incidents NORTH CENTRAL ** ** East North Central ** ** West North Central ** ** NORTHEAST ** ** Middle Atlantic ** ** New England ** ** SOUTH CENTRAL ** ** East South Central ** ** West South Central ** ** SOUTHEAST ** ** South Atlantic ** ** WEST 2.3% 2.0 Mountain ** ** Pacific 5.4% 2.0 NATIONAL 0.5% 2.0 Number of Units 1 to 99 ** ** 100 to 299 0.9% 2.0 300 to 499 ** ** 500 to 999 1.0% 2.0 1,000 or more ** ** Rentable Square Footage Less than 25,000 ** ** 25,000 to 49,999 1.2% 2.0 50,000 to 74,999 ** ** 75,000 to 99,999 2.4% 2.0 100,000 or more ** ** Market Area Urban 0.8% 2.0 Suburban 0.6% 2.0 Rural ** ** Year Facility Built Prior to 1981 ** ** 1981 to 1985 ** ** 1986 to 1990 5.0% 2.0 1991 to 1995 ** ** 1996 to 2000 ** ** 2001 to 2005 ** ** 2006 or after ** **
**Insufficient data
TABLE 9.13
A higher proportion of large selfstorage stores faced search warrants than the average at smaller facilities. More than 11 percent of properties with more than 1,000 storage spaces received a search warrant this year, making it the leader for the category. Self-storage properties with 75,000 or more rentable square feet also topped the grouping with almost 5 percent of these large stores reporting an incident. This number is much higher than the 0.8 percent of storage facilities with less than 25,000 rentable square feet who were served with a subpoena or search warrant in 2011.
guess the motivations and actions of staff members.
TABLE 9.12
the Middle Atlantic states also reported a higher than average proportion of owners and operators facing a search warrant or subpoena with 3.2 percent of facilities in this area being served at some point during the year.
**Insufficient data
2012 Self-Storage Almanac
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10•Marketing
I
n the not so distant past, selfstorage owners and operators gave little thought to marketing and advertising. Most facilities simply put up a sign and took out an ad in the Yellow Pages to spread their message and attract new customers in need of storage. However, the industry has matured over time. As markets have become increasingly saturated, the competition for new customers has grown, creating a need for successful methods for spreading a self-storage facility’s message to the public.
tics that are most cost effective for the self-storage facility. For example, if an owner is spending $2,000 per month on a Yellow Pages ad that brings in two new customers per month, then the cost per lease of the advertisement is $1,000. With this information, owners and operators can adjust their budgets and redistribute their marketing dollars into the advertising categories that are proving most effective.
Just as the self-storage sector has grown and developed, industry marketing and advertising efforts have become more complicated over time. Today’s owners and operators are constantly on the watch for innovative marketing techniques they can use to set themselves apart from the rest of the pack. As they experiment with a variety of media, many owners and operators have started to track the success of their marketing campaigns to ensure they are getting the most out of this important investment.
SELF-STORAGE STORES
Cost Per Lease Identifying the cost per lease is one of the best methods for establishing the efficacy of various marketing strategies. Defined as the cost of a marketing strategy divided by the number of new rentals that resulted from the campaign, the cost per lease helps owners pinpoint the tac-
OVER HALF OR 53 PERCENT OF
SURVEYED INDICATED THEY
OFFER CUSTOMER STORAGE INSURANCE. In order to ensure an accurate cost per lease number, many stores have implemented tracking programs that identify the specific type of marketing that brings each new customer to the store. These programs range from simple plans requiring managers to ask new tenants what drove them to the site and checklists included in new renter packets to more complicat-
ed and sophisticated programs that include separate phone numbers and coupon codes for each advertising strategy in use. In addition to being drawn in by specific advertising campaigns, many customers select a self-storage property based on the services and benefits provided. In fact, owners and operators routinely market not only the store, but the amenities and extras their sites offer in order to separate themselves from the competition. These services not only help sell new tenants on the facility but they often generate additional income as well, making them especially appealing to self-storage businesses. In general, the services offered at self-storage stores are up from last year in almost all categories for 2011. Nationally, nearly 80 percent of facilities surveyed boasted retail products for sale on site, making it the most popular amenity overall. Many self-storage customers place a premium on the ease and convenience of a one-stop shopping experience for moving and storage items and this category mirrors that demand as the grouping grew by more than 29 percent over the past year. Self-storage facilities in the Southeast and West regions of the country are most likely to resell retail products, while such offerings are least common in the North Central states.
TABLE 10.1
SERVICES OFFERED AT A FACILITY (PERCENTAGE OF FACILITIES)
REGION NORTH CENTRAL NORTHEAST SOUTH CENTRAL SOUTHEAST WEST NATIONAL
Moving Truck Rentals 33.0% 34.0% 33.0% 39.0% 36.0% 33.5%
**Insufficient data
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Self-Storage Almanac 2012
Ancillary Products for Resale 73.9% 76.2% 74.2% 84.8% 84.0% 79.4%
Customer Storage Insurance 50.0% 56.0% 51.0% 50.0% 57.0% 53.0%
Offers Shipping Services 0.9% 5.9% 3.1% 1.8% 4.3% 3.1%
Car Wash ** 2.0% ** 2.3% 0.5% 1.0%
Other On-Site Business 14.8% 17.8% 13.2% 12.9% 8.0% 12.7%
Marketing• 10
On-Site Insurance Sales Providing customers with the ability to purchase customer storage insurance at the self-storage facility is the second most common service offered and this grouping also posted big gains, growing by more than 11 percentage points over the previous year. This long-time staple of the industry is both a money maker for the storage facility as well as an extra layer of protection for the customer storing goods at the site. Many storage stores emphasize the importance of insurance and some even require that new tenants purchase coverage before moving their items into an empty unit. Over half or 53 percent of selfstorage stores surveyed indicated they offer customer storage insurance. Storage facilities in the West were most likely to offer this extra to customers with 57 percent of stores in this region selling coverage. The only decline in customer storage insurance was posted by the Southeast region where facilities offering tenant insurance fell from 56.7 percent in 2010 to 50 percent in 2011. Moving truck rentals remain a popular service at self-storage facilities and this amenity continues to be one of the most in-demand features at storage businesses. Often utilized by both tenants and the general public, rental trucks can help meet customers’ needs as well as add some extra income to the self-storage facility’s bottom line. Nation-
wide, approximately one-third of stores indicated they offer moving truck rentals at their sites. Up 10.6 percentage points from 2010, the rental truck category has grown in every region of the country over the past 12 months. Only two service groupings fell over the past 12 months: on-site shipping services and facility-based car washes. Between 2010 and 2011, the percentage of self-storage stores with shipping services dropped by 54 percent nationwide. The decline was especially steep in the Southeast region where the category fell by more than 68 percentage points from the past year. The number of stores with on-site car wash facilities is also down for 2011. Nationally, 1.0 percent of respondents indicated that their selfstorage property offered this service to tenants versus 2.9 percent in 2010. Region-by-region, this category is down across the board, as well. The high cost of constructing and operating car wash bays could be one explanation for the decline as many operators continue to look for ways to cut costs in order to boost net profits.
cility doors. This is especially true in highly saturated areas where the competition to sign new customers is fierce. Although some facilities in the not too distant past were able to rely on little more than a highly visible location to bring new tenants to the store, today’s self-storage owners and operators must exploit a mix of advertising media to keep customers coming in to fill their empty storage units. Well placed signage, advertising in the Yellow Pages and Internet marketing top the list as the most common promotional media for businesses. Signs are a regulation self-storage marketing tactic with more than three-quarters of facilities indicating they utilize signage to market and advertise their businesses. At 76 percent of facilities, signage use has grown markedly over the previous year when only 44.3 percent of respondents indicated they used signs to promote their stores.
Strategic Marketing
Referral programs, which reward tenants and business partners when they recommend the self-storage facility to a potential new customer, are also on the rise. Across the United States, approximately 45 percent of self-storage facilities indicated they utilize some type of referral program.
While amenities can help sway customers toward one facility over another and act as a strong motivating force enticing customers to sign a lease, it takes savvy marketing to bring new tenants through the fa-
The Yellow Pages, long considered the bread and butter of selfstorage marketing, remains a top choice in the marketing toolbox. However, it is clear that this category
TABLE 10.2
ACTUAL USAGE OF PROMOTIONAL MEDIA (PERCENTAGE OF FACILITIES) REGION NORTH CENTRAL NORTHEAST SOUTH CENTRAL SOUTHEAST WEST NATIONAL
Direct Telephone Yellow Billboards Mailings Flyers Internet Magazines Newspapers Radio Signage Solicitation Television Pages 9.9% 10.1% 9.2% 10.2% 9.0% 9.6%
6.1% 8.9% 8.8% 17.0% 11.7% 11.0%
28.7% 30.7% 28.0% 36.5% 35.6% 34.9%
77.4% 81.2% 74.2% 84.2% 87.8% 81.5%
3.5% 5.0% 2.5% 4.1% 3.7% 3.7%
12.2% 16.8% 15.1% 11.1% 11.7% 13.1%
3.5% 4.0% 0.6% 2.9% 5.9% 3.4%
73.9% 72.3% 71.1% 79.5% 78.2% 75.5%
3.5% 3.0% 4.4% 4.7% 4.8% 4.2%
0.9% 0.0% 1.9% 0.6% 1.1% 1.0%
80.4% 76.1% 68.6% 76.5% 79.4% 76.8%
Referrals 45.7% 49.3% 40.4% 47.2% 40.9% 45.3%
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10•Marketing
has been slowly losing ground over the past several years. Between 2009 and 2010, usage of the Yellow Pages to market self-storage properties fell by 11.9 percent. The grouping dropped off again over the past 12 months, losing almost 1 percentage point over the one year period. During the course of the past five years, the proportion of self-storage businesses nationwide that advertise in the Yellow Pages directory declined from 91.2 percent to its current average of 76.8 percent.
World Wide Web By contrast, Internet marketing continues to climb in popularity. In fact, 2011 marks the first time that the Internet has overtaken the Yellow Pages as the most common promotional medium for self-storage stores. This statistic mirrors the change in both consumer behavior and technology over the past several years. Rather than pulling out the latest copy of the Yellow Pages, customers increasingly start their search for a self-storage facility online. New media, like Twitter, Facebook and text message marketing are also becoming increasingly important
advertising tools in the self-storage industry.
TRADITIONAL
ADVERTISING CAMPAIGNS, SUCH AS MAGAZINE, NEWSPAPER AND TELEVISION
BUYS WERE DOWN FROM 2010. In addition, websites have improved dramatically over the past few years. Rather than simply including a facility name, phone number and map, many self-storage sites now offer detailed facility photos and online reservation capabilities, giving users the ability to select and reserve a unit from the comfort of their own homes. Some websites also offer only payment features and real time rental capabilities, allowing new tenants to pay for a unit and sign a lease agreement online. As technology continues to evolve, it is likely that the Internet will continue to occupy an ever
larger piece of the self-storage advertising pie. Currently, 81.5 percent of self-storage stores boast an Internet presence versus 61.7 percent in 2010. This is especially significant considering that only 49.7 percent of U.S. self-storage businesses were using the Internet to market their stores five years ago. Nearly 88 percent of facilities in the West indicated that they utilize Internet advertising; up from 64.9 percent over the last 12 months. On the low end of the spectrum, 74.2 percent of facilities in the South Central region used the Internet to market and advertise sites. Flyers are also popular with more than one-third of businesses utilizing this medium nationwide. An easy and inexpensive way to spread the word about a self-storage business, flyers can be updated regularly to advertise current facility specials and offers. Since they are usually handed out at special events or given to anyone who comes to the site, flyers can be distributed without typical delivery or mail fees.
Mass Media Advertising TABLE 10.3
INTERNET INQUIRIES & SALES EFFECTIVENESS
98
REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL Self-Storage Almanac 2012
Average Number of Daily Inquiries 2.2 2.5 1.5 4.6 6.7 1.9 2.6 1.4 3.1 4.2 4.2 3.9 2.3 5.5 3.6
Sales Conversions 35.8% 32.2% 45.1% 51.9% 54.4% 48.9% 45.8% 43.9% 46.7% 54.7% 54.7% 43.2% 47.4% 38.8% 47.2%
Traditional advertising campaigns, such as magazine, newspaper and television buys were down from 2010. Nationally, newspaper advertising shrank 9.3 percentage points from the previous year and radio was off 3.4 percentage points. Magazine advertising was down 2.1 percentage points for the year for the United States, but the category saw a slight gain in the North Central region over the previous year. One explanation for the decline could be due to the high cost of this type of large-scale advertising. With many businesses struggling to make ends meet in the current economic environment, it is likely that many
Marketing• 10
The percentage of inquiries converted into customers also rose significantly over the past year. While 12 months ago the Internet conversion rate was 33.6 percent nationwide, today’s rate is a solid 47.2 percent. In other words, self-storage facilities were able to translate almost half of all online inquiries into sales. Undoubtedly, increasingly sophisticated and user-friendly websites are playing a role in the growing success of Internet marketing. Buyer’s habits are also factoring into the picture as today’s average customer feels comfortable and confident communicating electronically.
Another important note is the fact that the Internet has overtaken call centers in both volume of inquiries and sales conversions. Currently, the average number of inquires fielded by call centers is 2.8 per day, a decline from 4.9 daily inquiries one year ago. The sales conversion rate of 44.4 percent remains similar to last year’s 45.9 percent but lags the Internet’s average of 47.2 percent. In addition to Internet and call center sales, leveraging technology can also be found at self-storage facilities that utilize kiosks. Across the country, 1.4 percent of self-storage businesses indicated they currently employ kiosks in their day-to-day operations. Although the numbers of kiosks in use is relatively small, it is clear that when offered, this amenity successfully processes a solid number of rentals each month. Nationally, kiosks were responsible for an average of almost nine sales per month, a number which is off from last year’s average of 11.9 sales. The North Central region
boasts the highest number of kioskdriven sales with an average of 15 sales registered monthly. Self-storage businesses in the East North Central states credit kiosks with a full 25 sales each month. On the opposite end of the spectrum, facilities in the West South Central and Pacific divisions saw the fewest kiosk-led sales, averaging 1.0 and 1.5, respectively.
KIOSK SALES EFFECTIVENESS TABLE 10.4
With an increasing interest in Internet marketing, owners and operators are keeping close tabs on the money they spend on online marketing campaigns. Overall, the average number of daily inquiries via the Internet has almost doubled over the last 12 months. Nationwide, self-storage facilities reported 3.6 inquiries per day compared with 1.9 daily inquiries in 2010. The Southeast and Northeast regions led the way in this category with more than four online contacts per day. Divisionally, properties in the West North Central and East South Central states were the laggards of the group with an average of 1.5 and 1.4 Internet inquiries per day. However, it is important to note that this compares well with the 2010 national average of 1.9 daily contacts—a good indication that this category is posting solid gains across the country.
Internet Outperforms Call Centers
REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST 7.6 Mountain Pacific NATIONAL
Average Number of Monthly Sales 15.0 25.0 5.0 ** ** ** 2.0 3.0 1.0 2.0 2.0 11.7 1.5 8.7
**Insufficient data
CALL CENTER INQUIRIES & SALES EFFECTIVENESS
TABLE 10.5
facilities are choosing to focus their marketing dollars on more targeted tactics using less costly media. Another explanation could involve the shift of dollars from other media types, allowing owners and operators to make a larger investment in the ever-growing Internet advertising category.
REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL
Average Number of Daily Inquiries 2.2 2.3 1.5 1.4 1.3 2.0 2.5 1.3 4.3 1.4 1.4 5.4 1.5 6.9 2.8
Sales Conversions 36.5% 37.1% 34.0% 50.5% 55.6% 30.0% 40.6% 30.0% 56.5% 40.3% 40.3% 51.9% 38.8% 57.2% 44.4%
2012 Self-Storage Almanac
99
11•Management&Training s the face of the business, the manager plays a crucial role in the success of a self-storage facility. An excellent manager can completely turn around a failing business while a lackluster manager can be responsible for a store’s decline. An average manager can answer the phones and rent units to new tenants, but an excellent manager goes much further, building relations with the community and forming personal connections with customers. With so much riding on this single employee, owners and operations are increasingly spending time and money to train and develop their management staff.
A
Just as skill levels vary, management situations vary at self-storage businesses nationwide. The most common involve full-time on-site managers, full-time off-site manag-
ers and relief management employees. Many self-storage stores opt for a mix of management situations in order to provide the necessary coverage and optimum schedule for all staff members.
THIS YEAR,
MORE THAN HALF OF ALL RESPONDENTS INDICATED THAT THEIR
SELF-STORAGE PROPERTIES WERE HEADED UP BY
FULL-TIME RESIDENT MANAGERS.
Resident Manager Majority This year, more than half of all respondents indicated that their selfstorage properties were headed up by full-time resident managers. Across America, 53.3 percent of storage businesses employed live-in managers. This situation is most common in the West where more than 70 percent of storage facilities employ a full-time resident manager. In fact, three-fourths of all respondents in the Pacific states, a subgroup of the Western region, indicated that they utilize full-time resident managers to oversee operations at their self-storage sites. Resident managers were least common in the Northeast where just over 28 percent of facilities chose this management option. However, it is important to note that the category has seen a dramatic increase over the past year in all regions of
TABLE 11.1
PROFILE OF FACILITY MANAGEMENT
REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL Rentable Square Footage Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99,999 100,000 or more
Full-Time On-site Resident Manager 52.2% 55.0% 33.3% 28.7% 25.4% 33.3% 54.1% 47.2% 57.5% 48.0% 48.0% 71.3% 68.2% 75.3% 53.3%
Full-Time Off-Site Manager 33.0% 32.0% 40.0% 49.5% 52.5% 45.2% 25.8% 34.0% 21.7% 38.0% 38.0% 17.6% 16.8% 18.5% 30.9%
Management Couple/Team 1.7% 2.0% ** 1.0% ** 2.4% 5.0% 1.9% 6.6% 4.1% 4.1% 4.8% 4.7% 4.9% 3.7%
Secondary Assistant or Relief Manager 60.9% 66.0% 26.7% 63.4% 64.4% 61.9% 60.4% 64.2% 58.5% 71.9% 71.9% 75.0% 68.2% 84.0% 67.3%
Owner Managed 20.9% 17.0% 46.7% 19.8% 20.3% 19.0% 23.3% 15.1% 27.4% 13.5% 13.5% 16.5% 17.8% 14.8% 18.4%
Third-Party Management 3.5% 3.0% 6.7% 5.0% 8.5% ** 1.9% 3.8% 0.9% 17.5% 17.5% 3.7% 2.8% 4.9% 6.7%
Other 4.3% 4.0% 6.7% 1.0% 1.7% ** 4.4% 3.8% 4.7% 1.2% 1.2% 2.7% 3.7% 1.2% 2.7%
23.6% 29.4% 50.0% 31.7% 46.3%
17.1% 42.4% 40.5% 56.1% 41.5%
3.3% 2.4% 12.2% 17.1% 7.3%
13.0% 35.3% 60.8% 63.4% 36.6%
58.5% 35.3% 24.3% 14.6% 19.5%
5.7% 12.9% 20.3% 22.0% 14.6%
5.7% 5.9% 6.8% 2.4% 4.9%
**Insufficient data
100
Self-Storage Almanac 2012
Management&Training• 11
Full-time off-site managers are also common industry-wide. For the current year, 30.9 percent of facilities in the United States hired a full-time off-site manager to run their storage businesses. Most common in the Northeast where almost half of all stores surveyed opt for this management type, off-site managers perform the same function as resident employees but do not live at the site. Overall, the grouping is down almost five percentage points on a national basis from the previous year and it is interesting to note that the grouping moved in the opposite direction of the resident management category, with one category declining while the other grows. Although it increased 28 percent in the Northeastern states, the category is down for the year in every other region of the United States.
FULL-TIME
OFF-SITE MANAGERS ARE ALSO
COMMON INDUSTRY-WIDE. Relief Management Increasing Secondary assistant or relief managers showed the most significant movement over the one year period. In 2010, slightly more than 28 percent of facilities indicated that they uti-
lized relief managers as opposed to 67.3 percent of stores in 2011, representing an increase of 134 percent. Looking at the category by region reveals that there is a great variance in this grouping state-by-state. While only 26.7 percent of storage stores in the West North Central di-
vision opted for a relief manager, a full 84 percent of facilities located in the Pacific states employed a relief or assistant manager. The owner-manager grouping tells another interesting story. In 2010, more than 40 percent of all self-stor-
BREAKDOWN OF MANAGERS’ BASE SALARIES
TABLE 11.2
the nation. In the Northeast, this situation grew by almost 15 percentage points between 2010 and 2011. Nationally, the category is up 24 percentage points—nearly doubling over the 12 month period.
REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL Number of Units 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more Rentable Square Footage Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99,999 100,000 or more Market Area Urban Suburban Rural Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after
Less than $10,000 9.8% 10.5% 7.7% 12.5% 16.0% 6.7% 12.9% 18.2% 10.4% 6.1% 6.1% 8.0% 14.6% ** 9.4%
$10,000 to $19,999 19.6% 18.4% 23.1% 10.0% 4.0% 20.0% 18.6% 13.6% 20.8% 9.8% 9.8% 20.0% 24.4% 14.7% 15.7%
$20,000 to $29,999 39.2% 44.7% 23.1% 20.0% 16.0% 26.7% 37.1% 40.9% 35.4% 34.1% 34.1% 30.7% 29.3% 32.4% 33.0%
$30,000 to $39,999 19.6% 13.2% 38.5% 32.5% 40.0% 20.0% 17.1% 4.5% 22.9% 32.9% 32.9% 21.3% 14.6% 29.4% 24.5%
$40,000 or More 11.8% 13.2% 7.7% 25.0% 24.0% 26.7% 14.3% 22.7% 10.4% 17.1% 17.1% 20.0% 17.1% 23.5% 17.3%
35.7% 18.1% 2.3% ** **
32.1% 20.2% 11.6% 10.2% **
10.7% 34.0% 38.4% 33.7% 28.6%
10.7% 14.9% 29.1% 34.7% 28.6%
10.7% 12.8% 18.6% 21.4% 42.9%
26.4% 8.0% ** ** **
17.2% 14.7% 13.9% 17.5% 8.1%
27.6% 40.0% 37.5% 22.5% 35.1%
13.8% 21.3% 33.3% 32.5% 35.1%
14.9% 16.0% 15.3% 27.5% 21.6%
6.7% 9.7% 13.0%
14.3% 13.2% 23.2%
43.8% 26.4% 30.4%
23.8% 28.5% 17.4%
11.4% 22.2% 15.9%
15.8% 5.4% 20.6% 23.1% 8.2% 5.6% 4.3%
10.5% 16.2% 11.8% 7.7% 14.8% 21.1% 17.1%
31.6% 35.1% 38.2% 23.1% 29.5% 33.8% 35.7%
26.3% 21.6% 11.8% 19.2% 27.9% 26.8% 28.6%
15.8% 21.6% 17.6% 26.9% 19.7% 12.7% 14.3%
**Insufficient data
2012 Self-Storage Almanac
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11 •Management&Training
age businesses indicated that they were relying on an owner-manager, a figure that was up 37 percent from 2009. For the new year, the category posted an even larger move but in the opposite direction, falling 55 percent between 2010 and 2011. This significant drop off occurred just as the relief manager category was on the rise, indicating that owners may be hiring relief managers to replace themselves as they exit from the day-to-day management duties of their self-storage facilities.
the past 12 months. Professional third-party management was also off from 2010. However, more than 17 percent of self-storage stores in the Southeastern region hired professional management companies to oversee their sites, representing a 75 percent increase. Despite the growth, the number is still off from its 2009 level when almost one-quarter of all self-storage properties were run by third-party management companies. In total, 6.7 percent of self-storage facilities currently utilize this management option.
...THE
Analyzing the data by size reveals that owner-managers are most common in small self-storage facilities. More than half of all facilities with less than 25,000 square feet and more than one-third of facilities with 25,000 to 49,999 square feet are run by the owner of the business. On the other end of the spectrum, fewer than 20 percent of stores with more than 75,000 rentable square have an owner who runs the day-to-day operations of the self-storage facility.
PAY RATE OF MANAGEMENT STAFF ALSO VARIES WIDELY ACROSS THE INDUSTRY. Management couples account for less than 4 percent of employees at self-storage properties in the country. Down from 10 percent in 2010, the category has declined in every region of the country over
Management Pay Scale Just as the management profile of the store differs from one facility to the next, the pay rate of management staff also varies widely across
TABLE 11.3
EFFECTS OF VARIOUS BENEFITS
Benefit Offered Bonus Pay Vacation Pay Apartment Paid holiday Free Utils 401K Medical Dental Sick Pay Eye Care
Less than $10,000 4.6% 3.5% 1.9% 3.0% 4.0% 1.4% 2.4% ** 2.4% **
**Insufficient data
102
Self-Storage Almanac 2012
$10,000 to $19,999 8.6% 10.5% 18.1% 12.0% 17.8% 4.3% 8.1% 8.8% 9.4% 10.8%
$20,000 to $29,999 37.1% 37.5% 45.7% 37.0% 43.6% 47.1% 39.5% 45.0% 37.8% 43.1%
$30,000 to $39,999 30.3% 30.0% 21.0% 28.5% 21.8% 24.3% 29.0% 28.8% 29.9% 29.2%
$40,000 or More 19.4% 18.5% 13.3% 19.5% 12.9% 22.9% 21.0% 17.5% 20.5% 16.9%
the industry. In general, manager wages rose significantly between 2010 and 2011. Approximately three quarters of all management employees earn $20,000 or more per year. More than half of all managers bring home between $20,000 and $39,999 annually while fewer than 10 percent are paid a salary that is less than $10,000. These figures represent a dramatic change from 2010 when 27.2 percent of all management staff earned less than $10,000 per year. The sharpest increase was posted in the highest salary categories—$30,000 to $39,999 and $40,000 an higher—which both grew by more than 50 percent during the past 12 months. On average, managers at small self-storage properties tend to earn less than those running larger facilities. More than 42 percent of storage stores with 1,000 or more units pay their managers $40,000 or more per year, while 35.7 percent of management employees working at facilities with less than 100 units bring home less than $10,000 per year. However, this pay-size correlation does not seem to exist when examining wages by rentable square footage. While more than a quarter of managers who are responsible for facilities with less than 25,000 net square feet make less than $10,000 yearly, it is interesting to note that the percentages for all other salary categories are fairly evenly distributed among the various rentable square footage groupings with a much smaller weight given to the largest self-storage properties. For instance, 40 percent of managers at self-storage stores ranging from 25,000 to 49,999 square feet earn $20,000 to $29,999, but 35.1 percent of managers running businesses with 100,000 or more square feet earn the same amount yearly. Similarly, 16 percent
Management&Training• 11
of managers working at storage facilities with 25,000 to 49,999 square feet are paid $40,000 or more annually, while 21.6 percent of those who manage sites with 100,000 or more square feet find themselves in the same salary grouping. One explanation for the disparity is that the number of units could be a more accurate indicator of the daily work expectations for the management employee. While a manager with 1,000 or more units could be expected to serve 1,000 or more customers, a large facility in terms of square footage could be comprised of many fewer extralarge units, such as RV and boat storage stores. Although spread out, the managers at these types of facilities are not expected to assist as many customers each day.
Salary By Age The year the facility was built also affects the manager’s average annual salary. Management staff members working at self-storage facilities built between 1986 and 1995 are much more likely to make less than $10,000 per year than the proportion of all managers who earn a salary in this bracket. In fact, more than 23 percent of managers at proper-
ties developed between 1991 and 1995 bring home less than $10,000 per year while only 9.4 percent of managers nationwide are paid less than $10,000 annually. While the explanation for this is not clear, it is interesting to note that almost 27 percent of managers overseeing a store built during this time period were paid $40,000 or more per year.
ONLY A
SMALL PERCENTAGE OF FACILITIES OFFER ANY TYPE OF BENEFITS TO
MANAGEMENT STAFF EARNING LESS THAN $10,000 PER YEAR. Benefits and salaries seem to go hand-in-hand—as wages rise the probably of receiving specific benefits increases. Only a small percentage of facilities offer any type of benefits to management staff earning less than $10,000 per year. Managers who make $20,000 or
more per year are more than twice as likely to get various benefits as managers earning $19,999 or less. Owner-managers were the least likely of all management types to receive any type of benefits. Most commonly, these managers earned paid holiday leave, vacation pay and bonus pay. Less than nine percent of owner-managers were offered a 401K or eye care benefits. All other types of managers had excellent access to benefits this year. Approximately 90 percent of full-time on-site resident managers were offered an apartment, paid holiday leave, vacation pay and bonus pay. More than three-quarters also earned sick pay, medical insurance, dental insurance, eye care and access to a 401K retirement plan. At 23.8 percent, free utilities came up as the only benefit that was relatively uncommon among this management grouping.
Increasing Benefits Participation Other management categories were also well compensated in terms of benefits offered. More than 80 percent of full-time off-site managers received vacation pay
TABLE 11.4
MANAGER BENEFITS
Benefit Bonus Pay Vacation Pay Apartment Paid holiday Free Utils 401K Medical Dental Sick Pay Eye Care
Full-Time On-site Resident Manager 89.3% 91.3% 91.8% 91.8% 23.8% 76.2% 83.4% 79.5% 84.4% 77.0%
Full-Time Off-Site Manager 78.9% 86.8% 4.4% 85.0% 4.0% 56.8% 67.8% 56.8% 68.7% 55.1%
Management Couple/Team 81.5% 70.4% 63.0% 77.8% 59.3% 22.2% 55.6% 33.3% 44.4% 33.3%
Assistant or Relief Manager 94.5% 95.7% 66.2% 95.5% 12.1% 82.4% 90.7% 83.8% 89.7% 83.0%
Secondary Owner Managed 21.5% 28.1% 18.5% 28.9% 16.3% 8.9% 19.3% 10.4% 14.8% 8.1%
Third-Party Management 87.8% 87.8% 40.8% 83.7% 40.8% 51.0% 67.3% 49.0% 65.3% 46.9%
2012 Self-Storage Almanac
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TABLE 11.5
11 •Management&Training
AVERAGE MANAGER HOURS PER WEEK Hours Under 30 30 to 39 40 to 49 50 to 59 60 to 69 70 or more
Percentage of Managers 30.3% 19.8% 18.5% 12.3% 7.8% 11.3%
and paid holidays as part of their compensation package this year. In 2010, less than half of full-time nonresident managers reported earning these benefits. Almost 79 percent of this type of management employee also received bonus pay in 2011, while only 49.2 percent of managers from the same category reported the opportunity to earn a bonus one year ago.
TABLE 11.6
TELEPHONE INQUIRIES & SALES EFFECTIVENESS REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL Number of Units 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more Rentable Square Footage Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99,999 100,000 or more Market Area Urban Suburban Rural Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after
104
Self-Storage Almanac 2012
Average Number of Daily Inquiries 5.7 6.2 4.3 4.1 4.6 3.2 3.8 3.2 4.0 5.6 5.6 3.6 3.5 3.7 4.5
Sales Conversions 48.5% 45.6% 57.0% 52.6% 49.0% 57.7% 48.7% 50.5% 47.9% 58.5% 58.5% 48.1% 50.3% 45.1% 51.4%
2.5 4.4 4.7 5.1 10.9
44.5% 52.3% 47.7% 57.0% 60.2%
4.1 4.0 4.6 4.7 7.1
49.7% 48.0% 54.7% 57.1% 49.9%
5.0 4.5 4.0
53.0% 48.0% 55.2%
6.6 4.1 2.9 5.2 4.6 5.3 3.7
55.3% 52.7% 46.2% 52.1% 48.6% 47.6% 58.3%
Management couples also saw a sharp increase in paid benefits for 2011. Close to 82 percent of management couples reported earning bonus pay. Last year, 16.9 percent reported receiving a salary bonus. More than 70 percent of management couples also earned vacation and holiday pay versus less than 25 percent of management couples receiving the same benefit last year. The proportion of these managers who receive medical, a retirement plan, dental, sick pay and eye car are also up this year over last.
MANAGEMENT COUPLES ALSO SAW A
SHARP INCREASE IN
PAID BENEFITS FOR 2011. The majority of all management categories clocked less than 40 hours per week during 2011. Approximately 30 percent of managers worked fewer than 30 hours per week; while almost 20 percent worked between 30 and 39 hours weekly. However, it is interesting to note that long hours are common in the self-storage industry, as well. Almost 20 percent of managers have very lengthy work days, logging more than 60 hours per week. On average, managers fielded 4.5 inquiries per day and posted a sales conversion rate of 51.4 percent. Although the number of daily calls received is slightly down from last year, the conversion rate is up 5.5 percentage points overall. Managers working at facilities in the East North Central division handled the
Management&Training• 11
most telephone inquiries, averaging 6.2 per day, while managers in New England and the East South Central states took the fewest number of calls at 3.2 per day.
THE LARGEST SELF-STORAGE STORES ANSWERED THE
Manager Effectiveness
The largest self-storage stores answered the most phone inquiries each day. Facilities with 100,000 or more square feet took 7.1 phone inquiries per day and those with 1,000 or more units answered almost 11 daily telephone inquiries. The most established storage businesses, those built prior to 1981, also received the highest number of phone inquiries, averaging 6.6 per day. On average, self-storage facilities received approximately half the number of in-person inquiries as telephone prospects across the United States. However, customers in the East South Central division were much more likely to walk into a storage facility than to call for information, averaging 3.2 daily phone inquiries versus 7.1 in-person inquiries. Although most sites received a higher number of inquiries from po-
MOST PHONE INQUIRIES EACH DAY.
IN-PERSON INQUIRIES & SALES EFFECTIVENESS
TABLE 11.7
In terms of conversion rates, managers successfully signed the highest percentage of phone customers in the Southeast and posted the lowest average conversion rate in the Pacific division. The properties with the most units also were most successful in converting inquiries into sales and boasted an impressive conversion rate of 60.2 percent. Rural storage businesses were also slightly more effective in converting new customers than their urban and suburban counterparts. In addition, the newest facilities, those built in 2006 or after, seemed to take the lead in signing new customers, posting a conversion rate of more than 58 percent.
tential customers over the phone rather than face-to-face, managers were most successful in converting the customers who took the time to come into the store and see the facility first hand. Nationwide, managers posted a walk-in conversion rate of 68.8 percent—up from 51.2 percent last year. More than 80 percent of in-person inquiries signed lease agreements at storage facilities in
REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL Number of Units 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more Rentable Square Footage Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99,999 100,000 or more Market Area Urban Suburban Rural Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after
Average Number of Daily Inquiries 3.0 3.5 1.5 1.8 1.7 1.9 4.2 7.1 2.9 2.1 2.1 1.8 1.7 1.8 2.6
Sales Conversions 60.5% 55.5% 76.8% 71.7% 66.6% 80.1% 70.3% 76.9% 67.1% 75.5% 75.5% 64.3% 62.5% 66.5% 68.8%
2.3 2.6 3.3 2.2 3.0
50.7% 65.8% 69.5% 76.5% 59.9%
2.3 3.3 2.7 2.2 2.4
62.8% 70.8% 71.2% 74.6% 65.9%
2.5 2.7 2.5
72.3% 65.7% 69.7%
2.3 3.3 2.1 1.7 2.5 4.1 1.8
55.9% 69.3% 65.7% 61.9% 68.0% 70.0% 75.9%
2012 Self-Storage Almanac
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11 •Management&Training
New England, followed closely by stores in the East South Central and West North Central divisions. Facilities in the East North Central states had the lowest sales conversion rate for walk-in customers.
Phone Versus In-Person Conversions Unlike phone inquiries, mid-sized facilities were more successful in con-
verting in-person inquiries than the largest self-storage stores. Proper-
THE INTERNET HAS BECOME AN ENORMOUSLY
POWERFUL MARKETING AND SALES TOOL...
TABLE 11.8
CALL CENTER INQUIRIES & SALES EFFECTIVENESS REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL Number of Units 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more Rentable Square Footage Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99,999 100,000 or more Market Area Urban Suburban Rural Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after
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ties with 500 to 999 units boasted the highest conversion rate at 76.5 percent. Combining size categories, self-storage facilities with 25,000 to 99,999 square feet averaged an in-person conversion rate greater than 70 percent although the lowest number of inquiries of 2.2 a day. Urban sites were slightly more successful in signing walk-in customers than storage facilities located in suburban and rural areas. In addition, those visiting the site were much more likely to rent at a new facility than an older property. The two youngest age categories—storage stores built during 2001 to 2005 and those built in 2006 or after—posted conversion rates of 70 percent and 75.9 percent, respectively.
Average Number of Daily Inquiries 2.2 2.3 1.5 1.4 1.3 2.0 11.3 1.3 23.2 1.4 1.4 5.4 1.5 6.9 4.5
Sales Conversions 36.5% 37.1% 34.0% 50.5% 55.6% 30.0% 40.6% 30.0% 56.5% 40.3% 40.3% 51.9% 38.8% 57.2% 44.4%
2.0 11.2 1.9 2.6 35.0
37.5% 63.3% 31.6% 46.4% 40.0%
9.2 2.0 2.5 4.5 3.4
49.7% 55.6% 33.8% 38.4% 53.4%
3.9 5.6 1.6
33.9% 46.2% 63.1%
Call Center Effectiveness
2.0 1.4 1.5 3.2 4.2 8.3 2.9
30.0% 51.0% 40.3% 58.5% 41.6% 38.1% 48.8%
This year, call centers were most effective in signing new customers at facilities in the Pacific, West South Central and Middle Atlantic areas of the country. These locations all posted conversion rates of more than 55 percent. In New England
Call centers received an average of 4.5 inquiries per day, more than twice the daily average number of calls they handled last year. These call centers successfully converted an average of 44.4 percent of potential customers, giving it the lowest sales effectiveness number of the categories being analyzed this year. The number of calls answered as well as the percentage of customers signed varied widely from region to region. At the top of the spectrum, call centers took 23.2 calls per day for storage facilities in the West South Central division. At the bottom end, they handled an average of 1.3 daily calls for properties in the Middle Atlantic and East South Central areas of the country.
Management&Training• 11
and the East South Central division, approximately 30 percent of customers who spoke with a call center went on to sign a lease agreement with the self-storage store.
erty age categories, with no clear pattern indicating a higher or lower success rate by age of the facility.
In terms of size, call centers managed the highest number of calls for self-storage facilities with 1,000 or more units, fielding 35 per day. However, they posted the highest conversion rates for smaller stores, successfully signing 63.3 percent of customers inquiring about properties with 100 to 299 units and 55.6 percent of customers calling for stores with 25,000 to 49,999 rentable square feet. It is interesting to note that this category’s success rate was significantly lower when looking at the next size category. Call centers had a sales conversion rate of only 31.6 percent at properties with 300 to 499 units and 33.8 percent at sites measuring 50,000 to 74,999 rentable square feet.
The Internet has become an enormously powerful marketing and sales tool for self-storage professionals. Not only are facilities growing their overall Internet presence but
Looking at the location of the self-storage facility being served shows that call centers handled the most calls for suburban stores and the least for rural businesses, averaging 5.6 and 1.6 per day respectively. Although 1.6 calls at rural properties is a much lower than the overall industry average of 4.5, call centers were very effective in signing new customers at these rural sites and posted a sales conversion rate of 63.1 percent. Call centers also managed more calls for newer properties than more established self-storage businesses. While they averaged 1.4 daily calls for properties built between 1981 and 1985, they took an average of 8.3 calls per day for storage facilities developed during the years of 2001 through 2005. However, the sales conversion rate remained fairly randomly distributed between all prop-
On-line Sales And Marketing
customers are increasingly turning to the web to help them find solutions to their self-storage needs. Larger facilities were especially successful with their Internet marketing in 2011. Storage stores with 1,000 or more units averaged 23.5 daily online inquiries, of which more than 55 percent went on to rent a space at the site. Self-storage facilities with 100,000 or more rentable square
TABLE 11.9
INTERNET INQUIRIES & SALES EFFECTIVENESS REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL Number of Units 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more Rentable Square Footage Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99,999 100,000 or more Market Area Urban Suburban Rural Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after
Average Number of Daily Inquiries 2.2 2.5 1.5 4.6 6.7 1.9 2.6 1.4 3.1 4.2 4.2 3.9 2.3 5.5 3.6
Sales Conversions 35.8% 32.2% 45.1% 51.9% 54.4% 48.9% 45.8% 43.9% 46.7% 54.7% 54.7% 43.2% 47.4% 38.8% 47.2%
1.1 2.3 2.6 3.5 **
28.1% 49.3% 46.3% 48.9% **
2.4 2.4 3.2 5.1 6.4
44.7% 53.3% 44.7% 44.8% 50.1%
6.4 2.3 1.6
46.0% 49.0% 45.0%
6.2 3.1 2.3 2.9 4.2 2.0 4.5
45.6% 49.0% 42.9% 45.1% 37.6% 46.0% 57.4%
**Insufficient data
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feet saw almost double the number of national daily inquiries and signed a solid 50 percent of these customers. On the other hand, properties with fewer than 100 units and less than 25,000 net square feet averaged only 1.1 and 2.4 daily Internet inquiries respectively. Urban areas saw the most online inquires and posted a daily average for 2011 that was two and a
half times greater than the average for 2010. Storage businesses in rural markets handled the least number of Internet leads, but realized a small gain in this category over the previous year. Suburban self-storage facilities also increased their average number of online inquiries from 2.0 to 2.3 inquiries per day.
Kiosk Sales And Rentals The newest facilities, those built in 2006 or after, posted the highest
TABLE 11.10
KIOSK SALES EFFECTIVENESS REGION Division NORTH CENTRAL East North Central West North Central NORTHEAST Middle Atlantic New England SOUTH CENTRAL East South Central West South Central SOUTHEAST South Atlantic WEST Mountain Pacific NATIONAL Number of Units 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more Rentable Square Footage Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99,999 100,000 or more Market Area Urban Suburban Rural Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after **Insufficient data
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sales conversion rate of the category at 57.4 percent. This grouping also handled an average of 4.5 daily Internet inquiries. However, selfstorage stores built before 1981 had the most inquiries, averaging 6.2 per day—almost twice the national average industry-wide.
Average Number of Monthly Sales 15.0 25.0 5.0 ** ** ** 2.0 3.0 1.0 2.0 2.0 7.6 11.7 1.5 8.7 30.0 7.4 12.5 3.0 ** 20.0 2.3 11.0 4.7 1.0 8.8 7.0 11.3 ** 10.0 ** ** 4.0 9.3 10.8
In addition to managers, kiosks were responsible for a number of sales at self-storage facilities. While only 2.7 percent of storage facilities nationwide were equipped with a kiosk, this technology was responsible for signing an average of almost nine new tenants per month. Although that figure is down from 2010, kiosks were successful in renting space at a variety of facilities across the country. They were utilized the most by storage customers in the East North Central division, which averaged 25 rentals per month. Kiosks also posted a high number of sales at selfstorage properties in the Mountain states, averaging 11.7 monthly. Facilities with less than 100 units logged 30 kiosk-driven rentals per month. In terms of rentable square feet, properties measuring less than 25,000 square feet posted 20 rentals per month using kiosks. At the largest properties with 100,000 or more rentable square feet, kiosks were responsible for an average of one sale per month. Businesses in rural areas had the most kiosk-driven sales with an average of more than 11 per month. Urban storage facilities also did well utilizing kiosks, posting almost nine sales closed by kiosk per month. Suburban stores were off from the national storage industry average by 1.7 sales, averaging seven sales via kiosk each month.
Valuation•12
S
elf-storage is a complex asset class. Investment by Wall Street institutional investors as well as Main Street bankers has increased the importance of self-storage economics and appraisal. Self-storage economics requires a quantified forecast of demand, compared to existing supply, as the basis of the conclusion of market conditions in the local trade area: over-supplied, under-supplied or equilibrium. The conclusion of market conditions is the foundation of an objective, impartial and unbiased opinion of value. Simply stated, appraisal is the process of formulating an opinion of value of real estate as of a given date. The appraisal is an economic model that analyzes all factors that bear upon the value or worth of real estate. The problem is defined, the property described and the data involved are acquired, classified, analyzed and interpreted into an opinion of value. All property is analyzed according to the highest and best use of the property as through vacant and as improved. Three primary valuation approaches have evolved in the appraisal process, summarized as follows: 1. Thecostapproach- considers the value of the land as vacant, plus the cost of the improvements including profit, less accrued depreciation from physical, functional, and external causes. 2. Thesalescomparison approach- considers the recent selling price of similar properties compared to the subject, broken down into common units of comparison, with adjustments being made for differences.
3. Theincomeapproachconsiders the economic or contract rent (earning capacity) of the land and improvements, less vacancy and landlord expenses, with the resulting net income stream being capitalized by an investment yield or capitalization rate that would be reasonable to a prudent investor. Each approach is used by the professional appraiser whenever it is applicable to the valuation problem. The use of each approach depends upon the type of property, the availability and suitability of the market data upon which the approach is predicated, and other judgment factors. The use of two or three approaches will generally result in a range of values for the subject property, which are correlated to a final value conclusion. The highest and best use analysis is key to the appraisal process and is the basis of the subject value estimate. It is defined in The Appraisal of Real Estate (Thirteenth Edition, page 277) as follows: “The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, and financially feasible and that results in the highest value.” Highest/best use is analyzed in two parts: 1) as though the site is vacant, and 2) as improved. There are essentially four stages of analysis: 1) PhysicallyPossibleconsider size, shape, area and terrain of the parcel. 2) LegallyPermissible- consider zoning and deed restrictions on the parcel.
3) FinanciallyFeasible- possible and permissible uses expected to produce a positive return. 4) MaximallyProductive- among feasible uses, the use that provides the highest rate of return, or value in terms of the highest present land worth. The most important concept of highest and best use is market based demand. This involves a detailed analysis of self-storage market trends with specific analyses of supply, demand and a conclusion of market equilibrium, over-supply or under-supply.
INVESTMENT BY WALL STREET INSTITUTIONAL INVESTORS AS WELL AS MAIN STREET BANKERS
HAS INCREASED THE IMPORTANCE OF SELF-STORAGE ECONOMICS AND APPRAISAL. Trends In Self-Storage Capital flow, both equity and debt (both private and public), has increased to real estate for few years due to comparatively high returns. Moreover, the appeal of self-storage compared with other real estate investment is that costs tend to be lower and operating results demand a lower yield. For example, the break-even occupancy rate for a self-storage facility is approximately 40 percent to 45 percent, compared with 60 percent or more for apartments. Consequently, selfstorage facilities tend to hold value better and recover faster than other 2012 Self-Storage Almanac
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12 •Valuation
assets when real estate markets sour. Beginning in 1995, these characteristics were recognized by Wall Street REITs and began a 12-year trend of increasing investment in self-storage. In the year 2000, REITs became eligible for Standard & Poor’s indexes increasing investors’ exposure and lending credibility to the industry. Seeking relatively safe returns with high dividends, self-storage REIT prices have increased over the past four years. These trends demonstrate that institutional investors are seeking self-storage property as a viable alternative investment vehicle.
Markets Sour The credit crunch that began to unfold in the U.S. in mid-2007 evolved into a global financial crisis by October 2008, soon after the Lehman Brothers bankruptcy. Many market observers equate this crisis as the greatest challenge to the world’s economic health since the Great Depression. Its effects have radically reshaped the financial sector, and its consequences continue to impact nearly every other industry. Although many financial experts believe that the worst may be behind us, economic conditions remain fragile. Concerns about a “double dip” loom large in early 2010, while job creation becomes the next big obstacle to tackle. As market observers who simulate behavior rather than affect it, we await market evidence as to the long term impact of the credit crisis. Risk is considered in the context of our anticipation of rental growth and most vividly in our cap and discount rate selections. Current investor behavior reflects a higher cost of capital, concern about the economy, a reduced pool of investors, and more conservative rent growth and cash flow modeling assumptions. We recognize also that the new market
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purchasers will have a greater equity interest and lenders will be working with more conventional lending margins, debt, and equity coverage ratios.
and now appear to be declining. For example, capitalization rates have decreased 10 basis points to an average of 8.45 percent (stabilized) from one year ago.
Nationally, the impact of continued difficulties of the for-sale housing market is unclear for selfstorage. Some argue that reduced household income (the negative “wealth effect” of diminishing home equity) may cause demand to decrease. Others argue that downsizing in housing will increase demand for self-storage. Over the long run, self-storage occupancies on a national basis have remained relatively stable (vacancy of less than 20 percent) in both bull and bear markets.
These dynamic changes in the financial market impacts macro market conditions for self-storage, particularly in valuation. However, self-storage is unique to most real estate because demand is generally local and less impacted by exogenous factors. For example, most customers come from a three-mile trade area. Market conditions, measured by over-supply, under-supply or market equilibrium in the Selfstorage Market Analysis section of this appraisal, are key to valuation parameters. Both macro and micro conditions are inherently considered in the conclusions of the appraisal of the subject property.
Cushman & Wakefield, Inc utilizes survey research to track investment criteria for self-storage property (Self-storage Investor Survey—Summer 2010 and the Korpacz Self-storage Investor Survey – Second Quarter 2010, see addenda). The market through mid-year improved significantly in 2010, with over $1 billion in equity money chasing yield in self-storage. Public and private REITs, as well as large national and regional self-storage companies, are back in the game. Nationwide, single asset transactions are up 20 percent or more over last year. Other findings show increased optimism for the asset class and slightly lower cap and yield rates. Marketing times are declining and absorption times improving, as new construction is at a 10-year low. Cap and yield rates have shown modest declines. At the end of the last year, it appeared cap rates were headed for 9 percent territory. With new capital (both equity and debt), cap rates have stabilized
Although stock prices are not directly comparable to individual assets, it underscores the importance of market dynamics for both equity and real estate because the value of these companies is in the real estate. These public investment parameters are generally positive for the asset class in comparison to other real estate. For example, as of November 30, 2008, self-storage REITs total return was a loss of 9.19 percent, the lowest of any REIT. This demonstrates that despite negative market sentiment, self-storage remained the winner of the “losers.” The reason is that self-storage is a cash flow business with strong fundamentals. The performance of key self-storage REITs are summarized in Table 12.1. Real estate economists are always wary of predicting the date or time of changing market conditions. Therefore, noting the concerns of the market is good for self-storage
Valuation฀• 12
market conditions over the long run. The current stable to declining momentum in self-storage has exceeded the low tide of commercialindustrial real estate. Wise investors continue to express caution in view of these conditions. Self-storage is a neighborhood specific asset with wide variances of market conditions even within a particular city or metropolitan statistical area (MSA). Therefore, local research remains the most important tool to investors. The data indicates a self-storage market characterized by stable returns. Yet, after years of industry investment and expansion, the selfstorage industry is increasingly expressing public concern about the future, particularly relating to interest rates, the availability of capital, and
market conditions. For example, the Self-Storage Almanac reports a 19-year cycle with a vacancy rate range from 10.10 percent to 18.60 percent, with an average of 14.36 percent nationwide. This trend demonstrates the cyclical nature of the industry and underscores the importance of analysis in each trade area. Clearly, investor sophistication and discipline are increasing in the decision process for the self-storage asset class. Market analysis of self-storage property appropriately considers industry trends, defines the subject trade area, measures conditions of supply, forecasts demand based on direct comparison as well as an econometric model of the subject trade area, and con-
cludes with a forecast of market equilibrium. Cumulatively, these factors should be considered in investment decisions. Based on the foregoing analyses of national data and trends, the conclusion is that the selfstorage market continues to experience demand for financially viable projects. However, as implied by the limited specificity of the analysis, defining winners and losers in the selfstorage market is very site specific and increasing in importance.
Measuring Market Demand Self-storage demand is measured in terms of square feet per person. An alternate measure is usage among households. To be consistent with the longest source of data, the analysis is based on square feet per person.
TABLE 12.1
SELF-STORAGE REIT STATISTICS AND PERFORMANCE Stock Public Storage, Inc. Sovran Self Storage U-Stor-It Trust Extra Space Storage, Inc. Averages
Ticker PSA SSS YSI EXR
2Q 2010 Price Dividend $93.18 3.48% $35.88 4.99% $7.92 1.27% $14.57 2.74% $37.89 3.12%
4Q 2009 Price Dividend $80.69 2.71% $32.00 5.65% $6.39 1.59% $11.42 8.89% $32.63 4.71%
4Q 2008 Price Dividend $73.41 2.72% $40.10 6.28% $9.16 7.86% $14.29 7.00% $34.24 5.97%
4Q 2007 Price Dividend $73.41 2.70% $40.10 6.30% $9.16 12.70% $14.29 7.20% $34.24 7.23%
4Q 2006 Price Dividend $94.45 2.13% $55.22 4.47% $19.97 5.82% $18.82 4.87% $47.12 4.32%
Source: Cushman & Wakefield Storage Industry Group
CHART 12.1
SELF-STORAGE VACANCY TRENDS
25% 20% 15% 10% 5% 0% 9 19
0
91 992 993 994 995 996 997 998 999 0 0 0 0 01 0 02 0 03 0 04 0 0 5 0 06 0 07 0 0 8 0 09 010 011 2 2 2 2 2 2 2 2 2 2 2 1 2 1 1 1 1 1 1 1 19
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12 •฀Valuation
For example, the 2010 Self-Storage Almanac indicates demand per person was 7.25 in 2010 nationwide, an increase exceeding 100 percent (or an annual compound rate of growth of 5.76 percent annually) over 3.31 square feet per person reported in 1996. While a good bench-
mark, this data does not directly relate to demand (measured in terms of square feet) for self-storage in a local trade area. For the purposes of this article, a real trade area is analyzed but the location remains confidential. In the subject trade area, occupied supply (one indication of
demand) is 4.57 feet per person with an average occupancy of 79 percent. This is below state and national averages. Now, the critical question is how much demand is there? One measure is a simple econometric model developed by the Self
TABLE 12.2
REGRESSION DEMAND PER CAPITA Occupied Percentage of Average Area Total Renter Occupied Household Household Occupied Demand Supply (Square Feet) Population Housing Units Size Income Supply Estimate Demand Subject - 1 mile radius: 113,734 24,892 5.77% 3.06 $69,944 4.57 5.20 0.63 Subject - 3 mile radius: 702,123 163,969 11.48% 3.01 $75,811 4.28 3.33 -0.95 Palatine, Il - 3 Mile Ring: 332,985 92,952 24.70% 2.59 $100,302 3.58 5.53 1.95 Palatine, Il - 5 Mile Ring: 596,869 229,157 22.80% 2.60 $102,917 2.60 3.14 0.54 Corona, Ca- 5 Mile Ring: 617,254 128,880 25.50% 3.36 $91,623 4.79 4.55 -0.24 Pasadena, Ca- 3 Mile Ring: 920,703 184,426 46.20% 2.59 $94,807 4.99 5.61 0.61 Oxnard, Ca - 3 Mile Ring: 479,405 112,733 40.80% 3.41 $72,367 4.25 6.01 1.75 Oxnard, Ca - 5 Mile Ring: 1,535,095 252,923 40.10% 3.47 $70,638 6.07 3.64 -2.43 Oxnard, Ca - Polygon: 838,360 134,960 41.50% 3.80 $72,955 6.21 5.43 -0.78 661,384 101,641 45.20% 2.32 $55,411 6.51 7.36 0.85 Fletcher, Fl - 3 Mile Ring: Fletcher, Fl- 5 Mile Ring: 1,411,656 270,394 42.30% 2.39 $57,060 5.22 4.34 -0.88 Hillsborough, Fl- 3 Mile Ring: 504,809 106,711 43.80% 2.41 $45,022 4.73 7.19 2.46 Hillsborough, Fl- 5 Mile Ring: 1,271,910 288,897 39.50% 2.42 $56,291 4.40 3.82 -0.58 Irvine, Ca - 3 Mile Ring: 800,086 113,579 46.40% 2.66 $93,112 7.04 6.74 -0.30 Irvine, Ca - Polygon: 770,139 97,068 38.80% 2.77 $95,410 7.93 6.38 -1.55 Long Beach, Ca - 3 Mile Ring: 558,430 196,329 24.50% 3.03 $91,734 2.84 3.60 0.75 Orange, Ca - 3 Mile Ring: 840,722 207,139 49.70% 3.37 $72,009 4.06 5.13 1.07 Henderson, NV - 3 Mile Ring 850,778 108,869 28.60% 2.58 $89,634 7.81 5.63 -2.18 Sun Valley, Ca - 3 Mile Ring: 943,149 153,210 49.50% 3.60 $60,605 6.16 5.93 -0.23 Hawthorne, Ca - 3 Mile Ring: 1,067,919 287,409 58.20% 3.10 $74,576 3.72 4.59 0.87 Costa Mesa, Ca - 3 Mile Ring: 1,166,168 172,880 48.60% 2.52 $105,674 6.75 5.93 -0.82 Fort Wayne, In - 5 Mile Ring: 352,783 84,932 26.50% 2.39 $61,818 4.15 6.21 2.05 Whittier, Ca - 3 Mile Ring: 545,230 181,269 27.20% 3.21 $78,021 3.01 4.01 1.01 Montclair, Ca - 3 Mile Ring: 1,056,135 182,652 44.10% 3.71 $64,996 5.78 4.95 -0.83 Maui: 442,153 144,957 31.80% 2.86 $76,986 3.05 5.18 2.13 Costa Mesa, Ca- 3 Mile Ring: 1,021,290 172,982 48.50% 2.58 $105,094 5.90 5.89 -0.02 Durham, Nc - 5 Mile Ring: 445,604 88,838 41.70% 2.54 $59,550 5.02 7.14 2.12 Covina, Ca 3-Mile Ring 854,858 198,045 35.60% 3.43 $69,541 4.32 4.25 -0.06 Whittier, Ca - 3 Mile Ring: 824,119 165,245 38.64% 3.40 $64,882 4.99 5.06 0.07 North Salt Lake, Ut - 5 Mile Ring: 802,905 112,812 29.80% 2.97 $77,538 7.12 5.48 -1.64 Chatsworth, Ca - 3 Mile Ring: 806,554 88,077 37.70% 2.81 $80,992 9.16 6.53 -2.63 Carson, Ca- 3 Mile Ring: 1,072,224 181,573 36.00% 3.19 $63,762 5.91 4.75 -1.15 Mira Loma, Ca - 5 Mile Ring: 710,709 188,841 29.50% 3.61 $57,899 3.76 3.93 0.17 Modesto, Ca - 3 Mile Ring: 484,250 115,050 38.53% 3.01 $56,692 4.21 6.19 1.98 Costa Mesa, Ca - 3 Mile Ring: 1,091,948 154,868 55.92% 3.14 $77,118 7.05 6.54 -0.51 Newbury Park, Ca - 5 Mile Ring: 425,599 107,571 22.50% 2.71 $102,626 3.96 5.04 1.08 Newbury Park, Ca - Polygon (Zip Codes): 470,857 122,688 21.60% 2.85 $127,815 3.84 4.44 0.61 El Monte - 3 Mile Ring: 756,954 245,622 46.47% 4.06 $56,146 3.08 3.93 0.84 Metarie, La - 3 Mile Ring: 1,021,797 86,453 30.60% 2.21 $58,295 11.82 6.62 -5.20 Rancho Cucamonga, Ca - 3 Mile Ring: 740,200 94,897 32.34% 3.24 $70,079 7.80 5.83 -1.97 Livermore, Ca-5 Mile Ring: 417,942 82,258 27.62% 2.84 $105,616 5.08 5.70 0.62 Oceanside, Ca - 5 mile ring: 958,281 226,662 42.32% 2.81 $68,401 4.23 4.69 0.46 Source: Cushman & Wakefield Storage Industry Group
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Valuation• 12
Testing for relationships and rank, these variables indicate moderate correlation with a co-efficient of .3238 or R squared (Multiple R of .5681) and indicates demand of 3.33 square feet of self-storage per person for the variables in the threemile trade area (Excel regression). Comparatively, the one-mile ring (as a test of reasonableness) indicates new demand of 0.63 square feet per person. Based on the three-mile ring, there is an over-supply demand of 0.95 (4.28 -3.33 = -0.95) square feet of an over-supply of 164,984 square feet (-0.95 x 163,969, less 20 percent for stabilized vacancy). The research proofs, compared with the subject trade areas, are shown in Table 12.3.
Market Equilibrium The market appears to be over-supplied characterized by vacancy exceeding 20 percent and stable rents in the subject trade area (three-mile ring) due to local demographic factors. Clearly, a careful analysis of existing supply and competitive position is warranted. The subject project is newer and has a competitive position above fair share in a market or trade area described as oversupplied. These risk factors must be considered in valuation. Qualitatively, these factors underscore the importance of market analysis in self-storage property and must be considered in the conclusions of the quantity, quality and durability of the income level. Careful
cash flow modeling is required to reflect these market characteristics. These factors are also considered in the valuation analysis and conclusions to ensure long run viability as an investment class.
value “as is” means an estimate of the market value of a property in the condition observed upon inspection and as it physically and legally exists without hypothetical conditions, assumptions, or qualifications as of the date of inspection.
Valuation This valuation model employs the Sales Comparison Approach and the Income Capitalization Approach. Based on our analysis and knowledge of the subject property type and relevant investor profiles, it is our opinion that the cost approach is not applicable to this property. Investors in the self-storage asset class focus on cash flow characteristics of the property with secondary consideration given to the Sales Comparison Approach. Therefore, only the Sales Comparison Approach and Income Capitalization Approach are considered meaningful and applicable in developing a credible value conclusion. The purpose of the appraisal is to estimate the market value “as is” at a given date. Market value is briefly described as the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Market
As an asset class, self-storage is now considered institutional grade. Consequently, the investment market is increasingly relying on discounted cash flow analyses. For example, key industry brokers, property owners, and property managers utilize direct capitalization and discounted cash flow as the primary tools of income capitalization. These methodologies are corroborated by survey research as contained in the Summer 2010 Investor Survey.
Sales Comparison Approach Sometimes called the market approach, the direct sales comparison approach involves investigation of recent sales of similar type properties and comparing them with the subject to arrive at an indication of value. This approach is based on the premise that an informed purchaser would pay no more for a property than the cost of acquiring an existing property with the same utility. The weakness of the approach is in accurately accounting for the variables among the self-storage
SELF-STORAGE MARKET EQUILIBRIUM
TABLE 12.3
Storage Industry Group of Cushman & Wakefield. After mining demographic data for meaningful mathematical relationships for self-storage, there are four characteristics key to demand: population, percentage of renters, average household size, and average household income. The data is analyzed in a regression model detailed in Table 12.2.
Trade Area Element Existing Supply New Construction Total Supply Less: Occupancy Available Supply Less: Stabilized Vacancy (20%) Subtotal (Remaining Supply) Demand Demand Less Remaining Supply Equilibrium Forecast
1-Mile Radius Square Feet 149,425 0 149,425 (113,734) 35,691 (29,885) 5,806 15,772 9,966 Under-Supplied
3-Mile Radius Square Feet 888,453 0 888,453 (702,123) 186,330 (177,691) 8,639 (156,254) (164,894) Over-Supplied
Source: Cushman & Wakefield Storage Industry Group
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Analysis of the data set centers around elements of comparison that are the characteristics of properties and transactions that cause the price paid for real estate to vary. There are 10 common elements of comparison that should always be considered in sales comparison analysis (The Appraisal of Real Estate, Thirteenth Edition, page 426), summarized in Table 12.5.
Units Of Analysis The building sales data indicates a value range from $23.29 to $68.06 per square foot with an average of $50.16 per square foot. Two units of comparison are used in this analysis: the effective gross income multiplier (EGIM) and an adjustment grid. Both value indications are correlated to a final estimate of value of the subject under the sales comparison approach with a comparison to the range of price per unit and price per square foot from the data set.
EGIM The effective gross income multipli-
er (EGIM) is calculated in the sales transactions by dividing the sales price by the effective gross income at the time of sale. The EGIM expresses the relationship between a sales price and the property’s effective gross income. All other things being equal, the lower the income, the lower the sales price. However, there are other variables that affect the price/income relationship such as the condition of the property, the vacancy at time of sale, the stability of the income stream, the likelihood of near term change (up or down), and the ratio of operating expenses to effective gross income.
fore, we conclude that the indicated value by the EGIM Analysis is as seen in the summary Table 12.6.
THE EGIM EXPRESSES THE
RELATIONSHIP BETWEEN A SALES PRICE AND THE PROPERTY’S EFFECTIVE GROSS INCOME. Price Per Square Foot
As all of the sales are very similar to the property appraised in terms of physical condition, access, and visibility and the prospect for continuation of the income stream at or near current levels, the expense ratio is the most significant variable of difference. The expense ratio affects net operating income and, by implication, the overall capitalization rate and sales price. The higher the expense ratio, the lower the EGIM.
The sales that we have used were the best available comparables to the subject property. The major points of comparison for this type of analysis include the property rights conveyed, the financial terms incorporated into the transaction, the conditions or motivations surround-
ELEMENTS OF COMPARISON TABLE 12.5
building sales. For example, as a test of reasonableness, several tools of analysis are warranted. On this basis, the sales comparison approach is generally given secondary consideration in the final value conclusion. A brief analysis is presented, beginning with comparable sales data in Table 12.4.
As support for this EGIM, we have checked it against our concluded capitalization rate of 8.00 percent and the subject’s estimated expense ratio of 39.48. Applying the equation of 1- Expense Ratio/Cap Rate = EGIM indicates 1-39.48/8.00 percent = 7.57 for the EGIM. There-
1) 2) 3) 4) 5) 6) 7) 8) 9) 10)
Real property rights conveyed Financing terms Conditions of sale Expenditures made Immediately after purchase Market conditions (Date) Location Physical characteristics Economic characteristics Use Non-realty components
TABLE 12.4
SUMMARY OF IMPROVED SELF STORAGE SALES (PROPERTY INFORMATION) No. (SF) S 1 2 3 4 5 Low High Average
Land NRA 140,699 145,055 120,226 201,250 125,453 84,942 84,942 201,250 135,385
Building Year Built of Units 76,385 2005 72,990 1974 56,035 1973 58,185 2002 67,425 2002 79,705 2007 56,035 1973 79,705 2007 66,868 1992
No. Average Interest Unit Size Date 634 120 439 166 Fee Simple 441 127 Fee Simple 507 115 Fee Simple 502 134 Fee Simple 723 110 Fee Simple 439 110 723 166 522 131
Source: Cushman & Wakefield Storage Industry Group
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Sale Price
Sale
$/SF
NOI/SF
OAR
May-10 May-10 Feb-10 Aug-09 Sep-08 Sep-08 May-10 Oct-09
$1,700,000 $1,800,000 $3,675,000 $4,325,000 $5,425,000 $1,700,000 $5,425,000 $3,385,000
$23.29 $32.13 $63.16 $64.15 $68.06 23.29 68.06 50.16
$5.65 $2.08 $2.84 $6.48 $5.17 $5.68 2.08 6.48 4.45
8.91% 8.84% 9.25% 8.06% 8.35% 8.06% 9.25% 8.68%
Occup. Ratio 67.62% 77% 77% 87% 80% 97% 77% 97% 84%
Expense
EGIM
39% 55% 55% 38% 39% 30% 30% 55% 44%
5.04 5.13 6.70 7.55 8.35 5.04 8.35 6.55
Valuation• 12
ing the sale, changes in market conditions since the sale, the location of the real estate, its physical traits and the economic characteristics of the property. The first adjustment made to the market data takes into account differences between the subject property and the comparable property
sales with regard to the legal interest transferred. Advantageous financing terms or atypical conditions of sale are then adjusted to reflect a normal market transaction. Next, changes in market conditions must be accounted for, thereby creating a time adjusted price. Lastly, adjustments for location, physical traits and the economic characteristics
of the market data are made in order to generate the final adjusted unit rate for the subject property. We have made a downward adjustment to those comparables considered superior to the subject and an upward adjustment to those comparables considered inferior. Where expenditures upon sale exist,
TABLE 12.6
EGIM SUMMARY (PROSPECTIVE VALUE UPON STABILIZATION) Name Sale No. and Location 1 Comparable One 2 Comparable Two 3 Comparable Three 4 Comparable Four 5 Comparable Five ANALYSIS Range EGIM Low 5.04 High 8.35 Median 6.70 Average 6.55 VALUE CONCLUSION Estimated EGIM Effective Gross Income Indicated Value LESS Curable Depreciation Adjusted Value Rounded to nearest $10,000 Per Square Foot
Effective Price $1,700,000 $1,800,000 $3,675,000 $4,325,000 $5,425,000 EGI $713,347 $713,347 $713,347 $713,347
÷ ÷ ÷ ÷ ÷
Gross Income $337,302 = $350,877 = $548,507 = $572,848 = $649,701 = Value $3,595,270 $5,956,449 $4,779,426 $4,675,277
EGIM 5.04 5.13 6.70 7.55 8.35 $/SF $47.07 $77.98 $62.57 $61.21
7.50 x $713,347 $5,350,104 $0 $5,350,104 $5,350,000 $70.04
Source: Cushman & Wakefield Storage Industry Group
TABLE 12.7
IMPROVED SALE ADJUSTMENT GRID $/SF and Date $23.29 5/10 2 $32.13 5/10 3 $63.16 2/10 4 $64.15 8/09 5 $68.06 9/08 STATISTICS $23.29 $68.06 $50.16
No. 1
ECONOMIC ADJUSTMENTS (CUMULATIVE) Property Rights Conditions Market Per SF Conveyed of Sale Financing Conditions Subtotal Fee Simple Arms-Length None Superior $22.31 0.0% 0.0% 0.0% -4.2% -4.2% Fee Simple Arms-Length None Superior $30.78 0.0% 0.0% 0.0% -4.2% -4.2% Fee Simple Arms-Length None Superior $59.12 0.0% 0.0% 0.0% -6.4% -6.4% Fee Simple Arms-Length None Superior $56.77 0.0% 0.0% 0.0% -11.5% -11.5% Fee Simple Arms-Length None Superior $54.79 0.0% 0.0% 0.0% -19.5% -19.5% - Low - High - Average
PROPERTY CHARACTERISTIC ADJUSTMENTS (ADDITIVE) Age, Quality & Adj. Location Size Condition Utility Economics Other $/SF Inferior Similar Inferior Similar Inferior Inferior $54.66 25.0% 0.0% 35.0% 0.0% 75.0% 10.0% 145.0% Inferior Smaller Inferior Similar Inferior Inferior $60.02 15.0% -5.0% 25.0% 0.0% 50.0% 10.0% 95.0% Similar Smaller Similar Similar Superior Inferior $56.16 0.0% -5.0% 0.0% 0.0% -10.0% 10.0% -5.0% Similar Similar Similar Similar Superior Similar $53.93 0.0% 0.0% 0.0% 0.0% -5.0% 0.0% -5.0% Similar Similar Similar Similar Superior Similar $52.05 0.0% 0.0% 0.0% 0.0% -5.0% 0.0% -5.0%
Overall Inferior Inferior Superior Superior Superior
Low - $52.05 High - $60.02 Average - $55.37
Source: Cushman & Wakefield Storage Industry Group
2012 Self-Storage Almanac
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12 •Valuation
solute difference, accounting for all the variables, in terms of one percentage adjustment. This absolute percentage variance between the comparable and the subject is directly applied as a net adjustment to the price per square foot. The analysis is summarized in Table 12.7 on previous page.
we have included them in the sales price. It is very difficult to accurately derive a dollar or percentage adjustment for each variable. For example, the data shows a value range (unadjusted). Furthermore, the data does not specifically demonstrate adjustments for all the variables. This technique compares each sale to the subject based on the net operating income per square foot of rentable area. This results in an ab-
Approach Conclusion The two indications of value for the subject sales comparison approach are summarized as follows:
THE POTENTIAL
EffectiveGrossIncome Multiplier: $5,350,000 PricePerSquareFoot: $5,200,000
GROSS INCOME CONSISTS OF
RENTAL INCOME
The analysis of the data includes quantitative and qualitative techniques to derive reasonable adjustments to the data set. Quantitative techniques used include linear regression and paired sales analysis. The primary approach conclusions indicate a small variance. Such
AND
OTHER INCOME.
close correlation is good support for an approach conclusion within the indicated range. Therefore, the approach conclusion is $5.2 million. The sales comparison approach is given less significant emphasis in the final value estimate to reflect the market of this asset class. The approach also demonstrates market demand for self-storage product and limited availability of product for sale. Consequently, pricing is increasing and marketing times are decreasing.
Income Capitalization Approach The income capitalization approach considers the market value of the subject from the perspective of a typical investor. In this regard, direct capitalization reflects the market. It demonstrates the expectations of the market based on a static (stabilized scenario) cash flow model. Therefore, the income capitalization approach conclusion is given primary emphasis in the final value
TABLE 12.8
MARKET RENT FORECAST - ALL UNITS No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Total
Unit No. Type Units 5x5 60 5x5 50 5 x 10 43 5 x 10 20 10 x 5 26 6 x 10 1 5 x 15 4 10 x 10 23 10 x 10 152 10 x 15 114 10 x 15 39 10 x 20 16 10 x 20 3 15 x 15 1 10 x 25 3 10 x 25 13 10 x 30 59 15 x 20 3 20 x 20 1 15 x 30 3
(%) Unit Occupancy 30.00 40.00 46.51 80.00 23.08 100.00 91.30 51.32 68.42 79.49 78.75 80.00 66.67 46.15 81.36 100.00 100.00 100.00
Inside Down Climate x x x x x x x x
Inside Asking Up Drive Rent Climate Up $/Month/Unit x $35 $45 x $65 $75 x $65 x $65 $85 $105 x $85 x $115 $125 x $185 x $185 $235 $220 x $220 x $225 $245 x $250 x $230 $105
Source: Cushman & Wakefield Storage Industry Group
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Actual C&W/Estimated Rent Market Rent $/Month/Unit $/Month/Unit $30 $45 $33 $50 $49 $65 $45 $70 $41 $65 $0 $70 $70 $90 $96 $110 $61 $95 $86 $130 $118 $145 $140 $160 $140 $180 $0 $190 $94 $200 $125 $220 $162 $250 $200 $230 $200 $270 $152 $290 $88 $114
C&W C&W Forecast Forecast Rent $/Year Rent $/SF/Year $32,400 $21.60 $30,000 $24.00 $33,540 $15.60 $16,800 $16.80 $20,280 $15.60 $840 $14.00 $4,320 $14.40 $30,360 $13.20 $173,280 $11.40 $177,840 $10.40 $67,860 $11.60 $30,720 $9.60 $6,480 $10.80 $2,280 $10.13 $7,200 $9.60 $34,320 $10.56 $177,000 $10.00 $8,280 $9.20 $3,240 $8.10 $10,440 $7.73 $867,480 $11.36
Valuation฀• 12
conclusion to be consistent with the self-storage investment market and most probable buyers. The potential gross income consists of rental income and other income. Rental income is derived from the units. The only reliable way to calculate rental income is by individual unit as outlined in Table 12.8. Analyzing rent per square foot can be very misleading and lead to erroneous results because rental income is dependent on the unit mix. Ancillary income includes late fees, administrative fees, and retail sales of storage items (from the office), truck rentals and other miscel-
laneous items. In this example, other income is derived from all these sources except for truck and equipment rentals. Ancillary income is typically 2 percent to 5 percent of gross income. The forecast rent roll, detailing potential gross income, is summarized in Table 12.8. As a comparison and to determine market rent for the subject, a survey of similar properties in and near the trade area has been conducted. Data has been researched and analyzed for the most typical unit sizes. Data specifics concerning the rent rate, basis, term, concessions and other important parameters have been verified. The self-
storage rental data indicates a wide value range for the seven unit sizes surveyed. As most of the comparables are within the subject trade area, most of the variances among the data set are due to a few distinct characteristics, such as low or high demand for a particular unit size. In cases of inexact sizing, the most close unit match is compared to the category. The foregoing comparable lease data is summarized in Table 12.9. Adjustment of comparable rent data is very difficult because, unlike adjustments in the other approaches, there is limited text book methodology. Nevertheless, rental
TABLE 12.9
COMPETITIVE SELF-STORAGE PROJECTS
No. 1
2
3
4
5
PROPERTY INFORMATION Property Name Address City, State, ZIP Unit Type Subject Property Comparable One Inside Down Climate Inside Up Climate Drive Up Comparable Two Inside Down Climate Inside Up Climate Drive Up Comparable Three Inside Down Climate Inside Up Climate Drive Up Comparable Four Inside Down Climate Inside Up Climate Drive Up Comparable Five Inside Down Climate Inside Up Climate Drive Up SUMMARY BY UNIT TYPE Inside Down Climate Minimum $/Month Maximum $/Month Average $/Month Inside Up Climate Minimum $/Month Maximum $/Month Average $/Month Drive Up Minimum $/Month Maximum $/Month Average $/Month
ASKING MONTHLY RENT & CONCESSIONS
5x5
5x10
5x15
$45
$60
$80
$39 $39
$59 $59 $69
$55
$75
$95
Asking Rent Per Month 10x10 10x15 10x20 10x25 $150 $85 $99 $185 $120
$170
$215
$109 $89
$129 $129
$179 $139
$125 $110
$155 $130 $155
$80 $40 5x5 $39 $39 $39 $39 $60 $50 $40 $40 $40
$55 5x10 $59 $59 $59 $59 $80 $71 $55 $69 $62
5x15 $0 $0 $0 $95 $95 $95 $0 $0 $0
10x10 $109 $125 $117 $80 $120 $97 $0 $0 $0
$225
$130 10x15 $129 $155 $142 $99 $170 $132 $155 $155 $155
10x30
20x20
$230
$245
$206 $160 10x20 $150 $179 $165 $139 $215 $177 $160 $160 $160
10x25 $0 $0 $0 $206 $206 $206 $185 $225 $205
10x30 $0 $0 $0 $0 $0 $0 $230 $245 $238
20x20 $0 $0 $0 $0 $0 $0 $0 $0 $0
Source: Cushman & Wakefield Storage Industry Group
2012 Self-Storage Almanac
117
12 •฀Valuation
adjustments should follow a logical and sequential path to derive reasonable market rate conclusions. Adjustments should account for financial aspects of the lease data as well as location and physical characteristics. More important than mathematical equivalencies, however, is actual data. In this re-
KEY VARIABLES TABLE 12.10
1) 2) 3) 4) 5) 6) 7)
Lease Basis Escalation Concessions Conditions Market conditions (time) Location Physical Characteristics
gard, data is based on quoted coupon rates that correlate well with specific data. For example, in the survey of comparable data, managers were queried as to the actual amount being paid by recently signed tenants as the representative rate of the comparable (and other parameters such as specials, discounts or other concessions). The seven key variables that warrant consideration for adjustment of the comparable data are summarized in Table 12.10.
credit, and concessions. In the subject analysis, all three components are combined to form a long term vacancy factor. Considering the subject competitive position and typical turnover, a physical vacancy factor of 20 percent is concluded for the subject. As to credit loss, the market will remain over-supplied. Such a forecast is consistent with the forecast of market equilibrium, long run vacancy trends and the subject competitive position within the selfstorage market.
Vacancy
Operating Expenses
Vacancy is comprised of three main components: stabilized or physical vacancy, collection loss or
The subject operates on a full service or gross basis, meaning all building operating expenses are paid by the owner including fixed and variable expenses. Fixed expenses do not vary with occupancy and include real estate taxes and insurance. Variable expenses vary with the level of occupancy and include the following: repairs and maintenance; administration; on-site management; off-site management; utilities, advertising; and miscellaneous. Self-storage property rarely incurs reserves for replacement in direct capitalization. Due to a relatively low break even point with respect to occupancy, self-storage expenses tend to be relatively inelastic or stable (in terms of total amount).
TABLE 12.11
OPERATING EXPENSE STATISTICS ($/SF) Location Expense Category Real Estate Taxes Insurance Repairs & Maintenance Administration On-Site Management Off-Site Management Utilities Advertising Miscellaneous Total Expenses (SF): Total Expenses (% of EGI):
Nationwide Low $0.01 $0.01 $0.01 $0.01 $0.02 $0.01 $0.01 $0.01 $0.01 $0.05
High $4.18 $1.29 $3.22 $3.22 $2.57 $3.22 $2.86 $3.86 $3.86 $28.26 44.77%
Source: Cushman & Wakefield Storage Industry Group
CHART 12.2
OPERATING EXPENSES
118
Self-Storage Almanac 2012
Mean $0.66 $0.20 $0.26 $0.44 $0.91 $0.57 $0.31 $0.30 $0.26 $3.90 52.50%
Subject Year 1 Forecast $0.71 $0.14 $0.26 $0.25 $0.93 $0.47 $0.34 $0.30 $0.01 $3.41
Data is analyzed on the rentable area per square foot and as a percentage of the effective gross income. To assist in the forecast of operating expenses, comparable expense data in the form of survey research and specific expense comparables are referenced. The survey research data is compiled from over 700 properties nationwide collected in 2010 (based on year end 2009 data). The data was published by MiniCo as the 2010 Expense GuideBook for Self-Storage, authored by Cushman & Wakefield, Inc. The data
Valuation฀• 12
The difficulty in utilizing survey research is the scope and methods of accumulating data vary for each category. Consequently, the data can be skewed by a limited amount of directly comparable data. Moreover, this explains why there may be large variances in several categories, but the overall expenses are generally similar. The function of the comparable data is to provide a foundation for analyzing the subject operating history as the basis of the forecast. Expenses can vary widely, particularly when analyzed solely on a single unit of analysis such as per square foot of rentable building area. Therefore, the data is analyzed on both a per square foot basis and expressed as a ratio of effective gross income as a test of reasonableness. The subject expense forecast is summarized in Chart 12.2. Based on the cumulative analyses, the subject income and expense forecast are reasonable.
market participants and to provide a foundation for yield analysis, other techniques such as debt coverage ratio analysis and band of investment can be utilized. For added support, the Summer 2010 Korpacz Investor Survey completed by the Self Storage Industry Group of Cushman & Wakefield, indicates a target overall capitalization rate in a stabilized pro forma of 8.45 percent. Typically, the self-stor-
Overall Capitalization Rate
The comparable sale data indicates a range from 8.06 percent to 9.25 percent with an average of 8.66 percent. Based on the wide range, further tools of analysis are warranted. To assist with understanding the motivations and expectations of
Continued on page 122
Stabilized Year for Direct Capitalization Potential Gross Revenue Actual Rent (Occupied Storage Units) Plus Market Rent (Vacant Storage Units) Base Rental Revenue - Storage Units Base Rental Revenue - Parking Base Rental Revenue - Total Other Revenue TOTAL POTENTIAL GROSS REVENUE Vacancy and Collection Loss EFFECTIVE GROSS REVENUE OPERATING EXPENSES Taxes Insurance Repairs & Maintenance Administration On-Site Management Off-Site Management Utilities Advertising Miscellaneous Total Operating Expenses TOTAL EXPENSES NET OPERATING INCOME
Year Four Annual $427,078 $317,723 $744,801 $109,167 $853,967 37,717 $891,684 (178,337) $713,347
$/SF $5.59 $4.16 $9.75 $1.43 $11.18 0.49 $11.67 (2.33) $9.34
% of EGI
$59,527 12,020 21,855 20,762 77,584 35,667 28,520 25,133 546 $281,613 $281,613 $431,734
$0.78 0.16 0.29 0.27 $1.02 0.47 0.37 0.33 0.01 $3.69 $3.69 $5.65
8.34% 1.69% 3.06% 2.91% 10.88% 5.00% 4.00% 3.52% 0.08% 39.48% 39.48% 60.52%
100.00%
Source: Cushman & Wakefield Storage Industry Group
DIRECT CAPITALIZATION METHOD
TABLE 12.13
The overall capitalization rate is calculated by dividing the net operating income by the sales price. This basic direct capitalization formula can simply be described as IRV (where I is income, R is capitalization rate, V is value) or I/R = V (The Appraisal of Real Estate, Thirteenth Edition, page 529). Ideally, the overall capitalization rate is selected from the market through sales of similar types of property.
age market data is emphasized in the conclusion of the subject overall capitalization rate. The market data corroborates the survey research and secondary techniques of estimating the overall capitalization rate for the subject. Due to declining interest rates, cap rates are also declining. Therefore, a cap rate at the low end of the range is warranted. Based on the foregoing, an overall
SUMMARY OF REVENUE AND EXPENSES
TABLE 12.12
is detailed on a national and western region basis and is compared to the subject forecast.
Prospective Value Upon Stabilization NET OPERATING INCOME Sensitivity Analysis (0.25% OAR Spread) Based on Low-Range of 7.75% Based on Most Probable Range of 8.00% Based on High-Range of 8.25% Reconciled Value LESS Curable Depreciation Adjusted Value Rounded to nearest $10,000
$431,734 Value $5,570,761 $5,396,675 $5,233,139 $5,396,675 $0 $5,396,675 $5,400,000
$5.65 $/SF $72.93 $70.65 $68.51 $70.65 $0.00 $70.65 $70.69
Source: Cushman & Wakefield Storage Industry Group
2012 Self-Storage Almanac
119
12 •Valuation
TABLE 12.14a
DISCOUNTED CASH FLOW ANALYSIS Assumptions Self Storage Rental Rate/SF Rent Growth (Market) Rent Growth (Income in place) Other Income Growth Vacancy & Collection Loss Expense Growth Tax Growth Management % EGI (1) Capital Reserves $/SF
Year 1 $11.36 0.00% 3.00% 3.00% 40.00% 3.00% 3.00% N/A $0.07
Year 2 $11.36 0.00% 3.00% 3.00% 35.00% 3.00% 3.00% N/A $0.07
Year 3 $11.70 3.00% 3.00% 3.00% 27.50% 3.00% 3.00% N/A $0.07
Year 4 $12.05 3.00% 3.00% 3.00% 20.00% 3.00% 3.00% 5.00% $0.08
Year 5 $12.41 3.00% 3.00% 3.00% 20.00% 3.00% 3.00% 5.00% $0.08
Year 6 $12.78 3.00% 3.00% 3.00% 20.00% 3.00% 3.00% 5.00% $0.08
Year 7 $13.17 3.00% 3.00% 3.00% 20.00% 3.00% 3.00% 5.00% $0.08
1) Management fee in unstabilized years is set to equate with management fee of first stabilized year.
For the Years Beginning For the Years Ending POTENTIAL GROSS REVENUE Actual Rent (Occupied Storage Units) Plus Market Rent (Vacant Storage Units) Less Rent Loss (Non-Revenue Units) Base Rental Revenue - Storage Units Self Storage Rental Rate/SF Base Rental Revenue - Parking Base Rental Revenue - Other Base Rental Revenue - Total Expense Reimbursement Revenue Miscellaneous Revenue Other Revenue TOTAL POTENTIAL GROSS REVENUE Vacancy and Collection Loss EFFECTIVE GROSS REVENUE OPERATING EXPENSES Taxes Insurance Repairs & Maintenance Administration On-Site Management Off-Site Management Utilities Advertising Miscellaneous Total Operating Expenses TOTAL EXPENSES Operating Expense Ratio NET OPERATING INCOME Capital Reserves Capital Deductions CAPITAL RESERVES CASH FLOW BEFORE DEBT SERVICE Implied Overall Rate Cash on Cash Return
1 Sep-10 Sep-11
2 Sep-11 Sep-12
Stabilized Year 3 Sep-12 Sep-13
$390,837 $299,484 $0 $690,321 $9.04 $102,900 $0 $793,221 $0 $0 $34,516 $827,737 -$331,095 $496,642
$402,562 $299,484 $0 $702,046 $9.19 $102,900 $0 $804,946 $0 $0 $35,552 $840,498 -$294,174 $546,323
$414,639 $308,469 $0 $723,107 $9.47 $105,987 $0 $829,094 $0 $0 $36,618 $865,713 -$238,071 $627,642
$427,078 $317,723 $0 $744,801 $9.75 $109,167 $0 $853,967 $0 $0 $37,717 $891,684 -$178,337 $713,347
$439,890 $327,254 $0 $767,145 $10.04 $112,442 $0 $879,586 $0 $0 $38,848 $918,434 -$183,687 $734,748
$453,087 $337,072 $0 $790,159 $10.34 $115,815 $0 $905,974 $0 $0 $40,014 $945,988 -$189,198 $756,790
$466,680 $347,184 $0 $813,864 $10.65 $119,289 $0 $933,153 $0 $0 $41,214 $974,367 -$194,873 $779,494
3.00% 2.88% -2.90% 5.37%
3.00% 3.00% 3.00% 3.00%
$54,475 $11,000 $20,000 $19,000 $71,000 $35,667 $26,100 $23,000 $500 $260,743 $260,743 52.5% $235,900 $5,347 $0 $5,347 $230,553 5.27% 5.15%
$56,110 $11,330 $20,600 $19,570 $73,130 $35,667 $26,883 $23,690 $515 $267,495 $267,495 49.0% $278,829 $5,507 $0 $5,507 $273,321 6.23% 6.11%
$57,793 $11,670 $21,218 $20,157 $75,324 $35,667 $27,689 $24,401 $530 $274,450 $274,450 43.7% $353,192 $5,673 $0 $5,673 $347,519 7.90% 7.77%
$59,527 $12,020 $21,855 $20,762 $77,584 $35,667 $28,520 $25,133 $546 $281,613 $281,613 39.5% $431,734 $5,843 $0 $5,843 $425,891 9.65% 9.52%
$61,312 $12,381 $22,510 $21,385 $79,911 $36,737 $29,376 $25,887 $563 $290,062 $290,062 39.5% $444,686 $6,018 $0 $6,018 $438,668 9.94% 9.81%
$63,152 $12,752 $23,185 $22,026 $82,308 $37,840 $30,257 $26,663 $580 $298,763 $298,763 39.5% $458,027 $6,199 $0 $6,199 $451,828 10.24% 10.10%
$65,046 3.00% $13,135 3.00% $23,881 3.00% $22,687 3.00% $84,778 3.00% $38,975 2.24% $31,165 3.00% $27,463 3.00% $597 3.00% $307,726 2.90% $307,726 2.90% 39.5% -2.35% $471,767 7.52% $6,385 3.00% $0 $6,385 3.00% $465,383 7.61% 10.55% 10.41%
3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 0.00% 3.00% 3.00%
Source: Cushman & Wakefield Storage Industry Group
120
Self-Storage Almanac 2012
4 Sep-13 Sep-14
5 Sep-14 Sep-15
6 Sep-15 Sep-16
7 Sep-16 Sep-17
Annual Growth Year 1 through Year 13
Annual Growth Year 4 through Year 13
3.00% 2.75%
3.00% 3.00%
2.89% 2.89% 2.75%
3.00% 3.00% 3.00%
2.87%
3.00%
3.00% 3.00%
Valuation• 12
TABLE 12.14b
DISCOUNTED CASH FLOW ANALYSIS Assumptions Self Storage Rental Rate/SF Rent Growth (Market) Rent Growth (Income in place) Other Income Growth Vacancy & Collection Loss Expense Growth Tax Growth Management % EGI (1) Capital Reserves $/SF
Year 8 $13.56 3.00% 3.00% 3.00% 20.00% 3.00% 3.00% 5.00% $0.09
Year 9 $13.97 3.00% 3.00% 3.00% 20.00% 3.00% 3.00% 5.00% $0.09
Year 10 $14.39 3.00% 3.00% 3.00% 20.00% 3.00% 3.00% 5.00% $0.09
Year 11 $14.82 3.00% 3.00% 3.00% 20.00% 3.00% 3.00% 5.00% $0.09
Year 12 $15.26 3.00% 3.00% 3.00% 20.00% 3.00% 3.00% 5.00% $0.10
Year 13 $15.72 3.00% 3.00% 3.00% 20.00% 3.00% 3.00% 5.00% $0.10
Year 14 $16.19 3.00% 3.00% 3.00% 20.00% 3.00% 3.00% 5.00% $0.10
1) Management fee in unstabilized years is set to equate with management fee of first stabilized year.
Annual Growth Year 1 through Year 13
8 9 10 11 12 13 14 For the Years Beginning Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23 For the Years Ending Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23 Sep-24 POTENTIAL GROSS REVENUE Actual Rent (Occupied Storage Units) $480,680 $495,101 $509,954 $525,252 $541,010 $557,240 $573,957 3.00% Plus Market Rent (Vacant Storage Units) $357,600 $368,328 $379,377 $390,759 $402,481 $414,556 $426,993 2.75% Less Rent Loss (Non-Revenue Units) $0 $0 $0 $0 $0 $0 $0 Base Rental Revenue - Storage Units $838,280 $863,428 $889,331 $916,011 $943,491 $971,796 $1,000,950 2.89% Self Storage Rental Rate/SF $10.97 $11.30 $11.64 $11.99 $12.35 $12.72 $13.10 2.89% Base Rental Revenue - Parking $122,868 $126,554 $130,351 $134,261 $138,289 $142,438 $146,711 2.75% Base Rental Revenue - Other $0 $0 $0 $0 $0 $0 $0 Base Rental Revenue - Total $961,148 $989,982 $1,019,682 $1,050,272 $1,081,780 $1,114,234 $1,147,661 2.87% Expense Reimbursement Revenue $0 $0 $0 $0 $0 $0 $0 Miscellaneous Revenue $0 $0 $0 $0 $0 $0 $0 Other Revenue $42,450 $43,724 $45,036 $46,387 $47,778 $49,212 $50,688 3.00% TOTAL POTENTIAL GROSS REVENUE $1,003,598 $1,033,706 $1,064,717 $1,096,659 $1,129,559 $1,163,445 $1,198,349 2.88% Vacancy and Collection Loss -$200,720 -$206,741 -$212,943 -$219,332 -$225,912 -$232,689 -$239,670 -2.90% EFFECTIVE GROSS REVENUE $802,879 $826,965 $851,774 $877,327 $903,647 $930,756 $958,679 5.37% OPERATING EXPENSES Taxes $66,998 $69,008 $71,078 $73,210 $75,407 $77,669 $79,999 3.00% Insurance $13,529 $13,934 $14,353 $14,783 $15,227 $15,683 $16,154 3.00% Repairs & Maintenance $24,597 $25,335 $26,095 $26,878 $27,685 $28,515 $29,371 3.00% Administration $23,368 $24,069 $24,791 $25,534 $26,300 $27,089 $27,902 3.00% On-Site Management $87,321 $89,941 $92,639 $95,418 $98,281 $101,229 $104,266 3.00% Off-Site Management $40,144 $41,348 $42,589 $43,866 $45,182 $46,538 $47,934 2.24% Utilities $32,100 $33,063 $34,055 $35,076 $36,129 $37,212 $38,329 3.00% Advertising $28,287 $29,136 $30,010 $30,910 $31,837 $32,793 $33,776 3.00% Miscellaneous $615 $633 $652 $672 $692 $713 $734 3.00% Total Operating Expenses $316,958 $326,467 $336,261 $346,349 $356,739 $367,441 $378,465 2.90% TOTAL EXPENSES $316,958 $326,467 $336,261 $346,349 $356,739 $367,441 $378,465 2.90% Operating Expense Ratio 39.5% 39.5% 39.5% 39.5% 39.5% 39.5% 39.5% -2.35% NET OPERATING INCOME $485,920 $500,498 $515,513 $530,978 $546,908 $563,315 $580,214 7.52% Capital Reserves $6,576 $6,773 $6,977 $7,186 $7,401 $7,623 $7,852 3.00% Capital Deductions $0 $0 $0 $0 $0 $0 $0 CAPITAL RESERVES $6,576 $6,773 $6,977 $7,186 $7,401 $7,623 $7,852 3.00% CASH FLOW BEFORE DEBT SERVICE $479,344 $493,725 $508,536 $523,792 $539,506 $555,691 $572,362 7.61% Implied Overall Rate 10.86% 11.19% 11.53% 11.87% 12.23% 12.60% 12.97% Cash on Cash Return 10.72% 11.04% 11.37% 11.71% 12.06% 12.42% 12.80%
Annual Growth Year 4 through Year 13 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 0.00% 3.00% 3.00% 3.00% 3.00%
Source: Cushman & Wakefield Storage Industry Group
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12 •Valuation
capitalization rate of 8.0 percent is reasonably concluded for the subject property.
Direct Capitalization Direct capitalization considers the income from one stable year of
TABLE 12.15
PRICING MATRIX (MARKET VALUE AS IS) Terminal Cap Rates 10.50% 7.75% $4,777,448 8.00% $4,716,114 8.25% $4,658,498 8.50% $4,604,271 8.75% $4,553,142 Cost of Sale at Reversion: Percent Residual: Rounded to nearest $25,000
10.75% $4,679,735 $4,620,177 $4,564,228 $4,511,571 $4,461,923
Discount Rate 11.00% $4,584,648 $4,526,810 $4,472,478 $4,421,342 $4,373,128 4.00% 43.15 $4,475,000
11.25% $4,492,107 $4,435,937 $4,383,171 $4,333,508 $4,286,684
11.50% $4,402,034 $4,347,479 $4,296,231 $4,247,997 $4,202,519
Source: Cushman & Wakefield Storage Industry Group
TABLE 12.16
PRICING MATRIX (PROSPECTIVE VALUE UPON STABILIZATION) Terminal Cap Rates 10.50% 6.75% $6,009,019 7.50% $5,698,012 8.25% $5,443,552 9.00% $5,231,502 9.75% $5,052,075 Cost of Sale at Reversion: Percent Residual: Rounded to nearest $10,000
10.75% $5,907,151 $5,603,109 $5,354,347 $5,147,046 $4,971,638
Discount Rate 11.00% $5,807,540 $5,510,292 $5,267,090 $5,064,421 $4,892,932 4.00% 51.14% $5,270,000
11.25% $5,710,131 $5,419,511 $5,181,730 $4,983,580 $4,815,914
11.50% $5,614,867 $5,330,712 $5,098,221 $4,904,479 $4,740,543
Source: Cushman & Wakefield Storage Industry Group
TABLE 12.17
VALUATION INDICES SALES COMPARISON APPROACH Market Value As Is Indicated Value: N/A Per Square Foot: N/A INCOME CAPITALIZATION APPROACH Discounted Cash Flow Projection Period: 14 Years Holding Period: 13 Years Terminal Capitalization Rate: 8.25% Internal Rate of Return: 11.00% Indicated Value: $4,480,000 Per Square Foot: $58.65 Direct Capitalization Net Operating Income: N/A Capitalization Rate: N/A Indicated Value: N/A Per Square Foot: N/A FINAL VALUE CONCLUSION Concluded Value: $4,500,000 Per Square Foot $58.91 Implied Capitalization Rate: N/A Source: Cushman & Wakefield Storage Industry Group
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Prospective Value Upon Stabilization $5,300,000 $69.39 13 Years 12 Years 8.25% 10.75% $5,270,000 $68.99 $431,734 8.00% $5,400,000 $70.69 $5,300,000 $69.39 8.15%
operation of the subject and capitalizes it into an indication of value. Under these parameters, the direct capitalization and the income summary are detailed for the subject in Table 12.17.
Discounted Cash Flow Analysis Due to increasing sophistication in the asset class, discounted cash flow analyses are increasingly being utilized by investors. This involves a forecast of cash flows over a typical holding period (usually 10 years). It is ideal as a tool of projects in absorption because the DCF analyzes “as is” and prospective stabilized scenarios. For the subject, this analysis is presented as follows:
Correlation To Final Value Conclusion The significance, applicability and defensibility of each approach conclusion are weighted in the determination of the final value conclusion. The value conclusions from the three approaches are summarized in the valuation indices table. In this example, a narrow range of value is indicated. The small variance in the two approaches suggests an approach conclusion anywhere within the range is reasonable. However, most investors emphasize the income capitalization approach. A powerful economic model, an appraisal is an excellent tool to determine the value or worth of an individual self-storage asset. Appraisal is complex and requires experience to understand and utilize properly, although the model is simplified for illustration in this example. As the self-storage asset class has risen in sophistication, so must the tools to analyze the market.
Finance•13
A
While the macroeconomic state may seem gloomy, it is important to recognize that there are many positive signs of economic improvement. For example, the U.S. economy experienced 1.3 percent real annualized growth in GDP in 2Q 2011, marking the eighth consecutive quarter of growth. That means that the U.S. economy is 4 percent higher (nominal) than it was prior to the recession and just 0.4 percent lower in real terms. The commercial real estate finance markets are also showing clear signs of improvement.
needed source of liquidity for borrowers. In addition, lenders have embraced the recent changes to SBA guidelines, which now allow for self-storage eligibility, injecting an additional source of liquidity into the marketplace for small borrowers. Other sources of capital including life companies, local and regional banks, and private sources of capital, including equity, are all actively lending and investing. With values rising, and vacancy and delinquency rates falling, albeit slowly,
there are definitely signs of improvement and room for optimism. There is hope that 2012 will be the year of change. Many see the election as the primary catalyst for that change. However, there will need to be renewed trust in both government institutions and Wall Street for the economy to fully bounce back. With many lenders holding onto large stockpiles of cash, it is no longer an issue of liquidity, but rather a matter of trust in more basic market fundamentals.
WHILE THE MACROECONOMIC STATE
Commercial Real Estate (CRE) fundamentals have continued to improve with stabilized vacancy rates leading to increased revenue, a low interest rate environment aiding cap rate compression, and associated increases in the market value of assets. Although they are not self-storage property specific, the graphs below illustrate the magnitude of change present for the four major asset classes over the past decade with respect to two major indicators—vacancy and price.
MAY SEEM GLOOMY, IT IS IMPORTANT TO RECOGNIZE THAT THERE ARE MANY
POSITIVE SIGNS...
AVERAGE VACANCY RATES (BY PROPERTY TYPE)
CHART 13.1
s 2011 progressed, what started out as renewed optimism for growth increasingly turned into skepticism about the future, and concerns over a “double dip” recession. Despite record low interest rates on home mortgages and the benchmark indices, a recent poll of top economists found that the probability of a second recession has risen from 25 percent to 31 percent; the last time it polled that high was September 2007, fully one year ahead of the collapse of Lehman Brothers and the ensuing first recession. Many troubling events in 2011 have led to this point including the overhang of the debt ceiling debate in Washington; S&P’s downgrade of the U.S. credit rating; an anemic recovery from the U.S. recession; and lingering doubts about Europe’s ability to solve its debt crisis. With the 2012 election looming, a general sentiment of pessimism is now being expressed, most notably by the Occupy Wall Street movement, leaving many questioning our current trajectory.
20 18 16 14 12 10 8 6 4 2
Office
2011 Q1
2010 Q3
2010 Q1
2009 Q3
2009 Q1
2008 Q1
2008 Q3
2007 Q1
Retail
2007 Q3
2006 Q3
2006 Q1
2005 Q3
2005 Q1
2004 Q1
2004 Q3
2003 Q3
2003 Q1
2002 Q3
0
2002 Q1
Notably, the CMBS market reemerged in 2011, and while the bullish projections of January have been tempered by more conservative expectations for December, the CMBS market again offers a much
Apartment
Source: REIS
2012 Self-Storage Almanac
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13 •Finance
The Lender Landscape: Improving Fundamentals
Chart 13.1 (Average Vacancy Rates) clearly shows that vacancy for all four major asset classes has risen steadily through the recession, beginning roughly 2007, but has now stabilized between 17 percent and 18 percent over the past several quarters. Of course, increased vacancy has a negative effect on net cash flow, a primary determinant of asset valuation.
Although many banks still face serious problems, the evidence of improving fundamentals is abundant. Perhaps the state of the banking industry can best be summarized by Fed Chairman Ben Bernanke: Like financial conditions generally, the state of the U.S. banking system has also improved significantly since the worst of the crisis. Loss rates on most types of loans seem to be peaking, and, in the aggregate, bank capital ratios have risen to new highs. However, many banks continue to have a large volume of troubled loans, and bank lending standards remain tight. With credit demand weak and with banks writing down problem credits, bank loans outstanding have continued to decline.
Chart 13.2 (Price Indices) shows that while asset values almost doubled during the period from December 2000 to their high during 2007, they have retreated significantly as a result of the recession, bottoming out in late 2009. There appears to be some disparity in recent price indices with the Moody’s/REAL index showing stagnant pricing and the GSA index showing substantial growth, with levels nearly as high as the 2007 peak. Much progress has been made over the past 12 months and there are visible signs of stabilization in the commercial lending markets. There is optimism that this trend should continue in 2012.
(FDIC) reported an aggregate profit of $28.7 billion and nearly $100 billion over the previous four quarters, up from $39 billion in the previous four quarters (Q3 2009 to Q2 2010) and a loss of $49 billion during the heart of the financial crisis (Q3 2008 and Q2 2009). Further proof that stabilization is creeping forward is that the FDIC Problem Bank List is finally beginning to shrink after expanding for 15 straight quarters.
Mortgage Debt Just as property sales on commercial/multifamily real estate increased dramatically, so too has the mortgage origination market since Q2 2010. The Q2 MBA Quarterly Databook sums it up best: [M]ortgage origination volumes [in Q2 2011] more than doubled compared to last year’s second quarter. Originations for Fannie Mae and Freddie Mac rose 58 percent; originations for life insurance companies rose 87 percent; originations for commercial banks rose 150 percent and originations for CMBS conduits rose 638 percent.
The Chairman’s statements are supported by the numbers. In the Q2 2011, commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation
CHART 13.2
PRICE INDICES (DECEMBER 2000 = 100) 200 190 180 170 160 150 140 130 120 110 100
Moodys/REAL CPPI
NCREIF TBI
GSA CPPI
Source: MBA, Moody’s Investors Services, National Council of Real Estate Investment Fiduciaries, and Green Street Advisors
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MAY 2011
DEC 2010
JUL 2010
FEB 2010
SEP 2009
APR 2009
NOV 2008
JUN 2008
JAN 2008
AUG 2007
MAR 2007
OCT 2006
MAY 2006
DEC 2005
JUL 2005
FEB 2005
SEP 2004
APR 2004
NOV 2003
JUN 2003
JAN 2003
AUG 2002
MAR 2002
OCT 2001
MAY 2001
DEC 2000
90
Finance• 13
Commercial/multifamily mortgage delinquency rates for four of five major investor groups— banks, life insurance companies, Fannie Mae and Freddie Mac—declined in the second quarter and remain below levels seen in the last major real estate downturn during the early 1990’s, some by large margins. The delinquency rate for loans held in CMBS continued to rise during the second quarter and reached the highest level since the series began in 1997, although the rate of increase continues to moderate. As of the Q2 2011, commercial mortgage debt outstanding was $2.37 trillion, up $3.5 billion from 2Q 2010, according to the Mortgage Bankers Association’s (MBA) Quarterly Databook. Commercial banks continue to hold the largest share of commercial/multifamily mortgages, $791 billion, or 33 percent of the total. CMBS are the second largest holders of commercial/multifamily mortgages, holding $617 billion, or 26 percent of the total. Fannie Mae and Freddie Mac (Agency and GSE portfolios including MBS) hold $331 billion, or 14 percent while Life insurance companies hold $304 billion, or 13 percent of the total.
Local And Regional Banks Banks are the largest originator of
COMMERCIAL MULTIFAMILY MORTGAGE DEBT OUTSTANDING
CHART 13.3
Originations for life insurance companies during the second quarter were at the highest level ever. This fact was seconded by ACLI reporting on commercial/ multifamily mortgage commitments by life companies of $15.7 billion during the quarter—also a record. The second quarter marked the CMBS market’s highest quarterly issuance volume since 2007, $12.4 billion.
(BY INVESTOR GROUP, SECOND QUARTER 2011) State and Local Government 3.7% Others 10.2%
Banks and Thrifts 33.4%
Life Insurance Companies 12.8%
Agency and GSE Portfolios and MBS 14.0%
commercial real estate loans, so it is no surprise that they are the primary source of capital for the majority of self-storage owners. Banks’ appetites to lend to existing or new customers are strongly dependent on the capital of the bank and the strength of the assets on their current balance sheet. Many banks are still managing their bad debt and write-offs from the financial crisis, methodically working though troubled loans in their portfolio. Others are further down the road to recovery and are currently increasing lending activity. Banks that have already been able to buoy their capital and strengthen their balance sheets are currently the most likely to lend. The current lending parameters for banks are primarily three- to fiveyear initial fixed rate terms, sometimes with embedded extension periods whereby the rate resets after the initial fixed rate term, and some banks are even extending 10year term money. Bank amortization schedules are typically 20 or 25 years with available leverage today in 65 percent to 75 percent range. Bank
CMBS, CDO and Other ABS Issues 26.0%
underwriting is largely based on the historical operations at the property, typically on a trailing 12-month basis, with little to no consideration given to pro-forma numbers or “upside.” Debt service requirements are currently in the 1.25 times (x) to 1.50x range, however, there remains the possibility that such conservative requirements at the upper end of this range might likely be loosened in the near future as additional signs of recovery emerge. In almost all cases, banks will be looking for a personal recourse guarantee on the loan. Recourse may be reduced or eliminated for low leverage loans under 50 percent LTV. Also, an important element to borrowing in today’s market is a bank’s strong desire to maintain comprehensive banking relationships with their customers. As a result, Borrowers should be prepared to have operating accounts and/ or other significant depository relationships in place with the lender. Finally, there is likely to be an extensive credit review analyzing global cash flow, net worth, and liquidity. 2012 Self-Storage Almanac
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13 •Finance
Small Business Administration (SBA) Loans
•Wanttorefinance •Haveashorterholdingperiod
When the government’s Small Business Administration (SBA) announced self-storage as an approved property type for loans in the fourth quarter of 2010, it raised tremendous interest within the industry. There are two types of SBA loans available to the self-storage industry: SBA 7a and SBA 504.
SBA 504 is a fixed-rate program that carries a rather steep 10-year prepayment penalty. Its borrowers typically have a long-term holding period and a single use of proceeds (real estate or equipment purchase).
Insurance Companies Insurance companies were among the first lenders to return to the market, and in hindsight it is with good reason. Insurance companies are very selective; they lend on stabilized assets and tend to have bias toward the top tier of real estate in terms of physical attributes, location, age and size. They seek owners with high levels of experience and strong balance sheets. By nature, insurance companies are among the most conservative of lenders in the market. With these criteria in mind,
In short, 7a borrowers are willing to trade interest-rate risk in exchange for proceed-use flexibility and additional leverage; whereas SBA 504 borrowers sacrifice flexibility and have limited use of proceeds, but are able to secure long-term fixed-rate debt.
SBA 7a is a variable-rate program with a three-year prepayment penalty, designed for borrowers who: •Havemultipleusesofproceeds (real estate, equipment, working capital, etc.) •Typicallyhavealoan-to-value (LTV) in excess of 90 percent
CHART 13.4
ing for some storage owners, it does not work for everyone. It is a unique new option that can only help the industry as a whole, injecting much needed liquidity into the market.
While SBA financing is appeal-
QUARTERLY COMMERCIAL MORTGAGE COMMITMENTS BY LIFE INSURANCE COMPANIES $18
$16
$14
$ Billions
$12
$10
$8
$6
$4
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Self-Storage Almanac 2012
2011 Q1
2011 Q2
2010 Q3
2010 Q4
2010 Q1
2010 Q2
2009 Q3
2009 Q4
2009 Q1
2009 Q2
2008 Q3
2008 Q4
2008 Q1
2008 Q2
2007 Q3
2007 Q4
2007 Q1
2007 Q2
2006 Q3
2006 Q4
2006 Q1
2006 Q2
2005 Q3
2005 Q4
2005 Q1
2005 Q2
2004 Q3
2004 Q4
2004 Q1
2004 Q2
2003 Q3
2003 Q4
2003 Q1
2003 Q2
2002 Q3
2002 Q4
2002 Q1
2002 Q2
2001 Q3
2001 Q4
2001 Q1
0
2001 Q2
$2
Finance• 13
cash flow projection, which are often more conservative than the actual historical operations or operator prepared budget. Because of the low leverage nature of insurance company loans, most accept nonrecourse or partial recourse guarantees. Loan terms can range from three to 10 years, with five-, seven-, and 10-year fixed rates terms being common. Insurance companies can also offer fully amortizing loan structures between 15 and 20 years. As of the 3Q 2011, interest rates for life company loans range from sub 5 percent to 7 percent depending on the structure of the loan.
it isn’t surprising that as of Q2 2010 insurance company 60 day delinquencies were only 0.12 percent, as compared to the 30-day delinquency for CMBS of 9.43 percent, as reported by the Mortgage Brokers Association. Life companies currently represent 12.8 percent of outstanding mortgages, at roughly $304 billion. As of 2Q 2011, life companies have originated an astounding $23.56 billion year to date, up from only $10.84 billion at this point last year, representing a staggering 117 percent increase, as shown in Chart 13.4.
Historically, conduit lenders provided significant lending volume and liquidity to the commercial real estate community. According to the MBA, CMBS are the second largest holders of commercial/multifam-
CMBS
Insurance companies typically advance no more than 65 percent of the value of the asset as determined by their stressed underwritten
CHART 13.5
transaction involves lenders that originate loans with the explicit purpose of pooling them in order to sell bonds backed by the income stream from the mortgage payments. When the bonds are sold to the investor community, capital is returned to the lender, who in turn is able to redeploy that capital and make more loans. In this structure, capital flows efficiently between borrowers, lenders and investors, and hence the name “conduit” is given to lenders using these financing approaches.
Commercial Mortgage Backed Securities (CMBS) are bonds backed by commercial mortgages. A CMBS
QUARTERLY ISSUANCE OF COMMERICAL MORTGAGE BACKED SECURITES (CMBS) AND COMMERCIAL REAL ESTATE COLLATERALIZED DEBT OBLIGATIONS (CDOS) 1200 CMBS 1050 CRE CDO/Re-Remics 900
basis points
750
600
450
300
150
APR 11
DEC 10
APR 10
AUG 10
DEC 09
APR 09
AUG 09
DEC 08
APR 08
AUG 08
DEC 07
APR 07
AUG 07
DEC 06
APR 06
AUG 06
DEC 05
APR 05
AUG 05
DEC 04
APR 04
AUG 04
DEC 03
APR 03
AUG 03
DEC 02
APR 02
AUG 02
DEC 01
APR 01
AUG 01
DEC 00
APR 00
AUG 00
DEC 99
APR 99
AUG 99
DEC 98
APR 98
AUG 98
DEC 97
APR 97
AUG 97
DEC 96
AUG 96
0
Source: Morgan Stanley via CRE Finance Council
2012 Self-Storage Almanac
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13 •Finance
ily mortgages, currently holding 26 percent of the total outstanding mortgage debt. During the credit crisis from mid-2008 thru late 2010 however, conduit origination was non-existent as bond spreads grew exponentially, making new issuance impossible (see Chart 13.5 below).
when Extra Space Storage Inc., the Salt Lake City-based real estate investment trust (REIT), received an $82 million first mortgage from Bank of America’s conduit program in January 2011.
In July 2011 the CMBS bond market (now dubbed CMBS 2.0) suffered a major setback when the rating agency Standard and Poor’s determined it would not be able to provide final ratings on a $1.6 billion offering from Goldman Sachs and Citibank. The deal, which was set to close the last week of July, was scrapped at the last minute as S&P indicated they needed to review and confirm their entire ratings methodology and criteria for commercial mortgage-backed securities transactions.
CMBS issuance was at $11.61 billion in the first quarter and $12.39 billion in the second. These numbers were on track to hit the projected issuance of $40 to $50 billion for 2011. As expected, CMBS loan transactions were smaller in size and loan counts, with better overall credit metrics such as higher weighted average DSCRs and lower LTVs. Things hit a snag in the third quarter, however, as investor demand for bonds weakened dramatically, stemming from factors such as the debt ceiling debate in Washington and S&P’s
The big news of 2011 was the manic CMBS markets. The year started hopeful, with more than 20 conduit lenders actively participating in the market. In addition to new lenders entering the market, established firms such as JP Morgan, Goldman Sachs, and Wells Fargo all began hiring and lending under their revamped conduit platforms. In particular, the self-storage CMBS lending market was bolstered
CHART 13.6
downgrade of the U.S. credit rating.
But even amongst fears that the CMBS market would ground to a halt again, the retrenchment was only temporary; third quarter CMBS
QUARTERLY ISSUANCE OF COMMERICAL MORTGAGE BACKED SECURITES (CMBS) AND COMMERCIAL REAL ESTATE COLLATERALIZED DEBT OBLIGATIONS (CDOS) $80 CMBS $70 CRE CDO/Re-Remics $60
$ Billions
$50
$40
$30
$20
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Self-Storage Almanac 2012
2011 Q1
2011 Q2
2010 Q3
2010 Q4
2010 Q1
2010 Q2
2009 Q3
2009 Q4
2009 Q1
2009 Q2
2008 Q3
2008 Q4
2008 Q1
2008 Q2
2007 Q3
2007 Q4
2007 Q1
2007 Q2
2006 Q3
2006 Q4
2006 Q1
2006 Q2
2005 Q3
2005 Q4
2005 Q1
2005 Q2
2004 Q3
2004 Q4
2004 Q1
2004 Q2
2003 Q3
2003 Q4
2003 Q1
2003 Q2
2002 Q3
Source: Commercial Real Estate Direct
2002 Q4
2002 Q1
2002 Q2
2001 Q3
2001 Q4
2001 Q1
2001 Q2
2000 Q3
2000 Q4
2000 Q1
0
2000 Q2
$10
Finance• 13
The primary hurdle facing storage owners is that today’s active CMBS programs have loan size, property classification and other restrictions that do not favor self-storage economics. For example, many programs have targeted minimum transaction sizes ($5 to $7 million) that present a major obstacle for many storage property owners and investors. These minimum hurdles essentially favor storage transactions that involve multiple, cross-collateralized assets located in larger markets and controlled by institutionalquality sponsors. Over time, however, it is anticipated that these restrictions will become less onerous as additional capital providers enter the space and lending competition increases.
Bridge Loans Bridge loans are often used by commercial real estate borrowers to facilitate the financing of a property for a short period of time, typically no longer than 3 years, in value-add situations where a sale or refinance of the asset is expected within the near term. In the current market bridge loans are commonly being used as a financing vehicle for assets that are still in lease up and not yet fully stabilized, or when the asset is in some other form of transition, such as a distressed recapitalization scenario. Many lenders offer short term bridge loans for commercial properties including self-storage. As a borrower, it is important to understand that in a bridge scenario the lender will be looking for a clear “exit strategy” to be certain that the loan will be retired through either a sale or re-
finance of the asset during the term of the loan. Bridge loans are commonly offered for terms of 12 to 24 months and typically have an embedded extension option that can be exercised for a fee so long as the property is performing according to the terms of the loan agreement.
MANY LENDERS OFFER
credit from the borrower, in order to provide additional credit enhancement and comfort for the lender. Based on lessons learned during the economic downturn, lenders today are more risk-averse, and increasingly concerned with the current and terminal value of their collateral, as well as their exit strategy.
Construction And Land Loans Traditionally banks have been the largest source of construction and development capital, including land loans. As a result of the tremendous pressure and volume of problem loans that banks experienced during the recession, however, there is a limited appetite and finite capital available for these types of loans available in the market at present.
SHORT TERM BRIDGE LOANS FOR COMMERCIAL PROPERTIES INCLUDING SELF-STORAGE. In the current lending environment, bridge loans are being underwritten fairly conservatively and are often sized using existing cash flow in place, with a clear understanding of the viability of any pro forma projections on the property. In some instances the lender may even require additional collateral, such as a cross-collateralization structure with another asset or a posted letter of
Construction loans are inherently more risky than other types of loans because there is no cash flow during the construction and lease up period. Currently, federal regulators are requiring lenders to keep additional capital reserves available for riskier assets, often deterring banks from making these types of loans. Additionally, the new equity and underwriting requirements, including a comprehensive global cash flow
CAPITAL STACK
CHART 13.7
issuance was $9.8 billion, placing the market firmly back on track to reach appreciable, albeit more conservative, year-end volume targets.
Sponsor Equity Preferred Equity Mezzanine Investors Junior Debt Investment Grade Debt
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underwriting on the borrowing entity, add additional obstacles to the process. For a developer that is determined to build and has a viable project in a high demand trade area, a local or regional bank willing to build a relationship and partner with the sponsor is the most likely lending suspect. Again, only the strongest balance sheets and most justified demand projects need apply.
Understanding The Dynamic Nature Of The Capital Stack A commercial real estate transaction has two primary financing components: debt and equity. The capital stack refers to the totality of capital invested in a real estate development project, including the debt and equity, as well as any hybrid “dequity” products that may sit in between. It can be helpful to think of the capital stack as represented by the pyramid seen in Chart 13.7 on previous page. The top of the pyramid contains the most risk as those positions are last in line to collect proceeds; this is representative of where the equity resides. Risk diminishes approaching the base of the pyramid where priority to cash flow resides; this is representative of the position of the senior debt lender. Lenders and equity stakeholders are highly sensitive to their position in the stack and price their debt and equity products accordingly. Typically, the stack has the following arrangement starting from the top:
1. Sponsor equity 2. Preferred equity 3. Mezzanine investors (hybrid debt and equity) 4. Junior mortgages 5. First mortgages Just as the value of a real estate asset is dynamic and changes over time, so too does a relative position in the capital stack. More specifically, as debt is reduced, equity increases, and vice versa. Sponsor equity, represented at the top of the pyramid, is essentially the owner’s cash position in the asset; it can be quantified as the asset’s current value minus all priority positions lower in the stack.
Equity Gap Example In a recessed market, as property value declines, owner equity erodes. If value declines faster than principal pay down can occur, owner equity can erode quickly. One of the most serious issues facing commercial real estate investors today is the potential equity gap that is exposed upon the maturity of existing debt. Consider the property refinancing example below, which illustrates how an equity gap is created by changing fundamentals in the market over time. A facility generating $200,000 in net operating income (NOI) five years ago would likely have qualified for loan proceeds of around $2 million, based on a cap rate of 8 percent and available market leverage of 80 percent (generic terms available in the market at the time of loan origination).
Assuming only a modest decline of 5 percent in NOI, combined with a 25 basis point increase in cap rates and new available leverage of 70 percent loan-to-value (LTV) today, the borrower would realize a proceeds shortfall of roughly $250,000 that will be needed to refinance the transaction at maturity of the existing loan. Although generic and based on the assumptions used, this is a very realistic scenario that a property owner could face given today’s market conditions. An owner faced with this predicament would be forced to infuse equity, work the deal out with their existing lender, or identify some other viable option to bridge that equity gap.
Distressed Real Estate The effect of reduced cash flow from operations can have a dramatic impact on a borrower’s ability to meet and repay their loan obligations. Moreover, when these factors are combined with the more conservative cap rates and lower leverage available from lenders in the market, the impact on a borrower’s ability to access refinance loan proceeds can be catastrophic, often resulting in the need for an equity infusion into the property upon refinance. It should come as no surprise, therefore, that many properties continue to face issues resulting from such serious but increasingly common problems. At the heart of the matter is leverage—or more specifically—too much of it. According to Moody’s/
TABLE 13.1
EQUITY GAP EXAMPLE Origination Current
130
Cash Flow
Cap Rate
Value
LTV
Loan Amount
Balloon Balance
$200,000 $190,000
8.00% 8.25%
$2,500,000 $2.303,030
80% 70%
$2,000,000 $1,612,121 $248,966
$1,861,067
Self-Storage Almanac 2012
Shortfall
Finance฀• 13
REAL Commercial Property Price Index, commercial real estate values dropped from their peak in 2007 by more than 40 percent at the end of 2010. Considering that it is not uncommon for commercial real estate assets to be purchased with a 75/25 debt to equity ratio, one does not need to be a mathematical genius to figure out that in light of post-recession valuations, many assets may in fact be worth less than their outstanding debt.
According to Trepp, LLC., as of November 2011 there were currently more than $61.1 billion of securitized loans in some stage of actual default; when combined with bank held mortgages, current estimates exceed $120 billion of total defaulted loans in the commercial real estate market. Some industry experts pontificate that the amount may actually be even greater. In addition to the volume of loans that are already delinquent, consider that according to a recent report from Deutsche Bank, New York, at least two-thirds of commercial mortgage-backed securities loans maturing between 2009 and 2018, roughly $410 billion, will unlikely qualify for refinancing at maturity without significant equity infusions from borrowers. By adding the life company, bank and GSE products that are maturing, that number will surely increase, and could even double. Transactional loan and REO volume will pick up as lenders and special servicers start making more aggressive moves to resolve issues and dispose of assets within their portfolios.
One relative measure commonly used to gauge the number of commercial real estate borrowers potentially facing difficulties is those that are behind, or delinquent, on loan payments. From the Delinquency Rate chart below, it is evident that beginning in early 2008, and throughout the recession, the number of troubled borrowers skyrocketed; only recently has this stabilized around 4 percent. Despite the recent uptick in real estate value, there remains a substantial amount of distressed Commercial Real Estate (CRE) loans and lender Real Estate Owned (REO).
8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0%
2002 Q1
2002 Q1
2002 Q1
2002 Q1
2002 Q1
2002 Q1
2002 Q1
2002 Q1
2002 Q1
2002 Q1
2002 Q1
2002 Q1
2002 Q1
2002 Q1
2002 Q1
2002 Q1
2002 Q1
2002 Q1
2002 Q1
2002 Q1
2002 Q1
0.0%
2002 Q1
CHART 13.8
COMMERCIAL/MULTIFAMILY DELIQUENCY RATES
Bridging The Gap: Subordinate Debt And Equity Options The magnitude of value decline and subsequent impact to the capital stack often dictates the solutions available to the property owner and borrower. As long as the debt in place is being serviced and does not expire, the equity erosion may only be a temporary situation that effectively creates a short-term paper loss with little consequence for the storage owner or lender. In situations where additional leverage is required, borrowers may have debt options available to help them reach their needs, so long as there is cash flow available to service debt. Subordinate debt is a general term that refers to any additional financing lower in priority to the first mortgage and is a mechanism that can provide more capital and higher leverage to help bridge an equity gap. In the current market, subordinate debt lenders will take a capital position between the first mortgage cut off and reach up to 85 percent or more LTV. By reaching higher in the capital stack, subordinate lenders are inherently assuming more risk, and as such they get paid a higher rate of interest for doing so. Interest rates on subordinate debt can range anywhere from 8 percent to 18 percent, depending on the transaction. Subordinate debt lenders are often flexible and willing to structure the payments to match the cash flow projections of the specific transaction; for example, the payments might be structured as an Interest Only payment with a balloon, or amortized over time via routine interest and principal payments to reduce the debt.
Banks & Thrifts (90+ days)
Source: Federal Deposit Insurance Corporation
The two most common types of 2012 Self-Storage Almanac
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subordinate debt are Mezzanine Financing and Junior Mortgages, or B-Notes. Albeit similar in application, there exist critical differentiating factors that will dictate which is proper for the specific transaction at hand. •Mezzanine Debt: Mezzanine lenders provide subordinate debt that is secured against an ownership position in the borrowing entity, rather than the mortgaged property itself. •Junior Mortgages–B Notes: Secondary debt position that is secured by the mortgaged property as collateral for the loan. This mortgage is junior in priority to the first mortgage, or senior note (A Note), hence the nomenclature. In more extreme cases, cash flow and equity erosion may be so severe that there is no longer adequate cash flow available to service the debt, and in some situations the commensurate value decline may be so severe that the current sponsor’s equity has been completely eroded. In these situations the sponsor may need to infuse new equity in to the transaction, and if the sponsor does not have the equity, this can be achieved through an equity joint venture. Joint venture equity is typically available to commercial property owners in transactions where there is a significant upside in the transaction, often stemming from a development or recapitalization scenario and resulting in enhanced cash flow and consequently value. •Equity Joint Ventures: Business agreement whereby two or more parties agree to invest in a new entity and asset through the contribution of equity for a finite
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period of time. Together this new entity will exercise control over the enterprise and consequently share in the revenues, expenses and assets of the venture, the extent to which is determined during its negotiated formation.
Loan Modifications, Workouts, And Restructuring For borrowers facing a loan workout with their lender, there are a variety of options that the lender may deem to be acceptable, depending on the specific situation and circumstance. •Payment Modification: Slight modification of the payment so that the current income from the property will be adequate to support the new payment. •Interest Rate Reduction: Lowered interest rate for a period of time, as long as the property can then cover operating expenses and debt service at the lower rate. •Principal Balance Reduction: Principal reduction of the loan under strict circumstances. •A/B Split Note: Split the note into two where the A note will essentially equal the amount of debt and the B note will be the difference between the original note amount and the A note amount. •Discounted Payoff: Reduce the amount due on the loan. •Note Sale: Borrower purchases the Mortgage Note from the lender. •Short Sale: A short sale occurs
when the new buyer assumes the existing debt and the special servicer agrees to write the debt down to the price of the sale. •Maturity Date Extensions: An extension of your CMBS loan due date. For workouts of CMBS debt, the structure is slightly more complicated because there are several more parties and interests involved. The borrower’s day-to-day contact on securitized loans for routine matters such as questions about payments, property taxes, insurance and other daily matters is referred to as the primary or master servicer, which may or may not be the original lender. Regardless, the approval authority required on specialized matters such as loan assumptions, modifications, and restructures typically does not fall under the jurisdiction of the day to day loan servicer. This role is handled by the “special” servicer. If you need to restructure a CMBS loan, it’s critically important to understand the objective of the special servicer. The special servicer has a fiduciary duty to make decisions that will be in the best interest of all the classes of bond holders. In order to qualify for a loan modification or restructure plan on a CMBS loan, the borrowers must be able to demonstrate that the current cash flow from the property is not adequate to support the current debt service payment. It is not enough to simply have a property that has declined in value to a point where the loan balance is higher than the value of the property. In the event that the cash flow is less than the debt service payment, and once the master servicer has made that determination, in their sole discretion, they will then transfer the
13 •Finance
loan to the special servicer, who may then be willing to consider a restructure or payment modification. It is somewhat ironic that the very REMIC (Real Estate Mortgage Investment Conduit) rules that do not allow a restructure or significant modification of a loan do provide the special servicer with the latitude to do whatever necessary in the best interest of the bond holders once a loan has been declared in default or imminent default. Therefore, once a loan has been transferred to the special servicer, any restructure or modification that is in the best interest of the bond holders can be considered.
Implications For Storage Owners What does this all mean for self-storage owners facing maturing loans? Assuming you have sufficient cash flow to service the loan’s debt, the guidelines are good news. It is important to remember, however, that the above scenarios may or may not apply to one’s individual situation, as every loan will have unique attributes that will affect the lender’s perspective and require specific negotiation. The unfortunate reality is that tremendous pressure on Commercial Real Estate valuations still remains, inevitably resulting in future foreclosure and losses. An investor facing this situation should begin a dialogue with their bankers as early as possible to identify a solution that will benefit both parties. The borrower should also begin document gathering, including: •Updatedfinancialstatements, both personal and business •Updatedpropertyperformance •Projectionsforthecomingyear •Marketingplan •Updatedbusinessplan
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If necessary, invite the bank executives and underwriters to the site for a show and tell. Be prepared to offer additional collateral or to paydown a portion of the principal if that is a possibility; show willingness to do whatever is possible to buy more time with them. Keep in mind that while self-storage undoubtedly has taken a punch, it is unlikely to have been hit as hard as other commercial assets in the banks’ portfolio.
WHAT DOES THIS ALL MEAN FOR
SELF-STORAGE OWNERS FACING MATURING LOANS? Mortgage Brokers, Consultants, And Intermediaries Professional intermediaries such as mortgage brokers can often add significant value to the financing or loan workout process, particularly during times of distress when the capital markets are severely dislocated. A broker’s knowledge of lenders and loan programs in the market, as well as the associated underwriting practices, can often assist a borrower in locating qualified capital sources, such as a banks and insurance companies, or even newly formed funds, that the loan applicant may be entirely unaware of. Brokers often have access to lenders whose programs may not be accessible at the retail level, or they may possess the knowledge to reach different sources of capital that exist within a given financial institution. Finally, most professional intermediaries can help to properly package, present, and structure a
transaction in a way that helps a financial institution to efficiently digest and understand the asset at hand. Lenders faced with an inbox full of potential transactions are more likely to react to a succinct, understandable presentation of the financial performance of the property. Sourcing funds is a full time job, and oftentimes a broker can help to achieve a more favorable execution for the borrower and facilitate the most challenging deals to completion.
Summation Lending markets are reawakening as financial institutions strengthen their balance sheets and trust that the market has bottomed. CMBS markets are alive once again, insurance companies are lending at alltime highs, and equity players are flooding the market looking for profitable ventures. While some owners are feeling the pain of declines in value and lower leverage financing options, there are viable workout solutions available. Many agree that the worst is over, as evidenced by declining cap rates and vacancies, and valuations that are increasing as a result. Unlike retail, office, and industrial properties that dwell in the longterm lease realm, self-storage is a month-to-month operating business with leases expiring monthly. Therefore, effective management is able to equalize rents with market conditions; as economic improvement begins, self-storage cash flows will typically recover more quickly than other asset classes. Relative to other commercial property investments, self-storage is known for resilient cash flows and steady performance in even the most severe economic downturns, and despite the most recent recession, this remains true to this day.
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A Note from the Publisher
Table of Contents
Welcome and Bienvenue to the First Canadian Almanac!
W
elcome to the inaugural edition of the Canadian Self Storage Almanac. Published in cooperation with the Canadian Self-Storage Association, this is the first published statistical analysis of the self-storage market in Canada. Like the U.S. Almanac, the purpose of the 2012 Canadian Self Storage Almanac is to provide an overview of the market and benchmarks by which facility owners, operators, investors and others may gauge the state of the industry.
IndustryProfile ...........143 Economics &Demographics .......146 Occupancy................150 PoppyBehrens- Publisher
The data was gained through the results of national survey presented to Canadian self-storage owners and operators and collected by an independent, third-party research company, after which, the raw data was tabulated by Cushman & Wakefield’s Self-Storage Industry Group. The resulting tables and charts were then analyzed by Candace Watson of Canadian Self-Storage Valuation, who graciously provided editorial content. On the following pages you will find information about economic and demographic trends, customer base, occupancy, rental rates, marketing, management, and specific site information including facility size, unit mix, unit distribution, and climate control. This information is provided on a national basis and is then broken down by province and territory.
RentalRates ...............155 CustomerBase .......... 161 SiteInformation .........163 Security ....................... 175 Marketing ................... 181 Management &Training ....................185
It is our goal going forward to provide year-over-year results from those operators who participated in this year’s Canadian Almanac Survey. In addition, we will add data from newly participating facilities that will be added to the data and reported in the future year-over-year. We welcome your input and feedback about the 2012 Canadian Self-Storage Almanac. Any questions, comments, or suggestions can be sent to me at pbehrens@minico.com. Above all, we hope that the Canadian Almanac will assist you in your self-storage endeavors and support you in your growth and success.
Poppy Behrens 2012 Self-Storage Almanac
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O
ver the past year, the selfstorage market in Canada has been marked by uncertainty despite reports that the recession has ended. As a result, consumers reduced their spending, unemployment increased, and the housing market dipped. Some operators (British Columbia and Ontario) struggled with a new tax regime which added an additional 7 percent to 8 percent to the cost of units, and resulted in a reduced ability to raise rents and customers downsizing by customers. For the first time, there was excess supply of larger outside units. Development has been much slower for the past three years. For example, in the Vancouver Lower Mainland, new supply has dropped to one new facility annually for the last three years from the previous average of five or six new properties. The best estimate of supply is less than three square feet per capita.
Major Operators In 2007, Public Storage was usurped as the top operator in Canada by InStorage REIT (Real Estate Investment Trust), which was bought out and taken private by StorageMart in 2009 and currently has 60 stores in Canada, with a total net rentable area of 3,942,472 square feet. (See Table C1.1) Public Storage is second with one fewer store but more square footage. U-Haul is third in size at 67 stores with 27,339 units. Depotium in Montreal has 22 properties with 1,123,844 square feet; Sentinel
based in Edmonton has 19 stores with 1,155,000 square feet and 11,510 units.
ants. Moreover, both students and military report significantly longer stays than those in the U.S.
In the B.C. Lower Mainland market, approximately 56 percent of the inventory is held in seven portfolios there and it is estimated that Canada-wide at least 50 percent of all properties are held by owners who own one or two facilities.
Services Offered At Facilities
With StorageMart’s buy-out of InStorage, there are no longer any purely Canadian self-storage REITs. U-Haul trades on Nasdaq as a public company but is not classified as a REIT; moreover, in Canada, it derives more than half of its income from the rental of moving trucks and equipment.
TABLE C1.2
IndustryProfile•1
Tenant Mix In general, the Canadian responses indicate a higher proportion of commercial tenants than the U.S. as indicated as seen in Table C1.3. A surprising statistic is the reported proportion of military tenants by comparison to those in the U.S. given that Canada has a much smaller proportion of military personnel in relation to the total population than does the U.S. (0.28 percent by comparison to 0.56 percent).
Length Of Stay As seen in Table C1.4, self-storage tenants in Canada, with the exception of commercial tenants, tend to rent their storage units for a longer period of time than American ten-
TABLE C1.1 – TOP CANADIAN OPERATORS Operator InStorage Public Storage U-Haul International Depotium Sentinel
Number of Facilities 60 52 67 22 19
Rentable Square Footage 3,942,472 4,022,000 2,587,305 1,123,844 1,155,000
Number of Units 37,550 41,000 27,339 8,861 11,510
In contrast to the U.S. statistics, a much greater proportion of Canadian facilities offer ancillary products for sale, as indicated by Table C1.5, however Canadian facilities offer
NUMBER OF FACILITIES OWNED OR OPERATED Average Provinces and Number of Territories Facilities Alberta 4.7 British Columbia 0.4 Manitoba ** New Brunswick 0.6 Newfoundland ** Northwest Territories 0.0 Nunavut ** Ontario 18.1 Quebec 4.0 Saskatchewan 2.8 Yukon Territory ** NATIONAL 30.5 Number of Units 1 to 99 0.6 100 to 299 6.2 300 to 499 9.6 500 to 999 10.8 1,000 or more 3.3 Square Footage Less Than 25,000 2.8 25,000 to 49,999 8.0 50,000 to 74,999 9.7 75,000 to 99,999 6.0 100,000 or more 3.9 Market Area Urban 13.8 Suburban 16.4 Rural 0.3 Year Facility Built Prior to 1981 2.2 1981 to 1985 0.0 1986 to 1990 3.3 1991 to 1995 0.6 1996 to 2000 4.7 2001 to 2005 10.0 2006 or after 9.8 **Insufficient data
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1 •IndustryProfile
a much smaller proportion of moving truck rentals and customer storage insurance. In general, customer goods insurance has been a very slow adoption across Canada for a number of reasons: •Canadianoperatorsare conservative and adding this product has not ranked high on their list of priorities. •Insuranceprovidershave been slow to introduce content insurance programs; there have been a lot of legislative issues that have slowed this down even further. •BCreallyhasonlyhad content insurance which can be facilitated by facility in the last two years and even then the program is still cumbersome. Operators cannot SELL insurance nor appear to SELL insurance as they are not licensed. •Therearestillmanyfacilities unaware that they can facilitate this form of insurance. •Storagefacilitystaffshave had a bit of a learning curve advertising the option aggressively.
•Becauseoftheverynature that facilities cannot sell insurance the whole follow through in marketing and sales programs has been close to nonexistent and the information and brochures that can be provided are far from helpful or attractive to create a sale of the product. •Fewoperatorsrequirethe insurance to be mandatory or proven. •Manyfacilitiesstillhavetheir facility policies with a local broker who does not really even provide storage-specific operator insurance let alone a customer goods package the operator can then facilitate. •Someoftheprogramsare cumbersome to facilitate with more monthly paperwork and processes that fall out of the regular storage management, operational software capabilities.
Facility Size And Unit Mix The national distribution of units, as seen in Table C1.6, indicates that there are generally more units on
TABLE C1.3 – COMPARISON OF 2011 TENANT MIX Canada U.S.
Commercial 25.5% 18.7%
Residential 63.4% 75.0%
Military 7.4% 3.2%
Students 5.2% 3.1%
TABLE C1.4 – COMPARISON OF 2011 AVERAGE RENTAL PERIOD IN MONTHS Commercial Canada 22.7 U.S. 30.9
Residential 16.7 16.5
Military 20.6 8.8
Students 16.1 3.6
the smaller end (5-by-5s) than there are in U.S. facilities; 10-by-20s also take a larger share of Canadian storage facilities than in the U.S.
ON AVERAGE, CANADIAN FACILITIES ARE
SLIGHTLY LARGER THAN U.S. FACILITIES... Table C1.7 refers to facility size. On average, Canadian facilities are slightly larger than U.S. facilities, however the average number of units per facility in the U.S. is greater (566 compared to 484). In terms of the number of RV/boat storage spaces, numbers for both Canada and the U.S. are similar. As seen in Table C1.8, the proportion of Canadian facilities offering climate control and multiple levels is lower than that of U.S. facilities.
Competitive Market By comparison with the U.S., Canadian facilities have fewer existing competitors. Unlike the U.S., however, Canadian markets appear to have more new facilities under construction within a five-mile radius.
Facility Management The U.S. facilities reflected a relatively consistent proportion of full-time residential management at between 29.0 percent and 30.8 percent in the past seven years. This figure jumped to 53.3 percent in 2011. Canadian
TABLE C1.5 – COMPARISON OF 2011 SERVICES OFFERED AT A FACILITY (PERCENTAGE OF FACILITIES)
Canada U.S.
144
Moving Truck Rentals 10.8% 33.5%
Self-Storage Almanac 2012
Ancillary Products For Resale 90.1% 79.4%
Customer Storage Insurance 21.6% 53.8%
Car Wash 1.8% 1.0%
Offers Shipping Services 8.1% 3.1%
Other On-Site Business 9.9% 12.7%
IndustryProfile• 1
TABLE C1.6 – COMPARISON OF 2011 (PERCENTAGE BY UNIT SIZE) facilities reported a higher proportion of resident management at 57.7 percent. As seen in Table C1.10, facilities on both sides of the border report a high proportion of use of an assistant or relief manager this year. Conversely, in both the U.S. and Canada, third-party managed properties are the smallest categories—at 6.7 percent and 3.6 percent of facilities, respectively. In terms of management salaries, as seen in Table C1.11, those in Canada are significantly higher than those of the U.S. with 79 percent of respondents reporting management base salaries of $40,000 or more as compared to 17.3 percent of U.S. facilities.
Canada U.S.
Use Of Promotional Media Table C1.13 indicates both similarities and differences between the two markets. For instance, while fewer Canadian facilities use the Internet as compared to American facilities, it appears that Canadians are still heavily reliant on the Yellow Pages for their advertising (91 percent by comparison to 76.8 percent). Canadian companies appear to be more likely to advertise on the radio and in magazines and to use telephone solicitation, but unlike the U.S. are much less likely to utilize flyers or referrals.
5x10 20.8% 19.0%
10x10 21.7% 25.6%
10x15 13.4% 13.6%
10x20 18.2% 15.2%
10x25 2.4% 3.5%
10x30 20x20 Other 3.3% 0.2% 8.4% 3.8% 0.5% 11.6%
TABLE C1.7 – COMPARISON OF 2011 AVERAGE FACILITY SIZE Number of Units 484 566
Canada U.S.
Number of RV/Boat Storage 37 35
Rentable Sq. Ft. (Unit Only) 52,392 51,119
RV/Boat Rentable Sq. Ft. 16,380 18,333
TABLE C1.8 – COMPARISON OF 2011 SHARES OF FACILITIES WITH MULTIPLE LEVELS AND/OR CLIMATE CONTROL (PERCENTAGE OF FACILITIES) Canada U.S.
With Multiple Levels 12.6% 18.2%
With Climate-Controlled Units 36.9% 47.9%
TABLE C1.9 – COMPARISON OF 2011 PRIMARY COMPETITIVE MARKET (FIVE-MILE RADIUS)
Facility Automation According to comparisons in Table C1.12, Canadian self-storage facilities utilize much more automation than their American storage counterparts with the exception of kiosks which have not yet caught on in Canada.
5x5 11.6% 7.1%
Average Number of Existing Competitors
Average Number of New Facilities Under Construction
4.5 7.7
0.5 0.2
Canada U.S.
TABLE C1.10 – COMPARISON OF 2011 FACILITY MANAGEMENT Full-Time Resident Manager Canada 57.7% U.S. 53.3%
Full-Time Off-Site Manager 26.1% 30.9%
Management Couple/Team 8.1% 3.7%
Assistant or Relief Manager 65.8% 67.3%
Owner Third-Party Managed Management 45.9% 3.6% 18.4% 6.7%
TABLEC1.11 – COMPARISON OF 2011 BREAKDOWN OF MANAGERS’ BASE SALARIES
Canada U.S.
Less than $20,000 3.9% 9.4%
$20,000 to $29,999 5.8% 15.7%
$30,000 to $39,999 19.4% 33.0%
$40,000 to $49,999 12.6% 24.8%
$50,000 or More 58.3% 17.3%
TABLE C1.12 – COMPARISON OF 2011 ELECTRONIC FACILITY AUTOMATIONS
Canada U.S.
Accounting/ Access Security Bookkeeping Control 90.1% 91.9% 90.1% 62.6% 69.5% 59.6%
Computerized Lights Rent Payment Kiosks 81.1% 87.4% 0.0% 53.7% 64.4% 2.7%
TABLE C1.13 – COMPARISON OF 2011 ACTUAL USAGE OF PROMOTIONAL MEDIA (PERCENTAGE OF FACILITIES)
Canada U.S.
Direct Telephone Yellow Billboards Mailings Flyers Internet Magazines Newspapers Radio Signage Solicitation Television Pages Referrals Other 8.1% 12.6% 17.1% 61.8% 9.0% 14.4% 10.8% 74.2% 16.0% 1.8% 91.0% 20.7% 19.4% 9.6% 11.0% 34.9% 81.5% 3.7% 13.1% 3.4% 75.5% 4.2% 1.0% 76.8% 45.3% 4.9% 2012 Self-Storage Almanac
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2•Economics & Demographics
T
wo of Canada’s largest banks reported on weaker confidence and disappointing economic indicators as a result of risks stemming from the U.S. and Europe. Their reports forecast declines in near term global and Canadian markets. Resourceoriented provinces such as Alberta, Saskatchewan, and Newfoundland/ Labrador are expected to lead the way in provincial recovery, while Central Canada and the rest of the Atlantic provinces are anticipated to trail behind due to their strong linkages to the U.S. Volatility and uncertainty remain the watchwords to the outlook, and all provinces remain vulnerable in light of the domestic and foreign risks. Although summer forecasts predicted that global supply chain disruptions would soon fade and that the U.S. economy would emerge from its soft patch, international de-
velopments have forced a revision of that line of thought. As a result, only sub-par growth is forecast for Canada and this will trickle down to the provinces. A series of negative shocks hit the Canadian and global economy in the second quarter of 2011, including the March earthquake in Japan, which resulted in a temporary interruption in the global supply chain; wild fires in Alberta and NW Ontario; and flooding in Manitoba which caused disruptions to key industrial sectors within each province. On-going fiscal challenges in the U.S. and the euro zone, and the surge in oil and gas prices combined to result in a shrinking of the Canadian economy in the second quarter of 2011, the first since the recession of 2008/09. The scars to business and consumer confidence as a result of increased global uncertainty are expected to allow only
modest growth in the second half of 2011 and into 2012.
British Columbia Growth in British Columbia will be driven by personal consumption, residential investment, and mining activity which have been drivers of the economy for some time. On the flip side, lackluster lumber and natural gas prices, which are projected to continue into 2013, will cause the economy to perform below the national average. Government spending must be pared back as a result of the HST debacle resulting in a costly reversion to the GST/PST regime and the obligation to repay transition payments to the federal government. Not only has the deficit increased to $2.8 billion (1.3 percent of GDP) but long term productivity growth and investor confidence are expected to be affected negatively.
CHART C2.1
CANADA GDP GROWTH RATE - ANNUAL GDP GROWTH ADJUSTED BY INFLATION 1.5
1.40% 1.21%
1 0.81%
0.80%
0.65% 0.56%
0.5
0.90%
0.60% 0.50% 0.40% 0.22% 0.09%
0 -0.02%
- 0.10%
-0.17%
-0.5 -0.71%
-0.79%
-1
-1.5 -1.80%
-2 2007
2008
2009
Source: TradingEconomics.com; STCA - Statistics Canada
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2010
2011
Economics&Demographics•2
A high Canadian dollar and a weak housing recovery in the U.S. limit positive opportunities for B.C.’s goods-producing sector. On the positive side, lumber and mining exports to Asia are expanding, with lumber exports to China forecasted to double in 2011. Mining gains are anticipated from new projects and firm commodity prices. The housing market is forecasted to stabilize with starts near their ten
A SERIES OF
NEGATIVE SHOCKS HIT THE
CANADIAN AND
GLOBAL ECONOMY IN THE SECOND QUARTER OF 2011...
year average, and the resale market is also expected to stabilize after trending lower in the first three quarters of 2011.
Alberta, Saskatchewan, And Newfoundland/ Labrador The resource-based provinces should see increases in business capital investment, employment, income, and non-residential construction, reflecting rising demand in China and other emerging markets. These markets will help support energy and non-energy commodity prices. Only Alberta and Newfoundland/Labrador have created net new jobs this year so far. Saskatchewan is down 2,700 positions since January. Little headway is expected in unemployment rates as job creation is forecasted to keep up with the pace of labor force growth. However, Alberta and Saskatchewan are anticipated to post two of the lowest unemployment rates in the country. Although employment in Alberta is slowly recovering, it has not yet reached post-economic
downturn levels; stronger growth is forecast for 2011. Housing starts are expected to ease back due to rising inventories, and a buyer’s market, widespread through the province in 2010, is likely to persist in 2011. Saskatchewan has the brightest prospects among the provinces due to a growing labor market, a falling unemployment rate, a higher level of consumer spending due to higher wages, and high interprovincial and international migration. Single detached housing starts accounted for about three-quarters of all housing starts across the province in 2010; these are expected to decrease in 2011 as multiple family starts ramp up. Home prices are expected to rise modestly.
Central Canada Manitoba, Ontario, and Quebec remain dependent on exports south of the border. With modest growth forecasted for the U.S. economy, a similar profile is anticipated for the Central Canada economy. Due to the spring flooding and two straight years of poor weather conditions, the agricultural sectors of Manitoba
CHART C2.2
CANADA INFLATION RATE - ANNUAL CHANGE ON CONSUMER PRICE INDEX 4
3
2
1
0
-1 Jul/08
Jan/09
Jul/09
Jan/10
Jul/10
Jan/11
Jul/11
Source: TradingEconomics.com; STCA - Statistics Canada
2012 Self-Storage Almanac
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2•Economics&Demographics
will post disappointing numbers in 2011 and 2012. On the bright side for Central Canada is pent-up demand for new vehicles and aerospace technology which form upside potential for the GDP forecasts for each of the provinces.
strong labor market, and relatively low unemployment.
Ontario’s residential construction activity was up in 2010 from 2009 but home sales moderated in the latter half of the year and housing markets are projected to remain stable through 2011. A variety of demographic factors will sustain Quebec’s housing markets in 2011 including growing net migration to the province, population aging, and a recent increase in the birth rate. Manitoba continues to attract international migrants which will support housing demand in 2011 but these gains will be offset by modest losses in net provincial migration. Manitoba is also experiencing an expanding economy with a rise in GDP, a
TAX HIKES
LOWER
PUBLIC SPENDING AND HAVE TRANSLATED INTO
MINIMAL WAGE GAINS AND DISAPPOINTING RETAIL SALES. The Atlantic Provinces These provinces are poised to reflect the weakest economic projections through 2013 due to fiscal restraint, weak demographics, and disappointing job creation com-
bined with the negative impact on the manufacturing and export sectors as a result of soft demand conditions in the U.S. The high Canadian dollar coupled with weak demand south of the border, lackluster lumber prices, and a prolonged housing recovery in the U.S. are projected to limit growth in the export-oriented forestry, paper, and processing sectors. Lower public spending and tax hikes have translated into minimal wage gains and disappointing retail sales. In New Brunswick population growth is anticipated to be modest and therefore there will be a small shift in housing demand. Consumer spending will only contribute moderately to growth as the outlook for the labor market remains soft. In Nova Scotia, non-residential investment continues to be one of the key drivers for growth although the level of investment activity is forecast to
CHART C2.2
HOUSEHOLD REAL ESTATE ASSETS, DISPOSABLE INCOME AND CPI (1990-2010) 1990-2010
Index (1990 = 100)
400 350 300 250 200 150 100 50 0 1990
1995 Household real estate assets
Source: Statistics Canada - Last observation: 2010Q4
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2000 Disposable income
2005
2010 Consumer price index - all-items
Economics&Demographics•2
moderate in 2011. Without a significant improvement in U.S. markets the provinces’ growth will remain subdued. The challenges for P.E.I. have been a drop in demand for potatoes, the reduction in pricing for shellfish, and the drop in tourist traffic from the U.S. In Newfoundland/ Labrador the growing demand from seniors and tighter rental markets will limit declines in multiple construction activity. Natural declines in offshore oil production have restrained GDP growth in 2010/2011 but increased royalties received by the province will offset the effects of production decline and additional growth will be spurred by the provincial infrastructure spending program.
The updated housing forecasts assume that interest rates will remain at their current level until 2013 and therefore housing prices and sales will be fairly steady through 2012 and 2013. Once the adjustment comes with the rise in interest rates, Ontario and B.C. are forecast to record larger than average price and sales declines reflecting the overheated markets in both Vancouver and Toronto. Heightened vulnerability will come from elevated new condo supply and the potential for reduced foreign investment in both markets. All regions and provinces are projected to experience price and sales declines in 2013-2014.
Household Debt
TO GROWTH AS THE
With only lukewarm income growth Canadian household debt is expected to reach new records at 150-155 percent debt to income ratio over the medium term. The vulnerability of households to economic shocks has been growing in all provinces and a key domestic risk remains the need for significant consumer deleveraging once interest rates start to rise again.
OUTLOOK
Mobility
CONSUMER SPENDING WILL ONLY
CONTRIBUTE MODERATELY
FOR THE
LABOR MARKET REMAINS SOFT. Housing Market Housing starts in Canada moderated over the course of 2010 from their strong pace at the beginning of the year. New home construction was strongest in Western Canada with B.C. leading the way with a 59 percent growth in housing starts. Alberta, Saskatchewan, and Manitoba each experienced over 30 percent growth in housing starts. Ontario reflected an increase in starts of 18.9 percent.
In 2009/2010 the unemployment rate in Canada rose to 8.4 percent; some provinces had greater increases in their unemployment rates than others. In 2009/2010 Ontario and Quebec, Canada’s two largest provinces had a negative net migration flow (-7.790 and -3,750) and so did Alberta (-3,270) which is a significant change over the last decade when Alberta had a larger net migration balance than every other province in every year except 2007/2008. On the other hand, B.C. (+10,520), Saskatchewan (+3,360), and Newfoundland/Labrador (+2,750) had positive net migrations.
There are two current trends in labor mobility in Canada: a clear movement from west to east and movement among the provinces to the west. Most workers leaving the Atlantic provinces move to Ontario and to a slightly lesser extent, Alberta. The vast majority of those leaving Quebec move to the province of Ontario and those leaving Ontario move mainly to Alberta as well as British Columbia and Quebec.
WITHOUT A
SIGNIFICANT IMPROVEMENT IN U.S. MARKETS THE
PROVINCES’ GROWTH WILL REMAIN SUBDUED. Most of those leaving B.C. move to Alberta and vice versa. However, with the impact of the recession in Alberta the number of in-migrants to the province fell as the province became a less attractive destination for workers. Notwithstanding, less than 1 percent of the total population of Canada moved in 2009/2010. By comparison, approximately 12.5 percent of U.S. households move annually. All of these factors have implications for self-storage demand which depends on strong market fundamentals: •populationgrowth; •astronghousingmarket; •ahealthylevelofdisposable income; •highemploymentlevels; •mobilityofthepopulation
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3•Occupancy
O
ccupancy is the most important economic indicator of the self-storage industry. Given the nature of the business, self-storage is all about turnover—as old tenants leave it is necessary to find new tenants to take their place. Another factor to consider is that as units are rented to new customers, they oftentimes do so at higher rates than those paid by the previous tenants, thereby increasing the bottom line. Self-storage owners, operators and managers must be diligent about tracking their occupancy. Rates that start to fall or remain significantly lower than expected may signal an operational or competitive issue that needs to be addressed at the facility. On the other hand, it may also be a signal of a structural shift in the market as a whole based on economic conditions or an increase
in supply, which will also require action on the part of the facility.
Physical And Economic Occupancy Standard physical occupancy refers to the percentage of rentable square footage or number of units at a site that are currently occupied by tenants. Thus, if the facility has 100 units and 90 are occupied then physical occupancy is 90 percent. Physical occupancy is most often reported by operators and managers and may be fairly easily estimated by market experts. Much more difficult to estimate— and more significant as a gauge of performance—is economic occupancy, which is the proportion of actual rent obtained as a percentage of potential rent. Economic occupancy is based on current listed rents. If the same facility is of-
TABLE C3.1
NATIONAL OCCUPANCY RATE TRENDS* Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL
Economic 76.7% 76.6% ** 84.0% ** 81.0% ** 74.6% 76.1% 79.1% ** 76.3%
Physical 78.7% 79.0% ** 88.2% ** 85.0% ** 77.1% 78.5% 82.0% ** 78.8%
*Includes facilities in rent-up **Insufficient data
TABLE C3.2
OCCUPANCY RATE BY RENTABLE SQUARE FOOTAGE* Square Footage Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99,999 100,000 or more ALL SIZES *Includes facilities in rent-up
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Economic 75.8% 80.8% 74.1% 71.3% 75.4% 76.3%
Physical 77.0% 83.6% 76.3% 74.4% 78.7% 78.8%
fering the first month rent free and 10 percent of the 90 rented units were rent free in that month then the economic occupancy may be 80 percent or lower (depending on the individual unit sizes that are rent free). Economic occupancy may exceed 100 percent if list rents have been lowered and yet existing tenants are still renting at the previous higher rents. Few operators want to achieve 100 percent physical occupancy because this leaves no space to offer to new tenants who will then go to the competition. Therefore, once the optimum occupancy level is reached an operator should consider raising the rents. During normal economic times rents are generally raised annually; however many operators monitor rents and occupancy on a unit-by-unit basis and adjust rents or offer discounts on a daily basis if occupancy drops below a certain level. As 2011 is the base year for the Canadian surveys we are unable to comment on occupancy levels Canada-wide on a year-over-year basis. Nationally, overall physical occupancy at Canadian facilities surveyed averaged 78.77 percent while economic occupancy averaged 76.27 percent on a national basis. As seen in Table C3.1, facilities in New Brunswick reported the highest physical occupancy at 88.2 percent, followed by the Northwest Territories at 85 percent and Saskatchewan at 82 percent. In terms of economic occupancy, facilities in New Brunswick reported an average of 84 percent, with the Northwest Territories reporting 81 percent. Saskatchewan reported the third highest economic occupancy at 79.1 percent.
Occupancy•3
in lease-up to offer more discounts and incentives. In Table C3.7, offering the use of a rental truck has the least impact
on economic and physical occupancy. Offering discounts on monthly rates is the most effective method of increasing occupancy, followed by offering one month for free.
OCCUPANCY RATE BY NUMBER OF UNITS*
TABLE C3.3
In general, facilities with 25,000 to 49,999 square feet reported the highest physical and economic occupancy (83.6 percent and 80.8 percent respectively), as seen in Table C3.2. Facilities with between 100 and 299 units also reported the highest occupancies (Table C3.3). While rural facilities reported the highest physical occupancy (81.3 percent), they also reported the lowest economic occupancy (61 percent). (See Table C3.4.) This typically indicates that urban facilities are utilizing more discounts and incentives to increase physical occupancy.
Number of Units 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more ALL SIZES
Economic 73.9% 78.6% 77.3% 72.9% 71.1% 75.5%
Physical 77.5% 82.5% 80.0% 75.2% 74.4% 78.8%
*Includes facilities in rent-up
Market Area Urban Suburban Rural ALL AREAS
Economic 73.0% 73.5% 61.0% 71.5%
Physical 78.0% 77.0% 81.3% 78.1%
*Includes facilities in rent-up
TABLE C3.5
OCCUPANCY RATE BY YEAR FACILITY BUILT* Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after ALL AREAS
Economic 64.7% 68.0% 83.9% 60.0% 79.1% 74.9% 64.4% 71.5%
Physical 80.3% 71.0% 85.3% 77.8% 82.5% 79.9% 72.2% 78.1%
*Includes facilities in rent-up
OCCUPANCY RATE EXCLUDING FACILITIES IN “RENT-UP”*
TABLE C3.6
The physical and economic occupancy reported in Table C3.6 excludes facilities which are in leaseup. While the average national economic occupancy is lower than that reported in Table C3.1 (74.1 percent versus 76.3 percent), physical occupancy is slightly higher (79.9 percent versus 78.8 percent. This reflects the tendency for facilities
TABLE C3.4
OCCUPANCY RATE BY MARKET AREA* Table C3.5 reports on occupancy by the age of the facility; data is varied in this category. Those facilities built between 1986 and 1990 have the highest economic and physical occupancy (83.9 percent and 85.3 percent respectively), followed by those facilities built between 1996 and 2000 (79.1 percent and 82.5 percent respectively). It is interesting to note that while the oldest facilities—those built prior to 1981—have the highest physical occupancy, they also have one of the lowest economic occupancies. This typically indicates that these facilities are more reluctant to increase rents for existing customers in an attempt to maintain physical occupancy. Moreover, the lowest economic occupancy is reported by those facilities built in 2006 or after, which is most likely due to discounts being offered during the lease-up phase.
Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL
Economic 78.9% 71.6% ** 84.0% ** 81.0% ** 70.2% 76.1% 79.1% ** 74.1%
Physical 82.0% 86.5% ** 88.2% ** 85.0% ** 75.9% 78.5% 82.0% ** 79.9%
*Rent-Up refers to facilities still in their lease-up stage (first 12 to 36 months) **Insufficient data
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3•Occupancy
Table C3.8 summarizes occupancy rates based on management characteristics and indicates that the highest physical occupancies are reported by facilities that are owner managed (80.7 percent). Following close behind are those facilities managed by full-time resident managers (80.6 percent) and management couples or teams (80.2 percent). In terms of economic occupancy, third-party managed facilities indicated the highest percentage at 79.3 percent. The lowest economic occupancy was report-
ed by those facilities that employ full-time, non-resident managers. An important measure of the strength of a market is the amount of time required to lease up a new facility. As a market matures and competition increases lease up times, in general, become extended; this is particularly the case in an economic downturn. The results shown in Table C3.9 indicate that the majority of those facilities surveyed (36 percent) were purchased after the initial lease-up phase. Of those fa-
TABLE C3.7
OCCUPANCY RATE BY DISCOUNT POLICY Type of Discount One Month Free Rental Truck Discounted Monthly Rates Other
Economic 75.2% 70.5% 76.4% 71.5%
Physical 77.6% 72.9% 78.7% 75.6%
TABLE C3.8
OCCUPANCY RATES BASED ON MANAGEMENT CHARACTERISTICS Characteristics of Facility Management Full-Time On-Site (Resident) Manager Full-Time (Non-resident) Manager Management Couple/Team Secondary Assistant or Relief Manager Owner Managed Third-party Management Other
Economic 77.6% 73.0% 77.0% 74.6% 79.0% 79.3% 78.2%
Physical 80.6% 76.7% 80.2% 77.5% 80.7% 79.0% 79.3%
cilities reporting on actual lease-up times, the Northwest Territories indicate that 70 percent occupancy is typically achieved within the first six months, while Saskatchewan and Quebec reported that 70 percent occupancy is achieved in six to 12 months. By comparison, U.S. facilities report that more 64 percent of facilities require more than 24 months to lease to 70 percent.
Climate Control And Occupancy Tables C3.10 and C3.11 summarize occupancies in climate and nonclimate controlled facilities. On a national basis, those facilities without climate-controlled storage report a higher occupancy rate at 81.2 percent. Conversely, those facilities with climate control reported an average occupancy rate of 74.8 percent. This may be a factor of cost as climate-controlled facilities are generally newer with more amenities and command higher rents. It is interesting to note, however, that the non-climate-controlled facilities in all provinces and territories reported higher occupancies than their climate-controlled counter-
TABLE C3.9
AMOUNT OF TIME TO REACH 70 PERCENT PHYSICAL OCCUPANCY* Percentage of Facilities Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL
Less than 6 Months 4.4% 5.6% ** 40.0% ** 100.0% ** 2.1% ** ** ** 5.4%
**Insufficient data
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Self-Storage Almanac 2012
6 to 12 Months 39.1% 16.7% ** 20.0% ** ** ** 57.5% 70.0% 71.3% ** 46.9%
13 to 18 Months ** 11.1% ** 20.0% ** ** ** 2.1% ** ** ** 3.6%
19 to 24 Months 13.0% ** ** 20.0% ** ** ** ** ** ** ** 3.6%
More than 24 Months 4.4% 11.1% ** ** ** ** ** 2.1% 10.0% ** ** 4.5%
Purchased After Initial Lease Up 39.1% 55.6% ** ** ** ** ** 36.2% 20.0% 28.6% ** 36.0%
parts with the exception of Quebec where non-climate controlled facilities reported 78.3 percent occupancy and climate-controlled facilities reported 80 percent occupancy.
PHYSICAL OCCUPANCY RATE FOR NON-CLIMATE-CONTROLLED FACILITIES ONLY Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL
79.9% 80.8% ** 90.3% ** 85.0% ** 81.0% 78.3% 87.2% ** 81.2%
SEASONAL PHYSICAL OCCUPANCY RATE TRENDS BY REGION Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL
Jan-Mar 75.6% 76.2% ** 82.2% ** 85.0% ** 77.1% 76.3% 82.9% ** 77.2%
Apr-Jun 78.3% 79.4% ** 86.0% ** 85.0% ** 78.0% 79.8% 83.7% ** 79.3%
Jul-Sept 79.6% 80.1% ** 82.8% ** 80.0% ** 78.5% 80.3% 84.9% ** 79.8%
Oct-Dec 76.0% 79.1% ** 81.6% ** 85.0% ** 77.8% 77.8% 81.7% ** 78.1%
**Insufficient data
TABLE C3.13
TABLE C3.10
There is generally a variation in occupancy depending on which season it is with most facilities reporting lower occupancies between October and March and higher occupancy in the spring and summer. Table C3.12—which summarizes seasonal occupancy by region—indi-
TABLE C3.12
Occupancy•3
**Insufficient data
SEASONAL PHYSICAL OCCUPANCY RATES FOR NON-CLIMATE-CONTROLLED FACILITIES ONLY Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL
Jan-Mar 76.6% 77.0% ** 80.0% ** 85.0% ** 80.1% 77.0% 87.2% ** 78.8%
Apr-Jun 79.2% 80.1% ** 85.0% ** 85.0% ** 81.1% 78.7% 87.2% ** 80.7%
Jul-Sept 80.6% 79.8% ** 82.3% ** 80.0% ** 81.3% 79.2% 87.2% ** 81.1%
Oct-Dec 77.1% 78.5% ** 80.7% ** 85.0% ** 80.7% 78.7% 87.2% ** 79.6%
PHYSICAL OCCUPANCY RATE FOR CLIMATE-CONTROLLED FACILITIES ONLY Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL **Insufficient data
70.7% 77.2% ** 85.0% ** ** ** 73.9% 80.0% 69.0% *** 74.8%
TABLE C3.14
TABLE C3.11
**Insufficient data
SEASONAL PHYSICAL OCCUPANCY RATES FOR CLIMATE-CONTROLLED FACILITIES ONLY Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL
Jan-Mar 69.0% 75.4% ** 85.5% ** ** ** 74.6% 70.0% 72.0% ** 74.6%
Apr-Jun 72.3% 78.5% ** 87.5% ** ** ** 75.5% 90.0% 75.0% ** 76.8%
Jul-Sept 73.3% 80.5% ** 83.5% ** ** ** 76.1% 90.0% 79.0% ** 77.6%
Oct-Dec 69.0% 79.6% ** 83.0% ** ** ** 75.3% 70.0% 68.0% ** 75.6%
**Insufficient data
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3•Occupancy
cates that facilities in New Brunswick have the highest occupancy (86 percent) between April and June. While the Northwest Territories report 85 percent occupancy throughout most of the year, the summer months (July through September) see a drop to 80 percent occupancy. Those facilities in Saskatchewan appear to have the most consistent seasonal occupancy, ranging between 81.7 percent and 84.9 percent. As seen in Tables C3.13 and C3.14, the same occupancy pattern is evident whether facilities are climate-controlled or not although occupancies in general are lower in
climate-controlled properties, possibly because of price points.
Other Occupancy Factors Self-storage occupancy can be influenced by other factors such as whether the facility is single-story or multi-story, or whether or not is has sophisticated security. Tables C3.15 and C3.16 summarizes the impact of both scenarios. In terms of occupancy at multilevel and single-level facilities, New Brunswick reported the highest rates at 91 percent and 87.5 percent respecively. The lowest occupancy for multi-level facilities was reported in
TABLE C3.15
EFFECT OF MULTIPLE LEVELS ON OCCUPANCY With Multiple Levels ** 77.9% ** 91.0% ** ** ** 75.3% 52.0% ** ** 76.2%
Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL
Without Multiple Levels 78.7% 79.9% ** 87.5% ** 85.0% ** 75.5% 81.4% 82.00% ** 78.3%
**Insufficient data
TABLE C3.16
EFFECT OF COMPUTERIZED SECURITY ON OCCUPANCY Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL **Insufficient data
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Self-Storage Almanac 2012
With 78.6% 75.9% ** 88.2% ** ** ** 74.6% 78.5% 82.5% ** 77.2%
Without 79.5% 89.8% ** ** ** 85.0% ** 88.3% ** 79.0% ** 86.1%
Percentage Point Difference -0.9% -13.8% ** ** ** ** ** -13.7% ** 3.5% ** -8.9%
Quebec at 52 percent, where single-story facilities boasted an 81.4 percent occupancy rate. In British Columbia and Ontario, the only other provinces with measurable results, occupancies of 77.9 percent and 75.3 percent respectively were reported per single-level facilities. Results for the effect of computerized security were more substantial as seen in Table C3.16. Among those facilities utilizing this type of security, those in New Brunswick reported the highest occupancy rate at 88.2 percent, followed by Saskatchewan at 82.5 percent. When looking at the results for facilities that do not have computerized security, facilities in British Columbia reported the highest occupancy at 89.8 percent. Ontario, which reported the lowest occupancy at facilities with computerized security (74.6 percent), had the second highest occupancy rate at facilities without computerized security (88.3 percent). Facilities in Alberta reported the least percentage point difference between those facilities with and without computerized storage (-0.88 percent). Conversely, British Columbia and Ontario reported the highest percentage point difference at -13.82 percent and -13.72 percent respectively. Only Saskatchewan reported a higher occupancy rate for facilities with computerized security (82.5 percent) than those without (79 percent). While insufficient data was reported in many occupancy categories for this inaugural year of the Canadian Almanac, it is anticipated that greater participation in the future will equate for more substantial results including year-over-year data.
Rental฀Rates•4
S
elf-storage rental rates are influenced by both local market dynamics and national economic trends. While rates may be affected by many factors including location, competition, concessions, and amenities, they also serve as an indicator of individual facility performance as well as the overall health and solvency of the market. An upward trend in rates, for instance, may point to an increase in local demand for storage while a decrease in rental rates could be a sign of market saturation.
Given that this is the first edition of the Canadian Self-Storage Almanac, we are unable to compare year-over-year trends in rental rates as we do in the U.S. edition; however
we look forward to reporting these comparative trends going forward. As seen in Tables C4.1 and C4.2, 2011 reported rental rates in the three smallest unit sizes (5-by5, 5-by10, and 10-by-10) are highest in Saskatchewan. While the second highest rate for 5-by-5 units is reported in Alberta at $74.43, the second highest rate for 5-by-10 units is in Ontario ($96.32). Both New Brunswick and the Northwest Territories report rental rates that are lower than the national average in each unit size. For larger units, the rental rate landscape shifts with the highest average rates for 10-by-15 units being charged in Ontario ($193.35) whereas Saskatchewan, the leader in rates for smaller units averages
the fourth highest rates at $173.57. British Columbia averages $187.10 for a 10-by-15 unit, while Quebec (a province that has some of the lowest rates for smaller units) now has the third highest rate at $185.10. Ontario also commands the highest rents for 10-by-20 units ($232.85), while the Northwest Territories reported the lowest rets for this sized unit at $112.50. Rates for 10-by-25 units spike to a high of $327.17 in British Columbia, followed by Quebec at $285.33. The lowest rental rates for these units are reported in Alberta where a 10-by-25 rents for $200.67. For 10-by-30 units, Quebec commands the highest rents at $340, with British Columbia charging the next highest rate at an average of
TABLE C4.1
RENTAL RATE TRENDS Provinces and Territories Alberta 2011 British Columbia 2011 Manitoba 2011 New Brunswick 2011 Newfoundland 2011 Northwest Territories 2011 Nunavut 2011 Ontario 2011 Quebec 2011 Saskatchewan 2011 Yukon Territory 2011 NATIONAL 2011
5X5
5X10
10X10
10X15
10X20
10X25
10X30
20X20
73.4
89.4
131.0
160.9
192.9
240.8
246.6
353.0
63.0
93.8
139.0
187.1
212.5
327.2
337.3
562.0
**
**
**
**
**
**
**
**
53.5
85.1
139.4
163.5
198.0
224.7
270.0
**
**
**
**
**
**
**
**
**
55.0
75.0
125.0
145.0
112.5
**
**
**
**
**
**
**
**
**
**
**
59.3
96.3
145.3
193.4
232.9
283.7
316.0
409.1
53.7
84.4
136.9
185.1
231.2
285.3
340.0
354.7
74.3
103.9
151.8
173.6
203.9
223.5
285.0
**
**
**
**
**
**
**
**
**
61.4
92.9
140.1
180.7
217.1
278.3
302.5
407.5
ALL AMOUNTS SHOWN IN CANADIAN DOLLARS ** Insufficient data
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4•RentalRates
$337.31. The lowest reported rate for these units is in Alberta where monthly rents average $246.60. The biggest
jump occurs with the 20-by-20 units where $562 is charged in British Columbia, followed by $409.13 in On-
TABLE C4.2a
RENTAL RATES BY UNIT SIZE Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL
5X5 73.4 63.0 ** 53.5 ** 55.0 ** 59.3 53.7 74.3 ** 61.4
Other Rental Rate Variables 5X10 89.4 93.8 ** 85.1 ** 75.0 ** 96.3 84.4 103.9 ** 92.9
10X10 131.0 139.0 ** 139.4 ** 125.0 ** 145.3 136.9 151.8 ** 140.1
10X15 160.9 187.1 ** 163.5 ** 145.0 ** 193.4 185.1 173.6 ** 180.7
ALL AMOUNTS SHOWN ARE IN CANADIAN DOLLARS ** Insufficient data
TABLE C4.2b
10X20 182.8 212.5 ** 198.0 ** 112.5 ** 232.9 231.2 203.9 ** 214.8
10X25 200.7 327.2 ** 224.7 ** ** ** 283.7 285.3 223.5 ** 272.3
10X30 229.0 337.3 ** 270.0 ** ** ** 316.0 340.0 285.0 ** 297.2
20X20 353.0 562.0 ** ** ** ** ** 409.1 354.7 ** ** 407.5
ALL AMOUNTS SHOWN ARE IN CANADIAN DOLLARS ** Insufficient data
TABLE C4.3
RENTAL RATES - CLIMATE-CONTROLLED COMPARISON Unit Size 5x5 5x10 10x10 10x15 10x20 10x25 10x30 20x20
With Climate Control 64.5 105.6 163.0 212.1 283.9 351.0 549.0 **
Without Climate Control 61.4 92.9 140.1 180.7 214.8 278.3 297.2 407.5
AMOUNTS SHOWN ARE IN CANADIAN DOLLARS **Insufficient data
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Climate-controlled units commanded a premium in all unit sizes with a very significant premium in the sizes over 10-by-20 as seen in Tables C4.3 and C4.4. The biggest jump is in the 10-by-30 size where units with climate control in British Columbia are rented for an average of $549 as opposed to those without climate control ($297.31). This equates to a difference of 84.5 percent for the province. The second largest difference is charged for 10-by-20 units (32.2 percent) followed by 10-by-25 units (26.1 percent).
MOREOVER,
RENTAL RATES BY UNIT SIZE Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL
tario. The other two reporting provinces—Quebec and Alberta—had the lowest rates at $354.67 and $353 respectively.
Percentage Difference 5.0% 13.7% 16.3% 17.4% 32.2% 26.1% 84.7% **
NEWER FACILITIES COMMAND
HIGHER RENTS THAN OLDER FACILITIES. Rental rates by size of facility (number of units) indicate that the largest facilities are obtaining the highest rents. When it comes to net rentable square footage the facilities in the 75,000 to 99,900 square foot size range are commanding the highest rents. The responses indicate that urban facilities are able to obtain higher rents than suburban and rural facilities. Moreover, newer facilities command higher rents than older facilities. This may be due to the fact that newer facilities have more amenities and ancillary services for which higher premiums can be charged.
RentalRates•4
As indicated in Tables C4.9 and C4.10, the survey responses indicate that the highest rates per unit size tend to be obtained through tele-
phone solicitation. Moreover, higher rates are more apt to be charged when the Yellow Pages are not used. By comparison, in the U.S. the highest
rates were obtained through magazine advertisement and telephone solicitation and the highest rates were obtained by facilities that were
TABLE C4.4
RENTAL RATES - CLIMATE-CONTROLLED FACILITIES Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL
5X5 ** 70.2 ** 40.0 ** ** ** 66.0 50.0 ** ** 64.5
5X10 ** 113.8 ** 85.0 ** ** ** 101.3 90.0 ** ** 105.6
10X10 ** 177.2 ** 140.0 ** ** ** 151.7 149.0 ** ** 163.0
10X15 ** 228.4 ** 160.0 ** ** ** 206.7 199.0 ** ** 212.1
10X20 ** 336.3 ** 210.0 ** ** ** 256.0 ** ** ** 283.9
10X25 ** 459.0 ** ** ** ** ** 297.0 ** ** ** 351.0
10X30 ** 549.0 ** ** ** ** ** ** ** ** ** 549.0
20X20 ** ** ** ** ** ** ** ** ** ** ** **
AMOUNTS SHOWN ARE IN CANADIAN DOLLARS **Insufficient data
TABLE C4.5
RENTAL RATES BY NUMBER OF UNITS Unit Size 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more
5X5 59.2 50.4 63.5 67.5 67.4
5X10 69.3 77.8 97.5 108.4 113.5
10X10 124.5 120.9 143.0 166.4 175.8
10X15 160.5 149.6 176.6 211.2 235.2
10X20 179.2 172.2 219.3 262.9 302.0
10X25 ** 220.1 245.9 294.9 365.2
10X30 250.0 257.7 287.2 367.5 400.4
20X20 ** 503.0 336.6 399.9 497.0
10X15 146.4 166.4 197.7 216.7 215.9
10X20 170.7 200.7 239.3 268.9 275.2
10X25 215.2 217.8 292.8 313.9 326.6
10X30 238.6 272.0 323.2 380.9 361.8
20X20 400.0 297.5 395.0 393.3 467.6
10X15 165.8 175.0 179.7 177.7 182.4 174.0 200.3
10X20 211.3 234.0 215.6 205.9 231.0 207.2 238.9
10X25 246.0 ** 281.3 229.7 276.5 271.3 319.9
10X30 314.6 ** 331.3 266.3 335.7 292.8 330.7
20X20 361.5 ** 379.0 383.5 472.4 379.4 382.7
AMOUNTS SHOWN ARE IN CANADIAN DOLLARS **Insufficient data
TABLE C4.6
RENTAL RATES BY RENTABLE SQUARE FOOTAGE Square Footage Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99,999 100,000 or more
5X5 51.2 56.8 67.8 71.5 61.1
5X10 71.4 90.3 103.4 113.5 102.2
10X10 119.5 136.5 154.7 170.3 159.3
AMOUNTS SHOWN ARE IN CANADIAN DOLLARS
TABLE C4.7
RENTAL RATES BY YEAR FACILITY BUILT Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after
5X5 56.4 49.0 51.0 59.1 64.5 61.1 66.4
5X10 88.2 95.0 91.3 91.9 95.4 90.3 100.6
10X10 133.5 150.0 144.7 132.8 150.7 136.1 152.4
AMOUNTS SHOWN ARE IN CANADIAN DOLLARS **Insufficient data
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4•RentalRates
not advertising in the newspaper. In Canada, the greatest difference in rents (between rents obtained if a particular media type was used or not used) in the smallest units (5-by-5) was through referrals
which brought in an extra $13.01 per month on average. The 5-by-10 units attained the highest rents, by an average of $11.17 per month, through billboard advertising; the greatest differences in rents in sizes from 10-by10 and larger were re-
flected in telephone solicitation. In five out of seven unit size categories higher rents were obtained if Yellow Pages advertising was not used. While marketing techniques will be explored in more depth in Sec-
TABLE 4.8
RENTAL RATES BY MARKET AREA Market Area Urban Suburban Rural
5X5 66.9 60.1 52.7
5X10 98.9 93.0 85.6
10X10 151.1 145.5 119.9
10X15 192.0 182.5 158.4
10X20 240.0 220.2 171.0
10X25 317.0 273.8 216.4
10X30 319.7 312.3 264.8
20X20 389.7 413.5 **
10X25 429.2 280.8 288.7 354.1 278.3 ** 282.8 279.3 327.0 336.7 285.0 281.4 298.0 **
10X30 330.7 310.9 351.6 433.4 340.6 ** 313.1 309.1 343.0 340.4 329.0 321.7 325.0 250.0
20X20 ** 404.2 ** ** 650.0 ** 404.5 404.5 508.5 562.0 650.0 ** 650.0 **
10X30 308.9 305.8 306.5 301.4 304.9 310.4 285.8 324.4 306.0 301.0 308.3 309.3 309.8 311.4
20X20 404.2 ** 404.2 404.2 389.8 404.2 400.0 400.0 391.2 384.5 389.8 404.2 389.8 404.2
AMOUNTS SHOWN ARE IN CANADIAN DOLLARS **Insufficient data
TABLE C4.9
RENTAL RATES WHEN VARIOUS PROMOTIONAL MEDIA ARE USED Media Billboards Signage Direct Mailings Telephone Solicitation Flyers Television Internet Yellow Pages Magazines Referrals Newspapers Radio Other None
5X5 72.9 61.7 57.7 68.3 62.4 ** 61.6 61.4 66.1 73.1 52.7 68.5 60.0 70.0
5X10 104.9 95.6 88.9 101.6 87.9 79.0 95.1 93.6 100.7 99.8 83.5 98.7 90.1 82.5
10X10 149.6 145.0 133.0 159.2 135.3 87.5 144.6 142.9 152.7 154.2 135.4 141.9 144.2 130.0
10X15 191.1 184.3 172.7 202.3 177.9 146.0 185.9 182.2 200.8 202.6 169.6 174.8 186.9 175.0
10X20 240.7 224.1 204.3 258.0 216.1 150.0 224.6 221.3 237.3 244.1 210.8 218.3 234.1 175.0
ALL AMOUNTS SHOWN ARE IN CANADIAN DOLLARS **Insufficient data
TABLE C4.10
RENTAL RATES WHEN VARIOUS PROMOTIONAL MEDIA ARE NOT USED Media Billboards Signage Direct Mailings Telephone Solicitation Flyers Television Internet Yellow Pages Magazines Referrals Newspapers Radio Other None
5X5 61.4 64.3 62.6 61.6 62.0 62.1 66.7 70.2 61.7 60.1 63.3 61.4 62.3 62.0
5X10 93.7 90.3 95.5 94.1 95.9 94.8 91.5 106.6 94.1 93.4 96.4 94.2 94.9 94.8
ALL AMOUNTS SHOWN ARE IN CANADIAN DOLLARS **Insufficient data
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10X10 144.0 142.0 146.0 143.3 146.0 145.6 143.1 160.1 143.6 142.1 145.6 144.7 144.4 144.6
10X15 183.7 184.2 185.9 182.8 185.4 184.7 171.2 206.2 182.9 180.1 186.5 185.4 184.0 184.4
10X20 221.0 215.3 225.1 219.9 223.8 224.0 205.8 236.7 221.1 217.8 224.2 223.0 221.6 223.0
10X25 276.7 296.9 281.8 274.8 283.9 282.8 281.9 314.2 276.7 267.5 282.5 282.9 281.4 282.8
RentalRates•4
tion 8, the Canadian survey responses indicate that 90 percent of all facilities advertise in the Yellow Pages. As seen in Table C4.11, this is followed closely by Internet usage at 85.59 percent and then by signage
rents for the 5-by-5 units to a 58.48 percent increase in rents for the 10by-30 units. The highest rent reported for a facility with computerized security was $408 for a 20-by-20 unit.
Computerized accounting systems also have a positive effect on rents as evidenced in Table C4.13. Unlike for facilities with computerized security, rates in this category showed the largest increase for
TABLE C4.11a
ACTUAL USAGE OF VARIOUS MEDIA (PERCENTAGE OF FACILITIES) Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL
Billboards 13.0% 16.7% ** ** ** ** ** 6.4% ** ** ** 8.1%
Signage 60.9% 77.8% ** 100.0% ** ** ** 85.1% 80.0% 100.0% ** 79.3%
Direct Mail 13.0% 33.3% ** 20.0% ** ** ** 4.3% 10.0% 14.3% ** 12.6%
Telephone Solicitation ** 27.8% ** ** ** ** ** 6.4% ** ** ** 7.2%
Television Commercial ** 11.1% ** ** ** ** ** ** ** ** ** 1.8%
Flyers 17.4% 44.4% ** 40.0% ** ** ** 8.5% 10.0% ** ** 17.1%
Internet/ Web Site 82.6% 88.9% ** 60.0% ** ** ** 89.4% 90.0% 85.7% ** 85.6%
**Insufficient data
TABLE C4.11b
ACTUAL USAGE OF VARIOUS MEDIA (PERCENTAGE OF FACILITIES) Provinces and Territories Yellow Pages Alberta 87.0% British Columbia 88.9% Manitoba ** New Brunswick 100.0% Newfoundland ** Northwest Territories 100.0% Nunavut ** Ontario 87.2% Quebec 100.0% Saskatchewan 100.0% Yukon Territory ** NATIONAL 90.1%
Magazines 4.4% 27.8% ** ** ** ** ** 4.3% 10.0% 14.3% ** 9.0%
Referrals 26.1% 55.6% ** 20.0% ** ** ** 12.8% ** ** ** 20.7%
Newspapers 13.0% 33.3% ** 40.0% ** ** ** 4.3% 20.0% 14.3% ** 14.4%
Radio 13.0% 16.7% ** 20.0% ** ** ** 8.5% ** 14.3% ** 10.8%
None ** ** ** ** ** ** ** 2.1% ** ** ** 0.9%
Other ** 16.7% ** ** ** ** ** 6.4% ** ** ** 5.4%
**Insufficient data
Computerized security had a positive effect on rents in all unit sizes as seen in Table C4.12. This effect increases with the size of units ranging from a 16.83 percent increase in
TABLE C4.12
EFFECT OF COMPUTERIZED SECURITY ON RENTAL RATES at 79.28 percent. The usage of various media in the U.S. is similar with 81.5 percent internet usage, 76.8 percent using the Yellow Pages, followed by 75.5 percent signage, and.
Unit Size 5x5 5x10 10x10 10x15 10x20 10x25 10x30 20x20
With Computerized Security 61.9 94.4 143.5 183.8 222.2 282.7 305.1 407.5
Without Computerized Security 53.0 78.1 113.2 147.0 153.5 185.0 192.5 **
Percentage Difference 16.8% 20.9% 26.8% 25.1% 44.7% 52.8% 58.5% **
ALL AMOUNTS SHOWN ARE IN CANADIAN DOLLARS ** Insufficent data
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TABLE C4.13
EFFECT OF COMPUTERIZED ACCOUNTING ON RENTAL RATES Unit Size 5x5 5x10 10x10 10x15 10x20 10x25 10x30 20x20
With Computerized Accounting 62.3 94.7 143.3 184.3 219.9 281.2 299.3 407.5
Without Computerized Accounting 32.0 72.4 107.8 142.4 160.4 150.0 269.5 **
Percentage Difference 94.7% 30.8% 33.0% 29.4% 37.1% 87.5% 11.0% **
ALL AMOUNTS SHOWN ARE IN CANADIAN DOLLARS ** Insufficent data
TABLE C4.14
EFFECT OF COMPUTERIZED LIGHTING & UTILITIES ON RENTAL RATES Unit Size 5x5 5x10 10x10 10x15 10x20 10x25 10x30 20x20
With Computerized Lighting & Utilities 62.3 93.9 141.8 183.4 220.0 289.3 308.4 408.0
Without Computerized Lighting & Utilities 56.3 87.8 132.6 166.4 182.5 234.6 244.4 400.0
Percentage Difference 10.8% 6.9% 6.9% 10.2% 21.1% 23.3% 26.2% 2.0%
ALL AMOUNTS SHOWN ARE IN CANADIAN DOLLARS
TABLE C4.15
EFFECT OF COMPUTERIZED ACCESS CONTROL ON RENTAL RATES Unit Size 5x5 5x10 10x10 10x15 10x20 10x25 10x30 20x20
With Computerized Lighting & Utilities 62.08 94.34 142.22 182.79 219.12 281.49 299.43 407.50
Without Computerized Lighting & Utilities 46.67 76.71 118.88 154.17 168.69 210.00 256.67 **
Percentage Difference 33.03% 22.98% 19.64% 18.56% 29.90% 34.04% 16.66% **
ALL AMOUNTS SHOWN ARE IN CANADIAN DOLLARS ** Insufficent data
TABLE C4.16
EFFECT OF MULTIPLE LEVELS ON RENTAL RATES Unit Size 5x5 5x10 10x10 10x15 10x20 10x25 10x30 20x20
With Multiple Levels 68.50 117.24 187.03 237.71 299.55 344.18 407.58 562.00
Without Multiple Levels 59.92 89.11 132.93 171.86 205.93 257.00 289.87 385.43
ALL AMOUNTS SHOWN ARE IN CANADIAN DOLLARS
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Percentage Difference 8.58 28.13 54.10 65.85 93.62 87.18 117.71 176.57
5-by-5 units (a 94.69 percent difference). The next largest difference was for 10-by-25 units, which showed a changeup of 87.48 percent. The least increase was reflected in the 10-by-30 units where rents were only 11.04 percent higher as a result of computerized accounting. The effect of computerized lighting and utilities can be seen in Table C4.14, where the largest increase appears to be for 10-by-30 units which showed a 26.19 percent increase over facilities without this amenity. The smallest difference in this category appears in the 20-by20 unit size where there is only a 2 percent increase. Other amenities such as computerized access control and multiple levels can also impact rental rates as seen in Tables C4.15 and C4.16. Based on survey results, the biggest difference between facilities with and without computerized lighting appears to be for 10-by-25 units (34.04 percent) followed closely by 5-by-5 units (33.03 percent). At the other end of the spectrum, 10-by-30 units showed the smallest difference in rental rates (16.66 percent). As seen in Table C4.16, facilities with multiple levels commanded significantly higher rents for larger units. For 20-by-20 units, survey respondents reported a 176.57 percent increase in rents, whereas 5-by-5 units showed only a 8.58 percent difference. This is consistent with other data which indicates newer urban facilities are generating the highest rents.
Customer฀Base•5
A
BOTH
NATURAL AND
MAN-MADE OBSTACLES ALSO SERVE TO
DEFINE A TRADE AREA. Most self-storage customers want to make their self-storage visits as easy and convenient as possible so facilities that are along the daily commuter route of a customer, particularly those which provide easy
access to going-home traffic or which are near a destination location, such as a favorite grocery store or home building supplies outlet, may be perceived as being easier to use than competition which is nearer to the tenant’s home.
Tenant Mix On average, the standard rule of thumb in the U.S. is that residential customers make up 75 percent
of the facilities, while commercial, military and student tenants make up the remaining 25 percent. However, in Canada, reporting facilities have managed to increase the commercial component to over 25 percent, nationally; while residential tenants make up 62.46 percent and the military and students constitute 7.26 percent and 5.13 percent, respectively. The proportion of military tenants reported is surprising given
TENANT MIX BY REGION
TABLE C5.1
s a general rule, the trade area of a self-storage facility is defined by a three- to fivemile radius around the property. However, this rule is not set in stone because urban, densely populated areas generally draw from a much smaller radius, and rural properties draw from farther afield. Both natural and man-made obstacles also serve to define a trade area. In Vancouver, tenants are reluctant to cross the bridges to and from the North Shore to store; the Fraser River forms an effective barrier between Richmond and Vancouver; and the Pitt River forms a barrier between the Tri-Cities and Pitt Meadows/Maple Ridge. While limited access highways serve to extend the trade area of a freeway-side location, often highways form a man-made barrier between trade areas. Storage facilities which cater to a niche market usually draw from a wider trade area but may have very specific locational requirements.
Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL Number of Units 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more Rentable Square Feet Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99.999 100,000 or more Market Area Urban Suburban Rural Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after
Commercial 22.9% 17.4% ** 20.2% ** 21.0% ** 30.6% 28.2% 31.5% ** 25.2% Commercial 17.6% 21.1% 30.3% 29.5% 27.5%
Residential 63.5% 68.2% ** 71.2% ** 79.0% ** 64.5% 58.6% 63.7% ** 62.5% Residential 65.3% 66.2% 62.7% 59.8% 67.7%
Military Students 9.3% 4.3% 9.1% 5.3% ** ** ** 8.6% ** ** ** ** ** ** 1.0% 4.0% 8.8% 4.4% ** 4.8% ** ** 7.3% 5.1% Military Students 8.7% 8.4% 8.3% 4.4% 0.9% 6.1% 7.2% 3.4% ** 4.8%
19.0% 23.4% 32.3% 28.0% 28.6% Commercial 26.2% 28.8% 14.9% Commercial 27.7% 18.0% 29.6% 29.2% 21.8% 27.3% 22.9%
62.0% 64.8% 61.3% 60.3% 69.4% Residential 63.7% 61.3% 68.6% Residential 65.9% 79.0% 67.0% 64.3% 58.5% 66.0% 58.5%
12.7% 6.4% 7.2% 4.6% 1.4% 5.0% 7.2% 4.5% ** 2.0% Military Students 3.7% 6.5% 5.5% 4.5% 12.6% 3.8% Military Students 1.9% 4.5% ** 3.0% 1.0% 2.4% ** 6.5% 16.4% 3.3% 1.4% 5.3% 12.7% 5.9%
**Insufficient data
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the much lower proportion of military personnel relative to the total population of Canada in contrast to the U.S. which reports a smaller proportion nationally (5.9 percent). Interestingly, Saskatchewan reports the highest proportion of commercial tenants (31.51 percent) while B.C. reports the lowest proportion of commercial tenants (17.36 percent). In terms of size, the smallest facili-
ties report the lowest proportion of commercial tenants and the greatest share of student tenants. The largest proportion of commercial tenants is reported by the 50,000 to 74,999 square foot facilities and those offering 300 to 499 units. The greatest proportion of residential tenants is reported by the largest facilities offering 1,000 or more units and 100,000 square feet plus of rentable area. Rural facilities report
TABLE C5.2
AVERAGE RENTAL PERIOD IN MONTHS Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL Number of Units 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more Rentable Square Feet Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99.999 100,000 or more Market Area Urban Suburban Rural Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after
Commercial 20.9 26.6 ** 16.8 ** 36.0 ** 23.3 20.1 21.1 ** 22.7 Commercial 15.8 23.5 21.3 25.5 25.0
Residential 15.1 12.2 ** 9.8 ** 24.0 ** 19.4 17.7 17.4 ** 16.7 Residential 11.4 14.7 19.6 18.4 16.9
Military Students 11.0 9.7 2.0 4.1 ** ** ** 5.8 ** ** ** ** ** ** 15.3 15.5 16.0 15.6 15.7 16.0 ** ** 11.5 16.0 Military Students 0.5 1.8 9.8 9.6 14.6 14.8 14.6 14.6 13.2 15.9
19.6 22.4 24.0 21.4 30.2 Commercial 21.2 25.2 20.4 Commercial 27.1 22.0 29.1 30.8 23.3 21.1 20.2
13.9 16.6 17.9 18.2 18.3 Residential 16.7 18.2 12.4 Residential 17.7 4.0 20.0 11.6 17.7 17.8 15.2
4.3 6.2 11.0 10.4 15.7 15.4 14.6 14.4 15.4 18.1 Military Students 10.5 11.2 16.1 16.0 1.6 2.6 Military Students 16.0 14.4 ** 2.0 10.3 10.6 4.4 7.0 12.0 13.5 14.1 13.1 9.9 11.0
**Insufficient data
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the lowest proportion of commercial tenants and a significantly larger proportion of military tenants. The largest proportion of student tenants are reported by the urban facilities, and both urban and suburban facilities offer similar proportions of commercial and residential tenants. In general, the older storage facilities report higher proportions of residential tenants.
...THE SMALLEST FACILITIES REPORT THE LEAST PROPORTION OF COMMERCIAL TENANTS AND THE GREATEST NUMBER OF STUDENT TENANTS. Length Of Stay Commercial tenants have an average stay of 22.7 months, nationally, with the Northwest Territories reporting the longest stays (36 months) and New Brunswick reporting the shortest stays (16.8 months). By comparison, in the U.S., commercial tenants averaged a stay of 34.1 months. Residential, military, and student tenants have similar lengths of stay on both sides of the border. The longest residential stays are reported by the Northwest Territories (24 months) followed by Ontario at 19.4 months. In general, the larger facilities appear to hold onto their tenants longer across all categories. Suburban facilities retained all categories of tenants longer than either urban or rural facilities. Age does not appear to be a significant factor in the length of stay of tenants in any category.
SiteInformation•6
In addition to exposure and access, the shape and topography of a site are important factors. Irregularly shaped sites can be problematic when designing to maximize on-site traffic circulation. A too small site poses challenges for layouts facilitating access by larger moving trucks. Ideally, a site would have a long frontage to the traffic thoroughfare, providing both exposure and ease of access. A tiered site may allow for the development of two levels of storage, each with ground level access without the necessity of costly elevators. If the site is not zoned to permit self-storage, then a lengthy re-zoning process may ensue and most municipalities extract development cost charges from developers which significantly increase the already high costs of development. It is important to investigate sign bylaws to ensure that the visibility of the property may be enhanced by signage as much as possible.
Demographics The overall demographic make-up
of the trade area must be considered as well. One of the significant factors is the level of income of the surrounding residents and therefore the amount of disposable income available for self-storage. As a significant proportion of the tenants of a facility will be residential, ideally, proximity to densely developed residential areas is sought by the self-storage developer. The mobility of a population is an important factor, as well, as most moves generate the need for at least short term storage. The age composition of the population is important as, in general, families with young children are not significant users of self-storage nor are retirees. The highly mobile younger age categories in the process of educating themselves and finding employment, as well as the pre-retirees seeking to downsize before retirement, form desirable demographic sectors. Some racial segments of the population have a lesser propensity to store which should be taken into consideration.
THE DAYS OF
“BUILD IT AND THEY WILL COME” ARE OVER IN CANADA ALSO. Cost Of The Land The cost of the land available for self-storage must also be taken into consideration. The prime sites come with high price tags which have not dropped in Canada despite the economic downturn. The price
of the land plus the costs imposed by municipalities in permits and required off-site costs may result in the development not “penciling out” when projected rents and expenses are calculated. High land costs in urban areas have resulted in the development of multi-level facilities to maximize density and therefore revenues.
TRAFFIC FLOW TABLE C6.1
A
s in all types of real estate, location is a key component of the success of a self-storage facility, with exposure being the primary concern, followed by accessibility. Initially, self-storage properties were developed in industrially zoned areas only as they were not permitted in commercially zoned areas. Typically, “Main Street” locations were not available to selfstorage. Exposure to a well-travelled commuter route or thoroughfare was the primary consideration in site selection. Although Canada has a much smaller supply per capita than the U.S., facilities may no longer be buried in an industrial park with the expectation of successful leaseup. The days of “build it and they will come” are over in Canada also.
Average Number of Vehicles Provinces and Entering the Territories Facility Daily Alberta 23.9 British Columbia 26.7 Manitoba ** New Brunswick 13.2 Newfoundland ** Northwest Territories 25.0 Nunavut ** Ontario 19.0 Quebec 18.1 Saskatchewan 19.3 Yukon Territory ** NATIONAL 21.0 Number of Units 1 to 99 6.0 100 to 299 18.8 300 to 499 20.9 500 to 999 25.5 1,000 or more 33.8 Rentable Square Footage Less than 25,000 11.2 25,000 to 49,999 21.4 50,000 to 74,999 20.9 75,000 to 99,999 26.9 100,000 or more 33.9 Market Area Urban 18.8 Suburban 23.9 Rural 19.8 Year Facility Built Prior to 1981 37.1 1981 to 1985 15.0 1986 to 1990 19.4 1991 to 1995 27.0 1996 to 2000 22.9 2001 to 2005 19.4 2006 or after 18.3 ** Insufficient data
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Site Traffic
Nationally, self-storage facilities report that an average of 21 cars daily enter the site ranging from an average low of 13.2 vehicles in New Brunswick to a high of 26.7 vehicles in B.C. The national U.S. average was similar at 21.4 cars. The responses indicate that the largest facilities gen-
erate the most traffic and traffic increases with size. Suburban facilities report more traffic on site than either urban or rural properties. The age of the facility does not appear to be a definitive factor in traffic generation.
Competition In analyzing the feasibility of a site for self-storage, the consultant investigates supply and demand; key to
AVERAGE NUMBER OF PARKING SPACES AT FACILITY OFFICE
PRIMARY COMPETITIVE MARKET (5-MILE RADIUS)
Provinces and Average Territories Number Alberta 8.8 British Columbia 9.2 Manitoba ** New Brunswick 17.2 Newfoundland ** Northwest Territories 5.0 Nunavut ** Ontario 9.1 Quebec 9.1 Saskatchewan 10.3 Yukon Territory ** NATIONAL 9.5 Number of Units 1 to 99 11.1 100 to 299 9.0 300 to 499 9.4 500 to 999 9.4 1,000 or more 9.6 Rentable Square Footage Less than 25,000 10.8 25,000 to 49,999 8.8 50,000 to 74,999 9.5 75,000 to 99,999 9.4 100,000 or more 9.1 Market Area Urban 9.9 Suburban 9.2 Rural 9.1 Year Facility Built Prior to 1981 7.7 1981 to 1985 4.0 1986 to 1990 8.3 1991 to 1995 9.8 1996 to 2000 10.1 2001 to 2005 8.7 2006 or after 10.7
Average Number Provinces and of Existing Territories Competitors Alberta 4.7 British Columbia 7.6 Manitoba ** New Brunswick 3.5 Newfoundland ** Northwest Territories ** Nunavut ** Ontario 6.1 Quebec 5.0 Saskatchewan 4.7 Yukon Territory ** NATIONAL 5.8 Number of Units 1 to 99 5.1 100 to 299 5.6 300 to 499 6.8 500 to 999 5.7 1,000 or more 5.1 Rentable Square Footage Less than 25,000 4.8 25,000 to 49,999 6.0 50,000 to 74,999 7.1 75,000 to 99,999 5.4 100,000 or more 4.9 Market Area Urban 7.1 Suburban 5.0 Rural 4.1 Year Facility Built Prior to 1981 9.0 1981 to 1985 2.0 1986 to 1990 5.9 1991 to 1995 7.3 1996 to 2000 5.7 2001 to 2005 5.9 2006 or after 5.3
**Insufficient data
164
al or service commercial uses also permitted by the zoning.
Self-Storage Almanac 2012
TABLE C6.3
TABLE C6.2
Another factor which must be considered in site selection is the capacity of the site to accommodate selfstorage customers on a daily basis. Most self-storage developers have to obtain a parking variance as self-storage does not generate the same need for parking enshrined in the zoning bylaws as other industri-
**Insufficient data
Average Number Average of New Facilities Number of Under Construction Conversions 1.0 1.0 1.0 2.0 ** ** 1.0 ** ** ** ** ** ** 1.0 1.0 1.0 1.0 1.0 1.0 ** ** 1.0 1.0 1.0 1.0 1.0 1.0 1.1
** 1.0 1.1 1.1 1.0
1.0 1.0 1.0 1.1 1.0
1.0 1.1 1.0 1.1 1.0
1.0 1.0 1.0
1.1 1.0 1.0
1.0 ** 1.0 1.0 1.0 1.0 1.1
1.0 ** 1.2 1.0 1.2 1.0 1.0
SiteInformation•6
SUBURBAN FACILITIES REPORT
MORE TRAFFIC ON SITE
ing facility, size, number of units, unit mix (difficult to obtain without inside information due to the freedom of information legislation), rental rates, occupancy, precise amenities offered, new customer specials and incentives, hours of operation, and security features. Once a facility is developed, knowing the existing and potential competition is crucial for the owner/manager in order to maintain or increase market share. Analyzing the Canadian data indicates that on average, there are on average 5.8 competitors within a five-mile radius of existing facilities with an average of one new facility under construction and one conversion in the market area. In the U.S., each facility had an average of 7.7 competitors within the same radius and virtually no new facilities under
THAN EITHER URBAN OR RURAL PROPERTIES. TABLE C6.4
AVERAGE FACILITY SIZE Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL Market Area Urban Suburban Rural Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after ** Insufficient data
Units Self-Storage RV/Boat 285 117 461 60 ** ** 155 6 ** ** 175 120 ** ** 574 7 593 401 27 ** ** 464 40
Rentable Sq. Ft. Self-Storage RV/Boat 40,337 56,379 45,713 38,267 ** ** 17,658 2,000 ** ** 40,000 20,000 ** ** 58,497 1,297 61,653 ** 51,878 6,343 ** ** 50,522 19,107
463 549 230
21 16 165
47,373 62,003 28,071
13,493 13,236 53,162
466 241 523 558 443 411 495
55 54 20 25 49 63 21
55,105 29,500 52,995 53,548 50,757 49,508 49,865
17,835 10,700 1,818 4,240 35,995 31,633 8,420
construction or conversion. The Canadian data indicates that B.C. has the highest number of competing facilities at 7.6 within the five-mile radius with another one new facility under construction and two facilities under conversion. Due to very high land costs, B.C. leads the country in conversions with double the number
TABLE C6.5
the equation is the amount of competing supply in an area. Information provided to the prospective selfstorage developer should include the exact location of each compet-
PERCENTAGE OF FACILITIES WITH MULTIPLE LEVELS Provinces and Percentage Territories of Facilities Alberta ** British Columbia 5.6% Manitoba ** New Brunswick 20.0% Newfoundland ** Northwest Territories ** Nunavut ** Ontario 8.5% Quebec 14.3% Saskatchewan ** Yukon Territory ** NATIONAL 12.6% Number of Units 1 to 99 ** 100 to 299 6.1% 300 to 499 10.7% 500 to 999 17.9% 1,000 or more 40.0% Rentable Square Footage Less than 25,000 4.2% 25,000 to 49,999 5.6% 50,000 to 74,999 20.0% 75,000 to 99,999 25.0% 100,000 or more 20.0% Market Area Urban 14.0% Suburban 15.6% Rural ** Year Facility Built Prior to 1981 14.3% 1981 to 1985 ** 1986 to 1990 18.2% 1991 to 1995 0.0% 1996 to 2000 17.6% 2001 to 2005 3.1% 2006 or after 18.4% **Insufficient data
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6•SiteInformation
of conversions in each market area than the rest of the provinces. The lowest amount is reported in New Brunswick with an average of 3.5 existing competitors, one new storage facility under construction and no conversions. In general, no particular size category stands out as having more competition except possibly the facilities in the 50,000 to 74,999 square
SELF-STORAGE FACILITIES
RANGE IN SIZE AND
AMENITIES FROM REGION TO REGION.
foot range and those offering 300 to 499 units. Urban facilities have a significantly higher number of existing competitors, and a similar amount of new facilities under construction or conversion. The oldest facilities have the highest numbers of competitors and the newest facilities have the fewest number of competitors, with the exception of the 1981 to 1985 age category which is limited by insufficient data.
TABLE 6.6
HOW CUSTOMERS ACCESS MULTI-LEVEL FACILITIES (PERCENTAGE OF MULTI-LEVEL FACILITIES) Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL Number of Units 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more Rentable Square Footage Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99,999 100,000 or more Market Area Urban Suburban Rural Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after **Insufficient data
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Elevator ** 62.5% ** 100.0% ** ** ** 100.0% 100.0% ** ** 78.6%
Stairs ** 62.5% ** 100.0% ** ** ** 50.0% ** ** ** 57.1%
Lift ** 25.0% ** ** ** ** ** ** ** ** ** 14.3%
Drive-Up Ramp ** 25.0% ** ** ** ** ** ** ** ** ** 14.3%
** 50.0% 66.7% 100.0% 75.0%
** 100.0% 100.0% 40.0% 25.0%
** 50.0% 33.3% ** **
** ** ** ** 50.0%
100.0% 50.0% 80.0% 75.0% 100.0%
100.0% 100.0% 60.0% 25.0% 50.0%
** 50.0% 20.0% ** **
** ** ** 25.0% 50.0%
100.0% 57.1% **
28.6% 85.7% **
** 28.6% **
** 28.6% **
100.0% ** 50.0% ** 100.0% ** 85.7%
100.0% ** 100.0% ** 66.7% 100.0% 28.6%
** ** 50.0% ** ** 100.0% **
** ** ** ** 33.3% ** 14.3%
SiteInformation•6
Amenities And Features Self-storage facilities range in size and amenities from region to region. Nationally, the average facility is 50,522 square feet in size, offering 464 units and 40 RV or boat spaces. Within this range, the smallest facilities are found in New Brunswick (17,658 square feet on average with 155 units and six RV/boat spaces) and the largest facilities are reported in Quebec, with an average size of 61,653 square feet and 593 units (and no exterior storage). Drilling down in the data, the smallest average unit size is reported in B.C. at 99 square feet and the largest average unit size is in the Northwest Territory at 229 square feet. By comparison, in 2010, in the U.S., the average facility size, nationally, was 51,119 square feet with 566 units and 35 RV/boat storage spaces (average unit size of 90 square feet). The largest facilities are found in suburban locations at an average size of 62,033 square feet offering 549 units (113 square foot average unit size) and the smallest facilities
are found in rural locations (28,071 square feet with 230 units and 165 recreational vehicle spaces, average unit size of 122 square feet). The data indicates that there seems to be no correlation between the year that a facility was built and its size.
NONE OF THE
RURAL FACILITIES REPORTING IN CANADA WERE
MULTIPLE LEVELS... Regarding multi-level developments, nationally 12.6 percent of facilities reporting were multi-level with New Brunswick and Quebec reporting the highest proportions at 20 percent and 14.3 percent. By comparison, U.S. data show that
19.2 percent of all facilities reporting were multi-level. Canadian data indicate that the 40 percent of facilities offering 1,000 or more units are multi-story, while in the U.S. that proportion is 55.6 percent. In terms of rentable square footage, facilities of 50,000 square feet and greater reported a range of 20 to 25 percent in multi-level buildings. By comparison the same size ranges in the U.S. reported a range of 22 to 48 percent in multi-story buildings. None of the rural facilities reporting in Canada were multiple levels; 4.3 percent of the rural facilities reporting in the U.S. were multi-level. Urban and suburban facilities reported 14 percent and 15.6 percent multiple level development in Canada, respectively, with much higher proportions in the U.S. (25.0 percent and 21.3 percent, respectively). Similarly, in Canada, a low number of facilities constructed between 1991 and 1995 were multiple story (0 percent in Canada and 8.3 percent in the U.S.) and the highest proportion of multi-story development is found in
TABLE C6.7
FACILITY AGE Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL Market Area Urban Suburban Rural
Prior to 1981 8.7% 5.6% ** ** ** ** ** 4.3% 10.0% 14.3% ** 6.3%
1981 to 1985 ** ** ** ** ** ** ** 2.1% ** ** ** 0.9%
8.0% 4.4% 6.3%
2.0% 0.0% 0.0%
Year Facility Opened 1986 to 1991 to 1996 to 1990 1995 2000 4.3% ** 26.1% 5.6% 5.6% 16.7% ** ** ** ** ** 20.0% ** ** ** 100.0% ** ** ** ** ** 8.5% 6.4% 12.8% 40.0% ** ** ** 14.3% 14.3% ** ** ** 9.9% 4.5% 15.3% 10.0% 11.1% 6.3%
6.0% 2.2% 6.3%
16.0% 13.3% 18.8%
2001 to 2005 39.1% 16.7% ** 20.0% ** ** ** 29.8% 30.0% 28.6% ** 28.8%
2006 or After 21.7% 50.0% ** 60.0% ** ** ** 36.2% 20.0% 28.6% ** 34.2%
26.0% 33.3% 25.0%
32.0% 35.6% 37.5%
**Insufficient data
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6•SiteInformation
newer facilities built after 2001 (18.4 percent in Canada, 30.4 percent in the U.S.). There are significant differences between the U.S. and Canada in how the upper levels of a multiple story facility are accessed. In Canada, 78.6 percent of all multi-level facilities are elevator accessible; in the U.S. this proportion was 48.1 percent
THE PATTERN OF DEVELOPMENT
IS RELATIVELY CONSISTENT ACROSS THE THREE MARKET TYPES.
in 2010. However, 57.1 percent of Canadian facilities reported access by stairs by comparison to 45.2 percent of U.S. facilities. Lift usage was higher in the Canada at 14.3 percent by comparison to 9.6 percent of U.S. multi-level properties and each also utilized drive-up ramps. However, if the actual table of responses is reviewed, only four provinces provided enough data to tabulate and
TABLE C6.8
ELECTRONIC FACILITY AUTOMATIONS Provinces and Territories Security Alberta 91.3% British Columbia 77.8% Manitoba ** New Brunswick 100.0% Newfoundland ** Northwest Territories ** Nunavut ** Ontario 93.6% Quebec 100.0% Saskatchewan 85.7% Yukon Territory ** NATIONAL 90.1% Number of Units 1 to 99 75.0% 100 to 299 81.8% 300 to 499 96.4% 500 to 999 96.4% 1,000 or more 100.0% Rentable Square Footage Less than 25,000 79.2% 25,000 to 49,999 88.9% 50,000 to 74,999 92.0% 75,000 to 99,999 100.0% 100,000 or more 100.0% Market Area Urban 90.0% Suburban 97.8% Rural 68.8% Year Facility Built Prior to 1981 85.7% 1981 to 1985 100.0% 1986 to 1990 72.7% 1991 to 1995 100.0% 1996 to 2000 88.2% 2001 to 2005 90.6% 2006 or after 94.7% **Insufficient data
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Accounting/ Bookkeeping 82.6% 88.9% ** 100.0% ** 100.0% ** 93.6% 100.0% 100.0% ** 91.9%
Access Control 87.0% 83.3% ** 80.0% ** 100.0% ** 93.6% 90.0% 100.0% ** 90.1%
Lights 78.3% 66.7% ** 60.0% ** ** ** 89.4% 90.0% 85.7% ** 81.1%
Computerized Rent Payment 78.3% 83.3% ** 80.0% ** ** ** 91.5% 90.0% 100.0% ** 87.4%
Kiosks 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
66.7% 87.9% 96.4% 100.0% 100.0%
66.7% 84.8% 96.4% 96.4% 100.0%
75.0% 75.8% 82.1% 85.7% 90.0%
75.0% 84.8% 85.7% 92.9% 100.0%
0.0% 0.0% 0.0% 0.0% 0.0%
70.8% 94.4% 100.0% 100.0% 100.0%
79.2% 88.9% 92.0% 100.0% 100.0%
75.0% 75.0% 84.0% 87.5% 100.0%
83.3% 77.8% 96.0% 93.8% 100.0%
0.0% 0.0% 0.0% 0.0% 0.0%
90.0% 100.0% 75.0%
86.0% 100.0% 75.0%
76.0% 91.1% 68.8%
86.0% 91.1% 81.3%
0.0% 0.0% 0.0%
100.0% 100.0% 81.8% 100.0% 94.1% 90.6% 92.1%
85.7% 100.0% 81.8% 100.0% 88.2% 90.6% 92.1%
85.7% 100.0% 54.5% 60.0% 76.5% 87.5% 86.8%
100.0% 100.0% 81.8% 80.0% 82.4% 90.6% 86.8%
0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
SiteInformation•6
The reports appear to indicate that larger multi-level facilities are more likely to have elevator access as well as stairs, and 100 percent of urban multi-story facilities reported elevator access with 28.6 percent also reporting stairs. In the suburban areas 57.1 percent reported elevator access and 85.7 percent reported access via stairs. Again the age of a facility does not appear to be significant except in the case of multi-level facilities constructed before 1981 which reported 100 percent access by elevators and stairs.
THE USE OF
ELECTRONIC AUTOMATIONS INCREASES THE LARGER A FACILITY IS AND ELECTRONICS ARE
FAR MORE UTILIZED IN URBAN AND SUBURBAN FACILITIES THAN IN RURAL FACILITIES. The reliability of the Facility Age table is limited by the limited number of responses. For example, the table would appear to indicate that 50 percent of the supply in B.C. was constructed in the last five years; in fact, the first facilities in the country were developed in B.C. and there has been very limited development in the past three years. It appears that the majority of respondents are from facilities which opened in 2001
and later. The supply in Canada, overall, is newer than that of the U.S., as self-storage development began 10 years later. However, the two time periods which are reporting the sparsest development coincide with the two last economic downturns, in the early 1980s and then in the early 1990s. The pattern of development is relatively consistent across the three market types. In general, Canadian self-storage facilities employ a much greater proportion of electronic automations than do U.S. facilities although these results may be skewed by the fact that more respondents were from newer facilities. Just over 90 percent of facilities nationally report electronic security (versus 62.6 percent in the U.S.); 91.9 percent do the accounting and bookkeeping electronically (69.5 percent in the U.S.); 90.1 percent have electronic access control (59.6 percent in the U.S.), 81.1 percent of lights are on electronic timers (58.2 percent in the U.S.) and 87.4 percent have computerized payments (63.1 percent in the U.S.). The most significant difference between the two national markets, however, is that kiosks have yet to arrive in the Canadian industry, whereas 2.7 percent of reporting U.S. facilities use kiosks (down from 4.3 percent in 2010). The use of electronic automations increases the larger a facility is and electronics are far more utilized in urban and suburban facilities than in rural facilities. Age does not appear to be a consistent factor in the use of electronics.
Unit Distribution The majority of units in the provinces and territories were in the 5-by-10 and 10-by-10 sizes, with Quebec, Ontario, British Columbia and New Brunswick taking the lion’s share of these units. The Northwest Territories
and Saskatchewan show spikes in usage of the 10-by-20 unit size, correlating with the size most used in rural areas. By facility size, the 10-by10 represented nearly 22.6 percent of all units nationally, and the bulk of these units in facilities under 50,000 square feet and 75,000 to 99,999 square feet. The runner up category
TABLE C6.9
only B.C. facilities reported lifts and drive-up ramps. Otherwise, three out of four provinces reported that 100 percent of the multiple level facilities were accessible by elevator.
PERCENTAGE OF FACILITIES WITH CLIMATE-CONTROLLED UNITS Provinces and Percentage Territories of Facilities Alberta 13% British Columbia 50% Manitoba ** New Brunswick 40% Newfoundland ** Northwest Territories ** Nunavut ** Ontario 55% Quebec 10% Saskatchewan 29% Yukon Territory ** NATIONAL 39% Number of Units 1 to 99 33% 100 to 299 12% 300 to 499 39% 500 to 999 57% 1,000 or more 80% Rentable Square Footage Less than 25,000 29% 25,000 to 49,999 28% 50,000 to 74,999 48% 75,000 to 99,999 44% 100,000 or more 70% Market Area Urban 42% Suburban 38% Rural 31% Year Facility Built Prior to 1981 29% 1981 to 1985 100% 1986 to 1990 18% 1991 to 1995 80% 1996 to 2000 35% 2001 to 2005 22% 2006 or after 55% **Insufficient data
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6•SiteInformation
TABLE C6.10
TYPE OF CLIMATE CONTROL USED BY REGION (PERCENTAGE OF FACILITIES) Type of Climate Control Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL
AC De-Humidifier 33.0% ** 11.0% ** ** ** 50.0% ** ** ** ** ** ** ** 50.0% ** ** ** ** 50.0% ** ** 37.0% 2.0%
Evap ** ** ** ** ** ** ** ** ** ** ** **
Humidifiers ** ** ** ** ** ** ** ** ** ** ** **
Cooling 33.0% ** ** ** ** ** ** 62.0% ** ** ** 40.0%
Heater 100.0% 89.0% ** 50.0% ** ** ** 88.0% 100.0% 50.0% ** 86.0%
Desiccant De-Humidification ** ** ** ** ** ** ** ** ** ** ** **
10X25 ** 5.4 ** 1.2 ** ** ** 3.6 ** 2.9 ** 2.6
10X30 0.2 4.9 ** 2.0 ** ** ** 0.3 ** 1.3 ** 1.2
**Insufficient data
TABLE C6.11
DISTRIBUTION OF CLIMATE-CONTROLLED UNITS BY REGION Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL
5X5 1.7 61.2 ** 9.0 ** ** ** 34.7 ** 2.9 ** 25.6
5X10 1.0 99.2 ** 10.4 ** ** ** 51.1 ** 4.0 ** 38.7
10X10 1.2 74.3 ** 8.0 ** ** ** 47.9 ** 2.9 ** 33.1
Unit Size 10X15 0.5 27.9 ** 5.0 ** ** ** 29.9 2.0 2.9 ** 17.9
10X20 2.0 19.1 ** 5.0 ** ** ** 9.9 1.9 2.9 ** 8.3
20X20 0.2 1.4 ** ** ** ** ** 0.1 ** ** ** 0.3
**Insufficient data
TABLE C6.12
PERCENTAGE DISTRIBUTION OF CLIMATE-CONTROLLED UNITS BY REGION Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL
5X5 25.6% 20.9% ** 22.2% ** ** ** 19.6% ** 14.6% ** 20.1%
**Insufficient data
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5X10 14.7% 33.8% ** 25.6% ** ** ** 28.8% ** 20.4% ** 30.3%
10X10 17.3% 25.3% ** 19.7% ** ** ** 27.0% ** 14.6% ** 26.0%
Unit Size 10X15 7.7% 9.5% ** 12.3% ** ** ** 16.8% 51.3% 14.6% ** 14.0%
10X20 28.9% 6.5% ** 12.3% ** ** ** 5.6% 48.7% 14.6% ** 6.5%
10X25 0.0% 1.8% ** 3.0% ** ** ** 2.0% ** 14.6% ** 2.1%
10X30 3.2% 1.7% ** 4.9% ** ** ** 0.2% ** 6.6% ** 0.9%
20X20 2.6% 0.5% ** ** ** ** ** 0.1% ** ** ** 0.2%
SiteInformation•6
is the 5-by-10 unit which constitutes 22.5 percent of all units, and leads in the 100,000 square foot and more facilities as well as the 50,000 to 74,999 square foot facilities. The distribution of climate control units by region appears to indicate that there are much fewer climatecontrolled units, overall, in Alberta, Saskatchewan, and Quebec and of the two provinces (B.C. and Ontario) which report significant use of climate control the major use is in the small and mid-sized units, particularly in B.C. The results, overall, are limited by the insufficient data from the majority of the provinces.
The percentage distribution reports appear to be more reliable, particularly by comparison to the U.S. sta-
tistics, although in general there are far fewer larger units available with climate control (sizes of 10-by-20 and larger) than there are in the U.S.
THE
NATIONAL PERCENT OF FACILITIES WITH
CLIMATE-CONTROLLED UNITS IS 39 PERCENT...
The national percent of facilities with climate-controlled units is 39 percent, in contrast to the 67.9 percent in the U.S. Climate control is more prevalent in the largest facility size, with 80 percent of facilities with 1,000 or more units reporting climate control, and 70 percent of facilities 100,000 square feet and larger offering climate control. In the U.S., the same size ranges reported 66.7 percent and 87.8 percent, respectively. Climate control is more prevalent
TABLE C6.13
DISTRIBUTION OF UNITS BY REGION Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL
5X5 12 111 ** 27 ** 8 ** 62 69 21 ** 56
5X10 45 174 ** 42 ** 30 ** 105 117 54 ** 98
10X10 59 155 ** 36 ** 8 ** 104 122 74 ** 98
Unit Size 10X15 10X20 49 63 57 74 ** ** 22 22 ** ** 46 124 ** ** 58 62 76 44 78 84 ** ** 57 63
10X25 17 14 ** 6 ** 0 ** 14 16 6 ** 14
10X30 21 17 ** 5 ** 29 ** 8 15 17 ** 13
20X20 1 4 ** 0 ** 0 ** 1 1 0 ** 1
Other 49 84 ** 13 ** 103 ** 21 13 10 ** 36
20X20 0.2% 0.6% ** 0.0% ** 0.0% ** 0.3% 0.1% 0.0% ** 0.3%
Other 15.5% 12.2% ** 7.7% ** 29.6% ** 4.7% 2.8% 2.9% ** 8.2%
**Insufficient data
TABLE C6.14
PERCENTAGE DISTRIBUTION OF UNITS BY REGION Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL
5X5 3.7% 16.1% ** 15.6% ** 2.3% ** 14.3% 14.6% 6.0% ** 12.7%
5X10 14.2% 25.2% ** 24.0% ** 8.6% ** 24.2% 24.8% 15.8% ** 22.5%
10X10 18.6% 22.5% ** 20.9% ** 2.3% ** 23.8% 25.8% 21.4% ** 22.6%
Unit Size 10X15 10X20 15.7% 20.1% 8.2% 10.7% ** ** 12.8% 12.5% ** ** 13.2% 35.6% ** ** 13.4% 14.3% 16.1% 9.3% 22.8% 24.4% ** ** 13.1% 14.4%
10X25 5.3% 2.1% ** 3.6% ** 0.0% ** 3.2% 3.3% 1.7% ** 3.1%
10X30 6.6% 2.4% ** 3.0% ** 8.3% ** 1.9% 3.1% 5.0% ** 3.1%
**Insufficient data
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in urban (42 percent) and suburban (38 percent) areas, although 31 percent of rural properties also provide some climate control. In the U.S., climate control is more likely in urban facilities (77.5 percent), followed by suburban facilities (65.0 percent) and rural properties (60.6 percent). There is very little correla-
THERE IS VERY LITTLE CORRELATION BETWEEN THE
AGE OF FACILITY AND
CLIMATE CONTROL REFLECTED BY THE CANADIAN STATISTICS.
tion between the age of facility and climate control reflected by the Canadian statistics. As seen in Table C6.10 on page 170, the predominant form of climate control used in Canada is heating (86 percent) followed by cooling at 40 percent. The most utilized form of climate control in the U.S. is air conditioning (55.1 percent) followed by heating (33.5 percent); air conditioning is relatively rare in Canada (37 percent). There are no reports of the use of evaporation, humidifiers or desiccant dehumidification. The percentage distribution of storage units by region indicates that Canadian facilities, in general, have more units in the smaller cat-
egories than those of the U.S. while being consistent with U.S. statistics in the larger unit sizes. B.C., New Brunswick, Ontario, and Quebec have unit distribution profiles consis-
AGE OF THE FACILITY
DOES NOT APPEAR TO BE A FACTOR IN UNIT DISTRIBUTION. tent with the national profile while Alberta and Saskatchewan are weighted toward the mid-sized units and the Northwest Territory facility has more larger units, particularly 10-by-20s. The urban and suburban self-storage facilities generally follow a consistent profile with the national
TABLE C6.15
PERCENTAGE DISTRIBUTION OF UNITS BY SQUARE FOOTAGE Square Footage Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99,999 100,000 or more NATIONAL
5X5 9.9% 7.6% 10.2% 16.4% 17.8% 12.7%
5X10 20.5% 19.6% 20.2% 24.1% 26.6% 22.5%
10X10 24.0% 20.5% 18.8% 24.4% 26.3% 22.6%
Unit Size 10X15 10X20 16.2% 18.0% 10.3% 16.6% 16.2% 18.4% 15.4% 12.1% 9.9% 9.2% 13.1% 14.4%
10X25 2.7% 2.7% 3.5% 3.3% 3.1% 3.1%
10X30 3.5% 4.3% 3.5% 1.6% 2.6% 3.1%
20X20 0.7% 0.0% 0.2% 0.2% 0.7% 0.3%
Other 4.5% 18.3% 9.1% 2.6% 3.8% 8.2%
10X25 3.7% 2.9% 1.4%
10X30 3.2% 2.8% 4.2%
20X20 0.3% 0.4% 0.0%
Other 8.0% 6.5% 19.3%
10X25 6.6% 0.0% 3.1% 5.0% 4.3% 2.2% 2.2%
10X30 1.8% 0.0% 1.6% 4.4% 5.2% 4.6% 1.3%
20X20 0.2% 0.0% 0.1% 0.9% 0.8% 0.1% 0.1%
Other 5.4% 33.2% 6.0% 0.4% 11.2% 9.4% 7.7%
TABLE C6.16
PERCENTAGE DISTRIBUTION OF UNITS BY MARKET AREA Market Area Urban Suburban Rural
5X5 14.3% 12.5% 6.0%
5X10 20.8% 25.6% 13.5%
10X10 22.5% 23.2% 19.5%
Unit Size 10X15 10X20 13.8% 13.5% 12.0% 14.2% 16.1% 20.0%
TABLE C6.17
PERCENTAGE DISTRIBUTION OF UNITS BY YEAR FACILITY BUILT
172
Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after
5X5 13.7% 16.6% 12.0% 12.2% 14.4% 9.0% 14.3%
Self-Storage Almanac 2012
5X10 24.4% 17.8% 24.5% 19.2% 21.0% 19.4% 25.1%
10X10 23.6% 2.1% 24.6% 19.9% 22.4% 20.8% 23.7%
Unit Size 10X15 10X20 12.1% 12.3% 13.3% 17.0% 15.6% 12.6% 20.7% 17.3% 9.2% 11.6% 12.9% 21.5% 13.8% 11.8%
SiteInformation•6
As seen in Table C6.18, there are only three provinces which provide sufficient data with respect to apartments on site and of these three over 55 percent of the respondents from B.C. reported that an apartment was present. By size, it appears that the smaller the facility the more likely that there will be a residential unit on site.
IT SEEMS THAT THE LARGER THE CANADIAN FACILITY THE GREATER LIKELIHOOD OF INCIDENTS...
incidents annually. In the U.S., 85.6 percent of facilities reported incidents with an average number of incidents at 9.1 annually. It seems that the larger the Canadian facility the greater likelihood of incidents and the greater number of incidents. Of suburban facilities, 95.6 percent reported incidents but urban facilities reported a slightly higher number of incidents. Age does not seem to be a significant factor.
SALE AND DISPOSAL OF DELINQUENT TENANT GOODS
Percentage of Facilities With Provinces and An Apartment Territories On Site Alberta 17.4% British Columbia 55.6% Manitoba ** New Brunswick ** Newfoundland ** Northwest Territories ** Nunavut ** Ontario 2.1% Quebec ** Saskatchewan ** Yukon Territory ** NATIONAL 13.5% Number of Units 1 to 99 33.3% 100 to 299 24.2% 300 to 499 3.6% 500 to 999 3.6% 1,000 or more 10.0% Rentable Square Footage Less than 25,000 20.8% 25,000 to 49,999 19.4% 50,000 to 74,999 8.0% 75,000 to 99,999 0.0% 100,000 or more 10.0%
Provinces and Percentage of Facilities Territories Reporting Incidents Alberta 87.0% British Columbia 88.9% Manitoba ** New Brunswick 80.0% Newfoundland ** Northwest Territories 100.0% Nunavut ** Ontario 89.4% Quebec 90.0% Saskatchewan 100.0% Yukon Territory ** NATIONAL 89.2% Number of Units 1 to 99 33.3% 100 to 299 90.9% 300 to 499 96.4% 500 to 999 100.0% 1,000 or more 100.0% Rentable Square Footage Less than 25,000 62.5% 25,000 to 49,999 91.7% 50,000 to 74,999 100.0% 75,000 to 99,999 100.0% 100,000 or more 100.0% Market Area Urban 88.0% Suburban 95.6% Rural 75.0% Year Facility Built Prior to 1981 100.0% 1981 to 1985 100.0% 1986 to 1990 81.8% 1991 to 1995 100.0% 1996 to 2000 94.1% 2001 to 2005 96.9% 2006 or after 78.9%
** Insufficient data
** Insufficient data
As seen in Table C6.19, an average of 89.2 percent of all responding facilities reported incidents of
TABLE C6.18
sales and disposal of delinquent tenant good with an average of 8.4
TABLE C6.19
profile however rural facilities are weighted toward the mid to larger sized units (10-by-15s and 10-by-20s). Age of the facility does not appear to be a factor in unit distribution.
PERCENTAGE OF FACILITIES WITH AN APARTMENT ON SITE
Average Number of Incidents 8.4 7.7 ** 4.0 25.6 6.0 ** 7.6 12.2 11.9 ** 8.4 3.5 6.0 9.0 11.0 8.3 9.3 6.8 8.4 10.7 8.4 8.9 8.7 5.3 12.9 4.0 11.0 19.0 7.9 6.4 7.2
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6•SiteInformation
Table C6.20 gives insight as to the trends in delinquency prevention at Canadian facilities. As seen in the table, regarding the prevention of delinquency, Canadian selfstorage facilities are far more likely to use regular billing statements (76.6 percent) and automatic electronic payments (78.4 percent) than their American counterparts (66.3 percent and 65.5 percent) and are
...CANADIAN
more likely to post notices (64.9 percent) than the U.S. facilities (56.4 percent). Otherwise the use of late fees, lien sale warnings, and notice of legal action is similar to that in the U.S. The largest facilities as well as those in suburban locations are most likely to use each of the delinquency prevention actions.
SELF-STORAGE FACILITIES ARE FAR MORE LIKELY TO
USE REGULAR BILLING STATEMENTS...
TABLE C6.20
DELINQUENCY PREVENTION BY REGION (PERCENTAGE OF FACILITIES) Preventative Measures Regular Provinces and Billing Territories Statements Alberta 69.6% British Columbia 77.8% Manitoba ** New Brunswick 40.0% Newfoundland ** Northwest Territories 100.0% Nunavut ** Ontario 80.9% Quebec 80.0% Saskatchewan 85.7% Yukon Territory ** NATIONAL 76.6%
Automatic/ Electronic Payment 60.9% 72.2% ** 80.0% ** 100.0% ** 83.0% 90.0% 100.0% ** 78.4%
Late Fees 87.0% 100.0% ** 60.0% ** 100.0% ** 97.9% 90.0% 100.0% ** 93.7%
Lien Sale Warning 87.0% 88.9% ** 80.0% ** 100.0% ** 91.5% 80.0% 100.0% ** 89.2%
Posted Notices 56.5% 55.6% ** 20.0% ** ** ** 74.5% 70.0% 85.7% ** 64.9%
Notice of Legal Action 65.2% 72.2% ** 20.0% ** 100.0% ** 83.0% 70.0% 85.7% ** 73.9%
Other 21.7% 27.8% ** 40.0% ** ** ** 10.6% ** ** ** 15.3%
None ** ** ** ** ** ** ** ** ** ** ** **
Other 8.3% 24.2% 3.6% 14.3% 30.0%
None ** ** ** ** **
Other 12.0% 17.8% 18.8%
None ** ** **
** Insufficient data
TABLE C6.21
DELINQUENCY PREVENTION BY NUMBER OF UNITS (PERCENTAGE OF FACILITIES) Preventative Measures Number of Units 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more
Regular Billing Statements 58.3% 72.7% 82.1% 78.6% 90.0%
Automatic/ Electronic Payment 41.7% 69.7% 89.3% 85.7% 100.0%
Late Fees 66.7% 90.9% 100.0% 100.0% 100.0%
Lien Sale Warning 66.7% 90.9% 85.7% 100.0% 90.0%
Posted Notices 50.0% 51.5% 78.6% 67.9% 80.0%
Notice of Legal Action 41.7% 69.7% 85.7% 78.6% 80.0%
** Insufficient data
TABLE C6.22
DELINQUENCY PREVENTION BY MARKET AREA (PERCENTAGE OF FACILITIES) Preventative Measures Market Area Urban Suburban Rural
Regular Billing Statements 76.0% 86.7% 50.0%
** Insufficient data
174
Self-Storage Almanac 2012
Automatic/ Electronic Payment 76.0% 86.7% 62.5%
Late Fees 96.0% 93.3% 87.5%
Lien Sale Warning 84.0% 95.6% 87.5%
Posted Notices 62.0% 80.0% 31.3%
Notice of Legal Action 70.0% 84.4% 56.3%
Security•7
F
OWNERS, OPERATORS, AND MANAGERS OF SELF-STORAGE FACILITIES CAN ALSO
HELP TO REDUCE CRIME BY EMPLOYING SOME
BASIC TACTICS... Oftentimes self-storage is seen as an attractive target for criminal activity due to the fact that it offers discreet comings and goings coupled with the storage of personal property. Criminals are opportunists who take advantage of situations that offer anonymity and easy access to goods. Undoubtedly, the best time to install proper security at a facility is during the planning and development stage. That having been said, existing self-storage facilities can be retrofitted and enhanced with upto-date security components at any given time.
Today’s self-storage security systems can vary from site to site. For some older facilities, security may be as basic as perimeter fencing. On the other hand, more substantial security at facilities can include components ranging from individual unit door alarms and adequate lighting to electronic access and video monitoring systems.
As seen in Table C7.1, those facilities with 300 or more units reported an average of 3.0 incidents per facility, while facilities with between 100 and 299 units reported an average of 1.5 incidents per site. And while 33.3 percent of the facilities with that number of units reported criminal activity, 50 percent of those sites with less
THEFTS AND BREAK-INS Owners, operators, and managers of self-storage facilities can also help to reduce crime by employing some basic tactics such as making sure that adequate padlocks are used and scrutinizing new customers. Rental agreements can also offer added protection by using verbiage that allows managers to take action should they suspect that a tenant is engaged in illegal activity or is storing hazardous materials. Remember: Being proactive is essential.
Looking At The Data As seen in Table C7.1, 27.9 percent of Canadian self-storage facilities reported theft and or break-ins in 2011. This is in strong contrast to the 7 percent of U.S. properties in 2010. The average number of incidents of thefts and/or break-ins at a facility was 2.4 on a national basis. Storage facilities located in B.C. had a significantly higher percentage of facilities affected by this activity with 66.7 percent of responding facilities reporting incidents. In terms of the average number of incidents, those facilities in B.C. reported an average of 2.3, while the province with the highest average number of incidents was in Saskatchewan (4.0). In general, the smaller the facility, the more likely it was to have experienced theft and/or break-ins—a finding that mirrors the U.S. situation.
TABLE C7.1
or self-storage customers, security has become an expectation—they are paying rent to keep their belongings in a storage unit where they will be kept safe. In fact, studies conducted in the U.S. clearly indicate that one of the top three influencers in choosing a self-storage facility is the perception of security, with customer convenience and curb appeal being the other two.
Percentage Average of Facilities Number Provinces and Reporting of Territories Incidents Incidents Alberta 34.8% 2.8 British Columbia 66.7% 2.3 Manitoba ** ** New Brunswick 20.0% 1.0 Newfoundland ** ** Northwest Territories ** ** Nunavut ** ** Ontario 14.9% 2.6 Quebec 20.0% 1.5 Saskatchewan 14.3% 4.0 Yukon Territory ** ** NATIONAL 27.9% 2.4 Number of Units 1 to 99 50.0% 2.5 100 to 299 33.3% 1.5 300 to 499 7.1% 3.0 500 to 999 32.1% 3.4 1,000 or more 30.0% 2.0 Rentable Square Footage Less than 25,000 45.8% 2.5 25,000 to 49,999 22.2% 1.4 50,000 to 74,999 20.0% 2.8 75,000 to 99,999 25.0% 3.3 100,000 or more 30.0% 3.0 Market Area Urban 32.0% 2.4 Suburban 15.6% 3.0 Rural 50.0% 1.9 Year Facility Built Prior to 1981 14.3% 4.0 1981 to 1985 ** ** 1986 to 1990 18.2% 2.5 1991 to 1995 40.0% 3.5 1996 to 2000 29.4% 2.4 2001 to 2005 28.1% 2.1 2006 or after 31.6% 2.3 **Insufficient data
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7•Security
than 100 units reported some type of criminal activity.
A SIGNIFICANTLY
HIGHER PROPORTION
A significantly higher proportion of rurally located facilities reported incidents (50 percent), although the average number of incidents was
OF RURALLY LOCATED FACILITIES REPORTED INCIDENTS...
higher in suburban facilities (3.0). The newer facilities reported more criminal activity with the incidence particularly high in the 1991 to 1995 age category (40 percent) which also reported one of the highest average number of incidents at 3.5.
TABLE C7.2
SECURITY MEASURES USED BY REGION Perimeter Cameras/ Security Provinces and Fencing Video Motion Patrol Guard Territories Walls Surveillence Detectors Service Dogs Alberta 91.3% 82.6% 30.4% 13.0% ** British Columbia 94.4% 88.9% 61.1% 38.9% 5.6% Manitoba ** ** ** ** ** New Brunswick 80.0% 80.0% 40.0% ** ** Newfoundland ** ** ** ** ** Northwest Territories 100.0% ** ** ** ** Nunavut ** ** ** ** ** Ontario 97.9% 95.7% 21.3% 8.5% 2.1% Quebec 90.0% 100.0% 10.0% ** ** Saskatchewan 100.0% 100.0% 14.3% 14.3% ** Yukon Territory ** ** ** ** ** NATIONAL 94.6% 91.0% 28.8% 13.5% 1.8%
Wired Door Alarms 56.5% 33.3% ** 80.0% ** ** ** 8.5% 10.0% 14.3% ** 26.1%
Preventative Measures Wireless Door Computerized Tenant Tenant Alarms Gate Access Photo ID Fingerprinting 34.8% 82.6% 13.0% ** 11.1% 77.8% 44.4% ** ** ** ** ** ** 80.0% ** ** ** ** ** ** ** 100.0% ** ** ** ** ** ** 8.5% 34.0% 8.5% ** ** 10.0% 10.0% ** ** 28.6% 14.3% ** ** ** ** ** 12.6% 51.4% 15.3% 0.0%
Padlock Local Crime Digital Security Restrictive Prevention Video Background Stickers Signage Program Recorder Checks Biometrics 56.5% 60.9% 8.7% 26.1% 4.3% ** 5.6% 50.0% 16.7% 72.2% ** ** ** ** ** ** ** ** 20.0% ** 20.0% 60.0% ** ** ** ** ** ** ** ** ** ** ** ** ** ** ** ** ** ** ** ** 76.6% 78.7% 4.3% 23.4% ** ** 70.0% 70.0% 0.0% 20.0% ** ** 85.7% 71.4% 14.3% ** ** ** ** ** ** ** ** ** 57.7% 64.9% 8.1% 31.5% 0.9% 0.0%
**Insufficient data
TABLE C7.3
SECURITY MEASURES BASED ON SQUARE FOOTAGE (PERCENTAGE OF FACILITIES) Perimeter Cameras/ Security Rentable Fencing Video Motion Patrol Guard Square Footage Walls Surveillence Detectors Service Dogs Less than 25,000 70.8% 58.3% 4.2% ** ** 25,000 to 49,999 83.3% 66.7% 16.7% ** ** 50,000 to 74,999 84.0% 60.0% 4.0% ** ** 75,000 to 99,999 68.8% 75.0% 6.3% 6.3% ** 100,000 or more 70.0% 60.0% ** ** ** All Sizes 77.5% 64.0% 8.1% 0.9% 0.0%
Wired Door Alarms 4.2% 5.6% ** ** ** 2.7%
Preventative Measures Wireless Door Computerized Tenant Tenant Alarms Gate Access Photo ID Fingerprinting ** 54.2% 8.3% ** ** 44.4% 11.1% ** ** 28.0% 4.0% ** ** 31.3% ** ** ** 30.0% ** ** 0.0% 39.6% 6.3% 0.0%
Padlock Security Stickers 16.7% 8.3% 12.0% 12.5% ** 10.8%
Local Crime Digital Restrictive Prevention Video Background Signage Program Recorder Checks Biometrics 16.7% 4.2% 33.3% ** ** 16.7% ** 5.6% ** ** 40.0% 4.0% 12.0% ** ** 31.3% ** 6.3% ** ** 40.0% ** 10.0% ** ** 26.1% 1.8% 13.5% 0.0% 0.0%
**Insufficient data
TABLE C7.4
SECURITY MEASURES BASED ON NUMBER OF UNITS (PERCENTAGE OF FACILITIES) Perimeter Cameras/ Security Fencing Video Motion Patrol Guard Number of Units Walls Surveillence Detectors Service Dogs 1 to 99 58.3% 58.3% ** ** ** 100 to 299 75.8% 54.5% 15.2% ** ** 300 to 499 92.9% 78.6% 7.1% ** ** 500 to 999 75.0% 67.9% 7.1% 3.6% ** 1,000 or ,more 70.0% 50.0% ** ** ** All Sizes 77.5% 64.0% 8.1% 0.9% 0.0% **Insufficient data
176
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Wired Door Alarms ** 3.0% 7.1% ** ** 2.7%
Preventative Measures Wireless Door Computerized Tenant Tenant Alarms Gate Access Photo ID Fingerprinting ** 50.0% ** ** ** 42.4% 12.1% ** ** 46.4% 10.7% ** ** 28.6% ** ** ** 30.0% ** ** 0.0% 39.6% 6.3% 0.0%
Padlock Security Stickers ** 18.2% 14.3% 7.1% ** 10.8%
Local Crime Digital Restrictive Prevention Video Background Signage Program Recorder Checks Biometrics 8.3% 8.3% 41.7% ** ** 15.2% ** 15.2% ** ** 32.1% ** 3.6% ** ** 35.7% 3.6% 14.3% ** ** 40.0% ** ** ** ** 26.1% 1.8% 13.5% 0.0% 0.0%
Security•7
According to the data in Table C7.2, the most utilized security measure in Canadian facilities is perimeter fencing (94.6 percent) followed closely by camera/video surveillance (91.0 percent). American facilities also prefer perimeter fencing (88.6 percent) but are less likely to have camera/video surveillance
(83.1 percent). Moreover, American facilities are more likely to have computerized gate access (78.1 percent) than Canadian properties (51.4 percent). Canadians also rely on restrictive signage (64.9 percent) and padlock security stickers (57.7 percent) more than Americans (19.6 percent and 11.9 percent).
facilities with less than 100 units utilize perimeter fencing. Comparatively, those facilities built prior to 1996 show the highest percentage of perimeter fencing for security.
COMPARATIVELY, THOSE FACILITIES BUILT
PRIOR TO 1996
Survey results also indicate that Canadian facilities are much less likely to do background checks (.9 percent) or employ guard dogs (1.8 percent) than American facilities. And fingerprinting tenants in the Canadian market is virtually nonexistent. In contrast, Canadian facilities are more likely to have either wired or unwired door alarms.
SURVEY RESULTS ALSO INDICATE THAT
CANADIAN FACILITIES ARE MUCH
LESS LIKELY
When comparing survey results by the number of units, 92.9 percent of those facilities with between 300 and 499 units utilize perimeter fencing while only 58.3 percent of those
TO DO BACKGROUND CHECKS...
SHOW THE
HIGHEST PERCENTAGE OF PERIMETER FENCING FOR SECURITY. Other Types Of Crimes In terms of other physical crimes, as seen in Table C7.7, the data received from most provinces and territories is insufficient on a national
TABLE C7.5
SECURITY MEASURES BASED ON YEAR FACILITY BUILT (PERCENTAGE OF FACILITIES)
Year Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after All Sizes
Perimeter Cameras/ Fencing Video Walls Surveillance 71.4% 71.4% 100.0% 100.0% 90.9% 63.6% 100.0% 40.0% 88.2% 70.6% 78.1% 65.6% 65.8% 60.5% 77.5% 64.0%
Motion Detectors 14.3% 100.0% 9.1% ** 5.9% 9.4% 5.3% 8.1%
Security Patrol Service ** ** ** ** ** ** 2.6% 0.9%
Wired Guard Door Dogs Alarms ** 14.3% ** ** ** ** ** ** ** 5.9% ** ** ** 2.6% 0.0% 2.7%
Preventative Measures Wireless Door Computerized Tenant Tenant Alarms Gate Access Photo ID Fingerprinting ** 42.9% 14.3% ** ** ** ** ** ** 27.3% 9.1% ** ** 60.0% 20.0% ** ** 64.7% ** ** ** 34.4% 6.3% ** ** 34.2% 5.3% ** 0.0% 39.6% 6.3% 0.0%
Padlock Security Stickers 28.6% ** 9.1% ** 17.6% 6.3% 10.5% 10.8%
Local Crime Digital Restrictive Prevention Video Background Signage Program Recorder Checks Biometrics 42.9% ** 14.3% ** ** ** ** ** ** ** 27.3% ** 9.1% ** ** 20.0% ** ** ** ** 35.3% ** 5.9% ** ** 18.8% ** 9.4% ** ** 26.3% 5.3% 23.7% ** ** 26.1% 1.8% 13.5% 0.0% 0.0%
**Insufficient data
TABLE C7.6
SECURITY MEASURES BASED ON MARKET AREA (PERCENTAGE OF FACILITIES)
Market Area Urban Suburban Rural All Sizes
Perimeter Cameras/ Security Fencing Video Motion Patrol Guard Walls Surveillance Detectors Service Dogs 78.0% 68.0% 8.0% ** ** 75.6% 62.2% 2.2% 2.2% ** 81.3% 56.3% 25.0% ** ** 77.5% 64.0% 8.1% 0.9% 0.0%
Wired Door Alarms 4.0% ** 6.3% 2.7%
Preventative Measures Wireless Door Computerized Tenant Tenant Alarms Gate Access Photo ID Fingerprinting 0.0% 38.0% 8.0% ** 0.0% 31.1% 4.4% ** 0.0% 68.8% 6.3% ** 0.0% 39.6% 6.3% 0.0%
Padlock Security Stickers 10.0% 15.6% ** 10.8%
Local Crime Digital Restrictive Prevention Video Background Signage Program Recorder Checks Biometrics 24.0% 2.0% 14.0% ** ** 37.8% ** 13.3% ** ** ** 6.3% 12.5% ** ** 26.1% 1.8% 13.5% 0.0% 0.0%
**Insufficient data
2012 Self-Storage Almanac
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7•Security
MOST
basis to make a definitive conclusion. According to the majority of the data received, 22.2 percent of the facilities surveyed in B.C. indicated that they had experienced some sort of “other” criminal activity, which includes vandalism, trespassing, and
GRAFFITI CRIMES APPEAR TO OCCUR AT
NEWER FACILITIES... GRAFFITI CRIMES
EMPLOYEE THEFT & FRAUD
Percentage Average of Facilities Number Provinces and Reporting of Territories Incidents Incidents Alberta ** ** British Columbia 22.2% 4 Manitoba ** ** New Brunswick ** ** Newfoundland ** ** Northwest Territories ** ** Nunavut ** ** Ontario 2.1% 1 Quebec ** ** Saskatchewan ** ** Yukon Territory ** ** NATIONAL 4.5% 5 Number of Units 1 to 99 8.3% 1 100 to 299 ** ** 300 to 499 ** ** 500 to 999 3.6% 1 1,000 or more 30.0% 3 Rentable Square Footage Less than 25,000 4.2% 1 25,000 to 49,999 ** ** 50,000 to 74,999 ** ** 75,000 to 99,999 12.5% 2 100,000 or more 20.0% 2 Market Area Urban 6.0% 3 Suburban 4.4% 2 Rural ** ** Year Facility Built Prior to 1981 ** ** 1981 to 1985 ** ** 1986 to 1990 9.1% 1 1991 to 1995 ** ** 1996 to 2000 11.8% 2 2001 to 2005 ** ** 2006 or after 5.3% 2
Percentage Average of Facilities Number Provinces and Reporting of Territories Incidents Incidents Alberta 4.3% 1 British Columbia 44.4% 8 Manitoba ** ** New Brunswick ** ** Newfoundland ** ** Northwest Territories ** ** Nunavut ** ** Ontario ** ** Quebec 10.0% 1 Saskatchewan ** ** Yukon Territory ** ** NATIONAL 9.0% 10 Number of Units 1 to 99 41.7% 5 100 to 299 3.0% 1 300 to 499 7.1% 2 500 to 999 3.6% 1 1,000 or more 10.0% 1 Rentable Square Footage Less than 25,000 20.8% 5 25,000 to 49,999 2.8% 1 50,000 to 74,999 12.0% 3 75,000 to 99,999 ** ** 100,000 or more 10.0% 1 Market Area Urban 10.0% 5 Suburban 4.4% 2 Rural 18.8% 3 Year Facility Built Prior to 1981 ** ** 1981 to 1985 ** ** 1986 to 1990 ** ** 1991 to 1995 ** ** 1996 to 2000 5.9% 1 2001 to 2005 9.4% 3 2006 or after 15.8% 6
Percentage Average of Facilities Number Provinces and Reporting of Territories Incidents Incidents Alberta 13.0% 3 British Columbia ** ** Manitoba ** ** New Brunswick ** ** Newfoundland ** ** Northwest Territories ** ** Nunavut ** ** Ontario 17.0% 8 Quebec 10.0% 1 Saskatchewan 14.3% 1 Yukon Territory ** ** NATIONAL 11.7% 13 Number of Units 1 to 99 8.3% 1 100 to 299 9.1% 3 300 to 499 3.6% 1 500 to 999 28.6% 8 1,000 or more ** ** Rentable Square Footage Less than 25,000 20.8% 5 25,000 to 49,999 5.6% 2 50,000 to 74,999 12.0% 3 75,000 to 99,999 18.8% 3 100,000 or more ** ** Market Area Urban 14.0% 7 Suburban 6.7% 3 Rural 18.8% 3 Year Facility Built Prior to 1981 ** ** 1981 to 1985 ** ** 1986 to 1990 27.3% 3 1991 to 1995 40.0% 2 1996 to 2000 5.9% 1 2001 to 2005 12.5% 4 2006 or after 7.9% 3
**Insufficient data
178
Self-Storage Almanac 2012
**Insufficient data
TABLE C7.9
(VANDALISM, TRESPASSING, DISORDERLY CONDUCT, ETC.)
TABLE C7.8
TABLE C7.7
OTHER PHYSICAL CRIMES
disorderly conduct. Among those self-storage facilities reporting, there was an average of four incidents reported over the last year. Ontario, on the other hand, reported that 2.1 percent of its self-storage facilities experienced this type of crime with an average on one incident per year.
**Insufficient data
Security•7
RENTABLE SQUARE FOOTAGE AND
NUMBER OF UNITS, LARGER FACILITIES CLEARLY EXPERIENCED A
HIGHER RATE OF THESE TYPES OF CRIME. summarized by total number of units, 30 percent of those sites with more than 1,000 units indicated crimes, averaging three incidents per year. As with other physical crimes, most provinces and territories reported very little in terms of graffiti crimes. Once again, B.C. reported the highest rate (44.4 percent) with an average of eight incidents per year. Ten percent of the facilities in Quebec reported graffiti crimes with an average of one incident, while 4.3 percent of the facilities in Alberta reported an average of one incident per year. Again, those facilities with the 1,000 or more units and 100,000 or more rentable square footage indicated high percentages. Most graffiti crimes appear to occur at newer facilities (15.8 percent) in rural areas (18.8 percent).
INCIDENTS OF CUSTOMERINITIATED LAWSUITS Percentage Average of Facilities Number Provinces and Reporting of Territories Incidents Incidents Alberta ** ** British Columbia 5.6% 1 Manitoba ** ** New Brunswick ** ** Newfoundland ** ** Northwest Territories ** ** Nunavut ** ** Ontario ** ** Quebec ** ** Saskatchewan ** ** Yukon Territory ** ** NATIONAL 0.9% 1 Number of Units 1 to 99 ** ** 100 to 299 ** ** 300 to 499 ** ** 500 to 999 3.6% 1 1,000 or more ** ** Rentable Square Footage Less than 25,000 ** ** 25,000 to 49,999 ** ** 50,000 to 74,999 4.0% 1 75,000 to 99,999 ** ** 100,000 or more ** ** Market Area Urban 2.0% 1 Suburban ** ** Rural ** ** Year Facility Built Prior to 1981 ** ** 1981 to 1985 ** ** 1986 to 1990 ** ** 1991 to 1995 ** ** 1996 to 2000 ** ** 2001 to 2005 ** ** 2006 or after 2.6% 1 **Insufficient data
lates with the data in facilities served search warrants. Ontario reported the most such incidents, as did the rural category and facilities with 500 to 999 units. Canadian facilities are reporting a higher amount of incidents
TABLE C7.11
...IN TERMS OF
According to the data in Table C7.9, the incidence of employee theft and fraud was much higher in Canada in 2011 with 11.7 percent of all facilities reporting these crimes by comparison to 0.5 percent of U.S. facilities in 2010. The breakdown of employee theft and fraud corre-
TABLE C7.10
When looking at this data in terms of rentable square footage and number of units, larger facilities clearly experienced a higher rate of these types of crime. For facilities larger than 100,000 rentable square feet, 20 percent indicated that they experienced these crimes, averaging two incidents per year. When
INCIDENTS OF CUSTOMER FRAUD/DECEPTION Percentage Average of Facilities Number Provinces and Reporting of Territories Incidents Incidents Alberta 39.1% 9 British Columbia 27.8% 5 Manitoba ** ** New Brunswick ** ** Newfoundland ** ** Northwest Territories ** ** Nunavut ** ** Ontario 4.3% 2 Quebec 10.0% 1 Saskatchewan 14.3% 1 Yukon Territory ** ** NATIONAL 16.2% 18 Number of Units 1 to 99 33.3% 4 100 to 299 15.2% 5 300 to 499 3.6% 1 500 to 999 25.0% 7 1,000 or more 10.0% 1 Rentable Square Footage Less than 25,000 29.2% 7 25,000 to 49,999 5.6% 2 50,000 to 74,999 12.0% 3 75,000 to 99,999 31.3% 5 100,000 or more 10.0% 1 Market Area Urban 14.0% 7 Suburban 15.6% 7 Rural 25.0% 4 Year Facility Built Prior to 1981 ** ** 1981 to 1985 ** ** 1986 to 1990 9.1% 1 1991 to 1995 ** ** 1996 to 2000 17.6% 3 2001 to 2005 18.8% 6 2006 or after 21.1% 8 **Insufficient data
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7•Security
SERVED WITH SEARCH WARRANT/SUBPOENA Percentage Average of Facilities Number Provinces and Reporting of Territories Incidents Incidents Alberta 13.0% 3 British Columbia ** ** Manitoba ** ** New Brunswick ** ** Newfoundland ** ** Northwest Territories ** ** Nunavut ** ** Ontario 17.0% 8 Quebec 10.0% 1 Saskatchewan 14.3% 1 Yukon Territory ** ** NATIONAL 11.7% 13 Number of Units 1 to 99 8.3% 1 100 to 299 9.1% 3 300 to 499 3.6% 1 500 to 999 28.6% 8 1,000 or more ** ** Rentable Square Footage Less than 25,000 20.8% 5 25,000 to 49,999 5.6% 2 50,000 to 74,999 12.0% 3 75,000 to 99,999 18.8% 3 100,000 or more ** ** Market Area Urban 14.0% 7 Suburban 6.7% 3 Rural 18.8% 3 Year Facility Built Prior to 1981 ** ** 1981 to 1985 ** ** 1986 to 1990 27.3% 3 1991 to 1995 40.0% 2 1996 to 2000 5.9% 1 2001 to 2005 12.5% 4 2006 or after 7.9% 3 **Insufficient data
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facilities reported a incidences of customer fraud as did facilities built after 2006. Sparse data preclude analysis of customer initiated lawsuits in Canada but over 11 percent of Canadian self-storage facilities were
TABLE C7.13
TABLE C7.12
of customer fraud/deception (16.2 percent nationally) than the percentage of U.S. facilities reporting (5.9 percent). The incidence of this type of deception is higher in the facilities with fewer units and the second largest size category (75,000 to 99,999 square feet). More rural
STORAGE OF ILLEGAL DRUGS/ HAZARDOUS MATERIALS Percentage Average of Facilities Number Provinces and Reporting of Territories Incidents Incidents Alberta 13.0% 3 British Columbia ** ** Manitoba ** ** New Brunswick ** ** Newfoundland ** ** Northwest Territories ** ** Nunavut ** ** Ontario 17.0% 8 Quebec 10.0% 1 Saskatchewan 14.3% 1 Yukon Territory ** ** NATIONAL 11.7% 13 Number of Units 1 to 99 8.3% 1 100 to 299 9.1% 3 300 to 499 3.6% 1 500 to 999 28.6% 8 1,000 or more ** ** Rentable Square Footage Less than 25,000 20.8% 5 25,000 to 49,999 5.6% 2 50,000 to 74,999 12.0% 3 75,000 to 99,999 18.8% 3 100,000 or more ** ** Market Area Urban 14.0% 7 Suburban 6.7% 3 Rural 18.8% 3 Year Facility Built Prior to 1981 ** ** 1981 to 1985 ** ** 1986 to 1990 27.3% 3 1991 to 1995 40.0% 2 1996 to 2000 5.9% 1 2001 to 2005 12.5% 4 2006 or after 7.9% 3 **Insufficient data
served with search warrants in 2011 in contrast to 1.6 percent of U.S. storage facilities in 2010. Storage facilities under 25,000 square feet, built between 1991 and 1995, and rural properties were more likely to be served (20.8 percent, 40 percent, and 18.8 percent, respectively) than either urban (14.0 percent) or suburban sites (6.7 percent) unlike in the U.S. where more urban facilities received warrants (2.5 percent).
SMALLER FACILITIES, THOSE
LESS THAN 25,000 SQUARE FEET, REPORTED OVER ONE-FIFTH OF THESE OFFENSES, AND
MORE THAN 40 PERCENT OF REPORTS CAME FROM FACILITIES BUILT BETWEEN 1991 TO 1995. Of the eleven provinces and territories, only four reported the storage of illegal drugs and hazardous materials, averaging 13 incidents. At 11.7 percent of all facilities reporting such incidents, the rate is higher than the 0.5 percent of U.S. facilities reporting in 2010. Smaller facilities, those less than 25,000 square feet, reported over one-fifth of these offenses, and more than 40 percent of reports came from facilities built between 1991 to 1995.
Marketing•8
I
n the business of self-storage, marketing consists of all activities undertaken to create awareness in the marketplace for a facility. The ultimate goal of all marketing efforts is to drive new business to the facility, thereby increasing the bottom line. Marketing strategies can include but are not limited to advertising, special promotions, community service programs, partnering with community businesses, and hosting special events.
what is attracting customers to their facility in order to gauge the effectiveness of their marketing strategies. This may be as simple as training a manager to ask prospective customers who call or visit the site how they heard about the facility and recording responses and tallying the results regularly. More sophis-
CLEARLY, OFFERING
ONE MONTH’S RENT FOR FREE
Marketing efforts tends to be very closely monitored at Canadian facilities, just as it is in the U.S. Furthermore, as a non-fixed cost, marketing efforts can be swiftly adjusted to respond to current market conditions.
IS THE MOST COMMONLY USED MARKETING TOOL...
ticated programs involve coding all coupons printed in newspapers, magazines, or flyers so that the source may be instantly identified. Call centers can assign a separate phone number to each advertising campaign to identify which marketing strategies are successful.
Services And Discounts Table C8.1 summarizes the effect of specific services and discounts used at a facility to increase business. Clearly, offering one month’s rent for free is the most commonly used marketing tool to attract tenants in a competitive market with 73 percent of all respondents using his incentive.
Most owners and operators develop a simple program to track
TABLE C8.1
SERVICES OFFERED AT A FACILITY (PERCENTAGE OF FACILITIES) Over the past 10 years the use of advertising media has changed significantly after being focused on a single source—the Yellow Pages— for many years before. Most potential customers now search online first for self-storage rather than consulting the Yellow Pages. In addition, some operators now choose to post ads on free websites such as Craigslist and eBay rather than taking out ads in newspapers or magazines.
Provinces and One Territories Month Free Alberta 60.9% British Columbia 61.1% Manitoba ** New Brunswick 20.0% Newfoundland ** Northwest Territories 100.0% Nunavut ** Ontario 85.1% Quebec 80.0% Saskatchewan 85.7% Yukon Territory ** NATIONAL 73.0%
Rental Truck 13.0% 22.2% ** 20.0% ** ** ** 10.6% ** ** ** 11.7%
Discount Monthly Rates 56.5% 38.9% ** 60.0% ** ** ** 85.1% 80.0% 100.0% ** 70.3%
Other 21.7% 38.9% ** 20.0% ** ** ** 4.3% 10.0% ** ** 14.4%
**Insufficient data
TABLE C8.2a
ACTUAL USAGE OF PROMOTIONAL MEDIA (PERCENTAGE OF FACILITIES) Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL
Billboards 13.0% 16.7% ** ** ** ** ** 6.4% ** ** ** 8.1%
Signage 60.9% 77.8% ** 100.0% ** ** ** 85.1% 80.0% 100.0% ** 79.3%
Direct Mail 13.0% 33.3% ** 20.0% ** ** ** 4.3% 10.0% 14.3% ** 12.6%
Telephone Solicitation ** 27.8% ** ** ** ** ** 6.4% ** ** ** 7.2%
Flyers 17.4% 44.4% ** 40.0% ** ** ** 8.5% 10.0% ** ** 17.1%
Television Commercial ** 11.1% ** ** ** ** ** ** ** ** ** 1.8%
Internet/ Web Site 82.6% 88.9% ** 60.0% ** ** ** 91.5% 90.0% 85.7% ** 86.5%
**Insufficient data
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8•Marketing
While the Northwest Territories use only free rent, it is based on a small
sample size therefor not as reflective of the market as those numbers re-
ported in other provinces and territories. In Saskatchewan for instance,
TABLE C8.2b
ACTUAL USAGE OF PROMOTIONAL MEDIA (PERCENTAGE OF FACILITIES) Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL
Yellow Pages 87.0% 88.9% ** 100.0% ** 100.0% ** 89.4% ** 100.0% ** 91.0%
Magazine 4.3% 27.8% ** ** ** ** ** 4.3% 80.0% 10.0% ** 9.0%
Referrals 26.1% 55.6% ** 20.0% ** ** ** 12.8% 10.0% ** ** 20.7%
Newspaper 13.0% 33.3% ** 40.0% ** ** ** 4.3% ** 20.0% ** 14.4%
Radio 13.0% 16.7% ** 20.0% ** ** ** 8.5% 10.0% 0.0% ** 10.8%
None 0.0% ** ** ** ** ** ** 2.1% ** ** ** 0.9%
Other 13.0% 16.7% ** 20.0% ** ** ** 8.5% 90.0% ** ** 10.8%
**Insufficient data
TABLE C8.3
INTERNET INQUIRIES & SALES EFFECTIVENESS Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL
Average Number of Daily Inquiries 2.3 4.0 ** 1.7 ** ** ** 3.3 5.5 2.0 ** 3.3
Sales Conversions 52.0% 42.0% ** 28.0% ** ** ** 32.0% 38.0% 70.0% ** 40.0%
**Insufficient data
TABLE C8.4
CALL CENTER INQUIRIES & SALES EFFECTIVENESS Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL **Insufficient data
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Average Number of Daily Inquiries ** ** ** ** ** ** ** 20.0 10.0 ** ** 18.3
Sales Conversions ** ** ** ** ** ** ** 57.8% 60.0% ** ** 58.2%
85.7 percent of responding facilities reported using the one month free incentive, followed by 85.1percent in Ontario and 80 percent in Quebec. On the low end of the scale, only 20 percent of the reporting facilities in New Brunswick utilize this method.
...THE
YELLOW PAGES IS STILL THE
MOST PROMINENT PROMOTIONAL MEDIA USED BY CANADIAN FACILITIES... The second most widely used incentive is offering discounted monthly rates; 70.3 percent of reporting facilities use this tactic. It is interesting to note that while facilities in New Brunswick are reluctant to offer free rent, 60 percent of the reporting facilities do offer some type of discount on rental rates.
Marketing•8
Utilizing Promotional Media As seen in Table C8.2b on page 182, the Yellow Pages is still the most prominent promotional media used by Canadian self-storage facilities— on a national average 91 percent of the facilities use this method of marketing. Among the provinces report sufficient data, three report 100 percent usage (New Brunswick, the Northwest Territories, and Saskatchewan) while the remaining three report between 87 percent and 88.9 percent usage. Use of the Yellow Pages is followed closely by utilization of the Internet for marketing with a national average of 86.5 percent. It is interesting to note that in six of provinces or territories with sufficient data, five report that more than 80 percent of
their facilities utilize the Internet or a Web site. Drilling down further at the provincial level, Ontario reports the highest use of the Internet at 91.5 percent, followed by Quebec at 90 percent and British Columbia at 88.9 percent. The lowest usage of the Internet or a Web site for marketing is in New Brunswick, which reports 60 percent.
FACILITY SIGNAGE APPEARS TO BE THE
THIRD HIGHEST MARKETING TOOL USED BY FACILITIES IN CANADA ON A NATIONAL BASIS.
On a national basis Canadian facilities rely much less on the use of flyers as a marketing tool (17.1 percent); however facilities in British Columbia and New Brunswick report a higher usage of this marketing tool at 44.4 percent and 40 percent respectively. Facility signage appears to be the third highest marketing tool used by facilities in Canada on a national basis. Other notable data indicates that 80 percent of the reporting facilities in Quebec turn to magazine advertising for marketing, followed by British Columbia at only 27.8 percent. Conversely, 55.6 percent of the facilities in British Columbia report referrals as a marketing tool, while only 10 percent of the self-storage facilities in Quebec cite this method of marketing.
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8•Marketing
Internet Inquiries And Call Centers
With respect to the usage of call centers, the number of responses to
Table C8.3 summarizes the effectiveness on the Internet as a marketing tool. On a national basis, facilities receive approximately 3.3 Internet inquiries per day with a 40 percent conversion rate. Quebec reports the highest number (5.5 per day) with a 38 percent conversion rate, while facilities in Saskatchewan report only 2 inquiries per day; they also show a 70 percent conversion rate. The number of Internet inquiries is similar with Canadians reporting an average of 3.3 daily inquiries and Americans reporting 3.6 daily. The conversion rate is higher in the U.S. at 47.2 percent by comparison to 40 percent in Canada.
WITH RESPECT TO THE
USAGE OF CALL CENTERS, THE NUMBER OF RESPONSES TO THIS YEAR’S SURVEY WERE
LOW WITH INSUFFICIENT DATA FOR MOST PROVINCES AND TERRITORIES.
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this year’s survey were low with insufficient data for most provinces and territories. This suggests Canadian storage operators tend to use this service on a very limited basis. The few respondents that use the service reported a much higher average number of daily inquiries (18.3) than reported in the U.S. (2.8) with a higher conversion rate of 58 percent by comparison to the U.S. at 44.4 percent. Breaking the numbers down, Ontario reports approximately 20 calls per day received by a call center with a 57.8 percent conversion rate. In Quebec, the average number of calls drops to 10 per day, however the conversion ratio is slightly higher at 60 percent.
For information about our Valuation & Advisory Services, please contact: Demetri J. Andros aaci, mrics Managing Director Toronto Oice +1 416 643 3779 demetri.andros@colliers.com
Management&Training•9 he management of selfstorage facilities has evolved over the years. Managers once tended to be retired couples who “babysat” the facility, but today’s managers are savvy marketers who provide top-notch customer service and are expert converters of prospects to renters. In addition, depending on the services offered at the site, managers may sell ancillary products and services not only to renters but to the general public as well.
tered either over the telephone or in an on-site visit.
In difficult economic times or in market areas where there is a high level of competition, excellent management can make the difference between a successful facility and one that is mediocre. Indeed, the success of a facility often depends on the managers’ ability to convert telephone calls or walk-in browsers into tenants. Moreover, self-storage managers represent the facility to the public as the first person encoun-
CAN MAKE THE DIFFERENCE...
T
...IN MARKET AREAS WHERE THERE IS A HIGH LEVEL OF COMPETITION,
EXCELLENT MANAGEMENT
Management Numbers As seen in Table C9.1, management situations vary across Canada from facility to facility. On a national basis, 57.7 percent of all facilities participating in the survey reported using a full-time manager who resides on site. Another 26.1 percent
of responding facilities declared using a full-time manager who does not reside on site. In addition, 65.8 percent use a secondary relief or assistant manager. This most likely corresponds directly to the high percentage of resident managers in the Canadian market, since those situations typically require a relief manager to give the manger time away from the facility. In terms of other types of management roles, only 8.1 percent of facilities reported using a management couple or team and 45.9 percent reported their facilities as owner managed. These figures show the Canadian self-storage industry at large is dominated by resident owner-managed sites. Similar to the industry in the U.S., only 3.6 percent of reporting facilities use a third-party management company. In drilling down to the survey results by province, Saskatchewan and
TABLE C9.1
PROFILE OF FACILITY MANAGEMENT
Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL Rentable Square Footage Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99,999 100,000 or more
Full-Time On-Site Resident Manager 56.5% 33.3% ** 40.0% ** ** ** 66.0% 70.0% 71.4% ** 57.7%
Full-Time Off-Site Manager 17.4% 44.4% ** 40.0% ** ** ** 23.4% 20.0% 28.6% ** 26.1%
Management Couple/Team 13.0% 27.8% ** ** ** ** ** 2.1% ** ** ** 8.1%
Secondary Assistant or Relief Manager 56.5% 38.9% ** 20.0% ** ** ** 80.9% 80.0% 85.7% ** 65.8%
Owner Managed 56.5% 33.3% ** 40.0% ** 100.0% ** 34.0% 80.0% 71.4% ** 45.9%
Third-Party Management 4.3% 5.6% ** ** ** ** ** 4.3% ** ** ** 3.6%
Other ** 16.7% ** ** ** ** ** 2.1% 10.0% ** ** 5.4%
20.8% 95.8% 75.0% 45.8% 29.2%
33.3% 29.2% 29.2% 16.7% 12.5%
12.5% 12.5% 12.5% ** **
41.7% 83.3% 83.3% 62.5% 33.3%
50.0% 75.0% 29.2% 37.5% 20.8%
** 12.5% ** ** 4.2%
8.3% 8.3% ** 4.2% 4.2%
**Insufficient data
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9•Management&Training
TABLE C9.2
MANAGER BENEFITS Benefit Offered Bonus Pay Vacation Pay Apartment Paid holiday Free Utils 401K Medical Dental Sick Pay Eye Care
Full-Time On-Site Full-Time Off-Site Management Assistant or Secondary Owner Third-Party Resident Manager Manager Couple/Team Relief Manager Managed Management 30.3% 10.6% 3.5% 34.8% 19.2% 1.5% 29.4% 11.7% 2.5% 34.5% 20.8% 1.0% 33.3% ** 25.9% 18.5% 11.1% ** 32.6% 9.6% 2.1% 35.3% 19.8% 0.5% 32.3% 9.7% 22.6% 16.1% 12.9% 6.5% 37.0% 1.5% 0.7% 37.8% 23.0% ** 31.1% 9.0% 2.3% 35.6% 20.3% 1.7% 31.2% 8.7% 1.7% 35.8% 20.8% 1.7% 31.2% 11.0% 1.2% 35.3% 20.2% 1.2% 31.6% 8.2% 2.3% 36.3% 20.5% 1.2%
**Insufficient data
TABLE C9.3
BREAKDOWN OF MANAGERS’ BASE SALARIES Provinces and Less than $10,000 to $20,000 to $30,000 to $40,000 or Territories $10,000 $19,999 $29,999 $39,999 More Alberta ** 4.3% 39.1% 8.7% 47.8% British Columbia 6.3% 18.8% 37.5% 18.8% 18.8% Manitoba ** ** ** ** ** New Brunswick ** ** 25.0% ** 75.0% Newfoundland ** ** ** ** ** Northwest Territories ** ** ** ** 100.0% Nunavut ** ** ** ** ** Ontario 6.8% 4.5% 6.8% 15.9% 65.9% Quebec ** ** ** ** 100.0% Saskatchewan ** ** 14.3% 14.3% 71.4% Yukon Territory ** ** ** ** ** NATIONAL 3.9% 5.8% 19.4% 12.6% 58.3% Number of Units 1 to 99 ** 9.1% 45.5% 9.1% 36.4% 100 to 299 ** 6.9% 24.1% 13.8% 55.2% 300 to 499 11.1% ** 14.8% 11.1% 63.0% 500 to 999 ** 7.7% 7.7% 15.4% 69.2% 1,000 or more 10.0% 10.0% 20.0% 10.0% 50.0% Rentable Square Footage Less than 25,000 ** 4.8% 42.9% 9.5% 42.9% 25,000 to 49,999 9.4% 6.3% 15.6% 15.6% 53.1% 50,000 to 74,999 ** 8.3% 8.3% 8.3% 75.0% 75,000 to 99,999 6.3% ** 12.5% 18.8% 62.5% 100,000 or more ** 10.0% 20.0% 10.0% 60.0% Market Area Urban 4.5% 2.3% 18.2% 13.6% 61.4% Suburban 4.5% 9.1% 18.2% 6.8% 61.4% Rural ** 6.7% 26.7% 26.7% 40.0% Year Facility Built Prior to 1981 ** ** 14.3% 28.6% 57.1% 1981 to 1985 ** ** ** 100.0% ** 1986 to 1990 9.1% 9.1% ** ** 81.8% 1991 to 1995 ** ** 66.7% ** 33.3% 1996 to 2000 5.9% 5.9% 23.5% 23.5% 41.2% 2001 to 2005 3.4% 3.4% 20.7% 10.3% 62.1% 2006 or after 2.9% 8.6% 20.0% 8.6% 60.0% **Insufficient data
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THESE THREE PROVINCES ALSO REPORTED THE
HIGHEST USE OF SECONDARY OR RELIEF MANAGERS... Quebec reports the highest percentage of full-time resident managers at 71.4 percent and 70 percent respectively. With a 66 percent share, Ontario reported the third highest share of full-time resident managers. These three provinces also reported the highest use of secondary or relief managers, again most likely reflecting the needs of resident managers for substitutes. One other notable figure is that of management in the Northwest Territories where 100 percent of the reporting facilities indicate that they are owner managed.
Manager Salaries And Benefits According to the survey results, managers in Canada are paid sig-
Management&Training•9
TABLE C9.4
EFFECTS OF VARIOUS BENEFITS Less than $10,000 to $20,000 to $30,000 to $40,000 or $10,000 $19,999 $29,999 $39,999 More 3.9% 4.9% 10.7% 10.7% 49.5% 2.9% 4.9% 9.7% 9.7% 53.4% ** 2.9% 5.8% 1.9% ** 2.9% 5.8% 6.8% 9.7% 50.5% ** 3.9% 5.8% 2.9% ** ** 1.0% ** 4.9% 43.7% 3.9% 2.9% 3.9% 8.7% 49.5% 3.9% 2.9% 3.9% 7.8% 49.5% 1.9% 4.9% 3.9% 6.8% 49.5% 2.9% 2.9% 2.9% 7.8% 48.5%
Benefit Offered Bonus Pay Vacation Pay Apartment Paid Holiday Free Utils 401K Medical Dental Sick Pay Eye Care **Insufficient data
TABLE C9.5
It is interesting to note, both Quebec and the Northwest Territories report 100 percent of their managers receive annual salaries of $40,000 or more. New Brunswick follows with 75 percent of its managers in that salary range; Saskatchewan falls close behind with 71.4 percent. Among
AVERAGE MANAGER HOURS PER WEEK Hours Under 30 30 to 39 40 to 49 50 to 59 60 to 69 70 or more
Percentage of Managers 16.2% 13.5% 59.5% 3.6% 2.7% 4.5%
When looking at the data by size of facility, only the smallest storage facilities pay their managers less (in the $30,000 to $39,999 range); all other size categories predominantly pay a base salary of $50,000 or
TELEPHONE INQUIRIES & SALES EFFECTIVENESS
TABLE C9.6
nificantly higher base salaries than those in the U.S. as seen in Table C9.3. On a national basis, 58.3 percent of the reporting facilities indicate that their managers receive a base pay of $40,000 or more, whereas in the U.S., only 17.3 percent of managers report this annual salary range. Also seen in Table C9.3, 19.4 percent of those facilities surveyed report an annual manager salary of between $20,000 and $29,999, while 12.6 percent report an annual salary range between $30,000 and $39,999. At lower salary ranges, percentages drop dramatically. Only 5.8 percent receive a salary between $10,000 and $19,999, and only 3.9 percent receive under $10,000 per year.
those facilities surveyed, there are fewer managers in B.C. that receive this type of salary (18.8 percent), whereas most managers fall in the $20,000 to $29,999 in this province.
Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL Number of Units 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more Rentable Square Footage Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99,999 100,000 or more Market Area Urban Suburban Rural Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after
Average Number of Daily Inquiries 11.7 6.9 ** 4.6 ** 10.0 ** 15.0 15.4 16.0 ** 12.6
Sales Conversions 28.1% 47.8% ** 45.6% ** 95.0% ** 32.4% 35.1% 31.4% ** 35.4%
2.0 11.4 15.8 15.4 12.3
43.5% 37.7% 31.7% 31.5% 39.0%
7.2 12.7 15.1 15.3 14.6
44.7% 35.0% 28.8% 32.6% 35.0%
11.6 15.3 8.1
33.7% 32.0% 50.0%
14.9 15.0 12.8 8.0 14.6 14.6 10.1
24.3% 70.0% 38.7% 43.0% 34.4% 29.1% 40.2%
**Insufficient data
2012 Self-Storage Almanac
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9•Management&Training
more. Rural managers are paid less, with just 40 percent reporting base salaries of over $50,000; 61.4 percent of urban and suburban facilities pay managers $50,000 plus. Age of the facility does not appear to be a factor in management remuneration in either country. As seen in Table C9.2 on page 186, 30.3 percent of full-time, resi-
VERY FEW MANAGERS WORK
MORE THAN 50 HOURS PER WEEK...
TABLE C9.7
IN-PERSON INQUIRIES & SALES EFFECTIVENESS Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL Number of Units 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more Rentable Square Footage Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99,999 100,000 or more Market Area Urban Suburban Rural Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after **Insufficient data
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Self-Storage Almanac 2012
Average Number of Daily Inquiries 8.7 2.4 ** 1.6 ** 3.0 ** 11.4 14.4 14.9 ** 9.4
Sales Conversions 41.7% 55.7% ** 58.0% ** 100.0% ** 32.3% 32.0% 39.3% ** 40.2%
0.6 7.3 12.1 12.5 10.1
23.3% 53.5% 32.7% 39.9% 38.8%
4.2 8.5 12.3 12.8 12.0
43.5% 45.5% 29.6% 39.3% 41.5%
9.2 12.2 2.0
36.9% 35.0% 65.6%
13.0 5.0 10.1 6.4 9.8 10.8 7.6
37.1% 4.0% 42.8% 69.8% 40.9% 35.3% 41.0%
dent managers receive bonus pay, as do 34.8 percent of assistant or relief managers. While 19.2 percent of managing owners pay themselves a bonus, only 10.6 percent of full-time non-resident managers receive this benefit. In terms of medical benefits, 35.6 percent and 31.1 percent of assistant/relief managers and full-time resident managers, respectively, receive this benefit. Dental benefits fall close behind at 35.8 and 31.2, respectively. As seen in Table C9.4 on page 186, the highest percentage of benefits are given to self-storage managers in the $40,000 or more salary range. This includes vacation pay and paid holidays (53.4 percent and 50.5 percent, respectively), with all other benefits, like 401K programs, ranging between 49.5 percent and 43.7 percent. Table C9.5 on page 186 clearly indicates that the majority of selfstorage managers in Canada work between 40 to 49 hours per week (59.5 percent). The percentages drop dramatically from there with the 16.2 percent of managers reporting under 30 hours per week— this category is most likely relief or assistant managers. Very few managers work more than 50 hours per week, with only 4.5 percent working more than 70 hours per week. Despite working fewer hours and higher pay, Canadian self-storage managers are not as effective as their American colleagues in conversion rates. U.S. self-storage managers field fewer daily calls (an average of 4.5 per day compared to 12.6 per day in Canada), but achieve more conversions (51.4 percent compared to 35.4 percent in Canada). Across all ranges of sizes, market areas and ages of facilities American managers are more ef-
Management&Training•9
Breaking down the data by province as in Table C9.6 on page 187, on a national basis Canadian facilities tend to receive an average of 12.6 telephone inquiries on a daily basis. Saskatchewan receives the highest number of calls, averaging 16 per day, followed by Quebec with 15.4 and Nunavut at 15 calls per day. The fewest number of calls per day, at 4.6 on average, is reported by New Brunswick. On a national basis, 35.4 percent of telephone calls are converted into sales. While those storage facilities in the Northwest Territories receive only 10 calls per day on average, they have the highest conversion ratio with 95 percent of those calls being turned into rentals. British Columbia receives an average of 6.9 calls per day, of which 47.8 percent are converted into sales. New Brunswick reports the third highest conversion ratio at 45.6 percent of an average 4.6 calls per day.
DESPITE WORKING FEWER HOURS AND HIGHER PAY,
CANADIAN SELF-STORAGE MANAGERS ARE NOT AS EFFECTIVE AS THEIR AMERICAN COLLEAGUES IN CONVERSION RATES. As seen in Table C9.7 on page 188, 40.2 percent of all in-person
inquiries are converted into sales. Higher than for telephone calls, this conversion rate is based on fewer in-person inquiries (9.4 daily). While Saskatchewan and Quebec receive the greatest number of potential customers visiting sites (14.9 and 14.4 on average, respectively) only 32 percent of those are converted to rentals on average. Again, the Northwest Territories tend to
ON A NATIONAL BASIS,
35.4 PERCENT OF TELEPHONE CALLS
ARE CONVERTED INTO SALES.
CALL CENTER INQUIRIES & SALES EFFECTIVENESS
TABLE C9.8
fective in converting telephone callers to tenants.
Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL Number of Units 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more Rentable Square Footage Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99,999 100,000 or more Market Area Urban Suburban Rural Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after
Average Number of Daily Inquiries ** ** ** ** ** ** ** ** 20.0 10.0 ** 18.3
Sales Conversions ** ** ** ** ** ** ** ** 57.8% 60.0% ** 58.2%
** 2.0 40.0 17.0 **
** 1.0% 92.0% 64.0% **
2.0 21.0 23.0 20.0 **
50.0% 46.5% 70.0% 66.0% **
8.5 38.0 **
44.3% 86.0% **
** ** 20.0 2.0 40.0 ** 23.0
** ** 66.0% 25.5% 92.0% ** 70.0%
**Insufficient data
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9•Management&Training
convert 100 percent of their visitors into renting customers, but they average only three visits a day. While New Brunswick receives an aver-
...STORAGE FACILITIES IN SASKATCHEWAN
RECEIVE THE FEWEST CALL CENTER LEADS...
age of 1.6 visits per day, 58 percent of those are converted into paying customers.
in Saskatchewan receive the fewest call center leads (10) and convert 60 of those into rentals.
Table C9.8 on page 189 shows call center use is highest in Quebec and Saskatchewan. Self-Storage facilities in Quebec receive 20 call center leads per day and convert 57.8 percent of those into rentals. On the other hand, storage facilities
FACILITIES IN QUEBEC RECEIVE
TABLE C9.9
INTERNET INQUIRIES & SALES EFFECTIVENESS Provinces and Territories Alberta British Columbia Manitoba New Brunswick Newfoundland Northwest Territories Nunavut Ontario Quebec Saskatchewan Yukon Territory NATIONAL Number of Units 1 to 99 100 to 299 300 to 499 500 to 999 1,000 or more Rentable Square Footage Less than 25,000 25,000 to 49,999 50,000 to 74,999 75,000 to 99,999 100,000 or more Market Area Urban Suburban Rural Year Facility Built Prior to 1981 1981 to 1985 1986 to 1990 1991 to 1995 1996 to 2000 2001 to 2005 2006 or after **Insufficient data
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Average Number of Daily Inquiries 2.3 4.0 ** 1.7 ** ** ** 3.3 5.5 2.0 ** 3.3
Sales Conversions 51.8% 42.0% ** 28.3% ** ** ** 32.4% 37.5% 70.0% ** 40.5%
1.5 2.1 2.0 5.8 7.0
30.8% 43.8% 41.9% 37.9% 45.0%
1.8 1.9 5.6 3.7 9.3
38.3% 44.7% 32.3% 37.7% 55.0%
2.6 5.0 2.8
36.0% 34.1% 55.9%
3.3 1.0 4.0 1.8 7.0 2.1 3.6
30.0% 1.0% 35.3% 45.0% 57.5% 45.8% 36.6%
5.5 INQUIRIES PER DAY, WHICH IS THE HIGHEST NUMBER REPORTED, AND
CONVERT 37.5 PERCENT OF THOSE INTO RENTALS. Nationally, as seen in Table C9.9, Canadian facilities receive an average of 3.3 Internet inquiries per day, with 40.5 percent of those converted into rentals. Quebec and B.C. report the highest number of inquiries. Facilities in Quebec receive 5.5 inquiries per day, which is the highest number reported, and convert 37.5 percent of those into rentals. Saskatchewan receives only two inquiries per day and converts 70 percent into rentals. Facilities in New Brunswick report the fewest number of inquiries at 1.7 and convert the lowest percentage (28.3 percent) into rentals.
ASSOCIATIONLISTINGS Participate. Learn. Beneit. Succeed.
BENEFITS FOR EVERYONE In the past three years, the national SSA and state association efforts have led to these victories that have saved self storage operators millions of dollars and protected businesses in more than 20 states: Lien Law Improvements Sales Taxes Repealed or Avoided Abandoned Records & Sensitive Item Disposal Liability Protection Tenant Insurance Licenses
WORKING TOGETHER FOR THE GOOD OF THE INDUSTRY
BENEFITS FOR YOU Data You Can Use Publications SSA Globe Magazine Executive Education Employee Training (CSSM) Webinars Networking & Meetings Self Storage Legal Network
SSA EVENTS 26TH ANNUAL SKI WORKSHOP January 30 – February 2, 2012 The Ritz-Carlton • Lake Tahoe
SPRING CONFERENCE & TRADE SHOW April 25–27, 2012 Gaylord Palms Resort & Convention Center Orlando, Florida
FALL CONFERENCE & TRADE SHOW September 5-7, 2012 Caesars Palace • Las Vegas, Nevada
www.selfstorage.org (888) 735-3784 • info@selfstorage.org
Association Listings SelfStorageAssociation Contact: Michael T. Scanlon, Jr., President and CEO 1900 N. Beauregard Street, Suite 110 Alexandria, VA 22311 Phone: (888) 735-3784 Fax: (703) 575-8901 E-mail: mscanlon@selfstorage.org Web site: www.selfstorage.org
ColoradoSelfStorageAssociation Contact: Hank Saipe, President 6800 S. Holly Circle Centennial, CO 80112 Phone: (303) 888-1260 Fax: (303) 694-9400 E-mail: hsaipe@fross.com Web site: www.coloradossa.com
ConnecticutSelfStorageAssociation Contact: Lorna Bolduc, Exec. Director 17 Rivendell Road Marlborough, CT 06447 Phone: (860) 228-3624 Fax: (860) 228-1337 E-mail: lbolduc@ctssa.org Web site: www.ctssa.org
STATeASSOCIATIONS AlabamaSelfStorage Association Contact: Lissa Pressley PO Box 2904 Mobile, AL 36652 Phone: (256) 772-7166 Fax: (251) 433-3470 E-mail: lpressley@decaturtransit.com Web site: www.alabamassa.org ArizonaSelf-Storage Association Contact: Anne Mari DeCoster, Exec. Director PO Box 44031 Phoenix, AZ 85064 Phone: (602) 374-7184 Fax: (602) 441-4706 E-mail: azsahq@azselfstorage.com Web site: www.azselfstorage.com ArkansasSelfStorage Association Contact: Bill Humble PO Box 55715 Little Rock, AR 72215 Phone: (501) 607-4775 Fax: (501) 421-8189 E-mail: info@arssa.org Web site: www.arssa.org
arkline Small Metal Buildings Parkline manufactures one- and twostory self storage buildings to meet any budget. Our unique non-exposed fastener system prevents rust, streaking and break-ins. Discover the Parkline difference for yourself.
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CaliforniaSelfStorage Association Contact: Erin King, Exec. Director 3780 Kilroy Airport Way, Suite 200 Long Beach, CA 90806 Phone: (562) 304-2864 Fax: (562) 304-2865 E-mail: info@cssaweb.com Web site: www.cssaweb.com
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ASSOCIATIONLISTINGS
FloridaSelfStorageAssociation Contact: Robert Bret, Exec. Director PO Box 149 Lake Worth, FL 33460 Phone: (877) 222-9441 Fax: (877) 379-0352 E-mail: rbret@floridassa.org Web site: www.floridassa.org
IdahoSelf-StorageAssociation Contact: Michael Bishop, President 500 W. Idaho Street, Suite 202 Boise, ID 83702 Phone: (208) 919-0771 Fax: (877) 630-0100 E-mail: info@idssa.org Web site: www.idssa.org
GeorgiaSelfStorageAssociation Contact: Chuck Manley, Exec. Director 3162 Johnson Ferry Road, Suite 260 #510 Marietta, GA 30062 Phone: (678) 764-2006 Fax: (678) 264-0968 Web site: www.gassa.org
IllinoisSelfStorageAssociation Contact: Michael Lane, Exec. Director 225 E. Cook Street Springfield, IL 62704 Phone: (217) 528-5230 Fax: (217) 241-4683 E-mail: member@p-a-m-s.com Web site: www.illinoisselfstorage.org
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IndianaSelfStorageAssociation Contact: Julie Aton 739 Repp Court Columbus, IN 47201 Phone: (812) 343-7173 E-mail: janton@ymail.com Web site: www.inselfstorage.org
KansasSelfStorage OwnersAssociation Contact: Shawn Herrick, Exec. Director 7321 NW Rochester Road Topeka, KS 66617 Phone: (785) 286-1110 Fax: (785) 286-0611 E-mail: herrick.shawn@gmail.com Web site: www.kssoa.org
ASSOCIATIONLISTINGS
KentuckySelfStorageOrganization Contact: Debbie Sutherland 680 Tennessee Avenue Lexington, KY 40505 Phone: (859) 425-1129 Fax: (859) 425-1139 E-mail: storqueen@spacecenterstorage.com
LouisianaSelfStorageAssociation Contact: Lana Griffin, President 13434 Plank Road Baker, LA 70714 Phone: (866) 857-8473; (225) 774-2117 Fax: (225)774-2116 E-mail: info@ssala.org Web site: www.ssala.org
Self-StorageAssociationofMichigan Contact: Dan Morris, President 2222 Association Drive Okemos, MI 48864 Phone: (888) 308-7726 Fax: (517) 349-3543 E-mail: info@selfstoragemichigan.org Web site: www.selfstoragemichigan.com
MississippiSelfStorage OwnersAssociation Contact: Tina de Leon, Exec. Director PO Box 6582 Diamondhead, MS 39525 Phone: (228) 223-6121 Fax: (228) 255-7740 E-mail: msssoassn@yahoo.com Web site: www.msssoa.org
MinnesotaSelfStorageAssociation Contact: Ellis Gottlieb, President 3410 Winnetka Avenue North New Hope, MN 55427 Phone: (763) 458-5919 Fax: (763) 512-7723 E-mail: rgott22@aol.com
MissouriSelfStorageOwners Association Contact: Dale Jordan, President 141 Cypress Point Lane Lake Ozark, MO 65049 Phone: (573) 480-0454 Fax: (816) 587-7802 E-mail: mssoa2003@yahoo.com Web site: www.mssoa.org
MaineSelfStorageAssociation Contact: Rhonda Hallett-Pope, Treasurer 23 Smada Drive Sanford, ME 04073 Phone: (207) 490-1160 E-mail: rhonda@mainessa.com Web site: www.mainessa.com
MarylandSelfStorageAssociation Contact: Richard L. Sellers U-Store Management Corp. 1611 N. Kent Street, Suite 800 Arlington, VA 22209 Phone: (703) 276-9160 Fax: (703) 276-9162 E-mail: rsellers@u-store.com
MassachusettsSelfStorageAssociation Contact: Lorna M. Bolduc, CAE 17 Rivendell Road Marlborough, CT 06447 Phone: (617) 600-4481 Fax: (860) 228-1337 E-mail: lbolduc@maselfstorage.org Web site: maselfstorage.org
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ASSOCIATIONLISTINGS
MobileSelfStorageAssociation Contact: Bob McLean, CAE 2001 Jefferson Davis Highway, Suite 1004 Arlington, VA 22202 Phone: (703) 416-0060 Fax: (703) 416-0014 E-mail: bmclean@ms-sa.org Web site: www.ms-sa.org
MontanaSelfStorageAssociation Contact: Kathryn Wolhat Owner Montana Real Estate PO BOX 387 Superior, MT 59872 Phone: (406) 396-4966 Fax: (360) 587-3830 E-mail: kathryn@ownmt.com
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NebraskaSelfStorageAssociation Contact: David Paladino 101 North 38th Avenue Omaha, NE 68131 Phone: (402) 672-6566 Fax: (402) 553-8308 E-mail: paladino@alum.mit.edu
NevadaSelfStorageAssociation Contact: Katrina Bruce, Exec. Director PO Box 94795 Las Vegas, NV 89193 Phone: (702) 952-2455 Fax: (702) 798-8653 E-mail: info@nv-ssa.org Web site: www.nv-ssa.org
NewHampshireSelfStorage Association Contact: Joe Mendola, President The Norwood Group 116 S. River Road Bedford, NH 03110 Phone: (603) 668-7000 E-mail: joemendola@nhssa.net Web site: www.nhssa.net
NewJerseySelfStorageAssociation Contact: Cologne Hunter, Interim Executive Director 402 Main Street, Suite 100-317 Metuchen, NJ 08840 Phone: (855) 476-6181; (703) 575-8000 ext.122 Email: NJSSAExecDir@selfstorage.org Web site: www.NJSSA.org
ASSOCIATIONLISTINGS
NewyorkSelfStorageAssociation Contact: Lisa Herbst 22 Clinton Avenue, 3rd Floor Albany, NY 12207 Phone: (518) 431-1106 Fax: (518) 431-0721 E-mail: info@nyselfstorage.org
Northdakota Self-StorageAssociation Contact: Fred Kraft, President PO Box 367 Mandan, ND 58554 Phone: (701) 663-1561 Fax: (701) 663-1647 E-mail: fred.northland@midconetwork.com
NorthCarolinaSelfStorageAssociation Contact: Whitney Bertram, Exec. Director 2501 Aerial Center Parkway, Suite 103 Morrisville, NC 27560 Phone: (919) 459-2074 Fax: (919) 459-2075 E-mail: info@ncssaonline.org Web site: www.ncssaonline.org
NorthernCaliforniaStorage OperatorsNetwork Contact: William Kenney, Exec. Director 120 N. El Camino Real San Mateo, CA 94401 Phone: (650) 347-3603 Fax: (650) 347-3735
PennsylvaniaSelfStorage Association Contact: Kimberly Cossar, Exec. Director 908 N. Second Street Harrisburg, PA 17102 Phone: (717) 441-6044 Fax: (717) 236-2046 E-mail: info@paselfstorage.org Web site: www.paselfstorage.org
rhodeIslandSelf-StorageAssociation 130 Washington Avenue, 3rd Floor Albany, NY 12210 Phone: (518) 462-3333 Fax: (518) 427-6781 E-mail: info@nycapcon.com
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ASSOCIATIONLISTINGS
SouthCarolinaSelfStorage Association Contact: Bill Crane Stor-N-Lock LLC PO Box 1 Rock Hill, SC 29731 Phone: (803) 366-3739 Fax: (803) 366-6858 E-mail: stornlock@comporium.net
SouthernCaliforniaStorage OperatorsNetwork Contact: Dean Keller 30021 Tomas Street, Suite 245 Rancho Santa Margarita, CA 92688 Phone: (949) 888-5355 Fax: (949) 203-6105 E-mail: dkeller@bancapselfstorage.com Web site: www.bancapselfstorage.com
TennesseeSelfStorage Association Contact: Dee Wiseman Sharp 1100 Abernathy Road, Suite 600 Atlanta, GA 30328 Phone: (865) 560-8737 Fax: (949) 239-3003 E-mail: info@tnssa.net Web site: www.tnssa.net
TexasSelfStorageAssociation Contact: Ginny Sutton 595 Round Rock West Drive, Suite 503 Round Rock, TX 78681 Phone: (888) 259-4902 Fax: (512) 374-9253 E-mail: info@txssa.org Web site: www.txssa.org
utahSelfStorageAssociation Contact: Burke Bradshaw, Director Towne Storage / Free & Associates 1100 E. 6600 South, Suite 201 Salt Lake City, UT 84121 Phone: (801) 262-3388 Fax: (801) 262-7893 E-mail: burkeb@townestorage.com Web site: www.utahssa.org
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VermontSelfStorageAssociation Contact: Siobhan McGrath 130 Washington Avenue, Third Floor Albany, NY 12210 Phone: (518) 462-3333 Fax: (518) 427-6781 E-mail: smcgrath@nycapcon.com
VirginiaSelfStorageAssociation Contact: Richard L. Sellers U-Store Management Corp. 1611 N. Kent Street, Suite 800 Arlington, VA 22209 Phone: (703) 276-9160 Fax: (703) 276-9162 E-mail: rsellers@u-store.com
Washington(dC)Area SelfStorageAssociation Contact: Nancy Gunning Chesapeake Resources 6001 Montrose Road, Suite 800 Rockville, MD 20852 Phone: (301) 881-5151 Fax: (301) 881-4874 E-mail: ngunning@selfstorageplus.com
WashingtonSelfStorage Association Contact: Patrick Reilly, President PO Box 58530 Seattle, WA 98138 Phone: (206) 623-8632 Fax: (206) 575-9255 E-Mail: pat.reilly@urbanstorage.com Web site: www.wa-ssa.org
WestVirginiaSelfStorageAssociation Contact: Andy Laskody 482 Lower Aaron’s Creek Road Morgantown, WV 26508 Phone: (304) 296-2255 Fax: (304) 296-2295 E-mail: storage_solutions@adelphia.net
WisconsinSelfStorageAssociation Contact: Douglas Stangohr Wisconsin Association Management 11801 W. Silver Spring Drive, Suite 200 Milwaukee, WI 53225 Phone: (414) 755-3364 Fax: (414) 464-0850 E-mail: info@wiselfstorage.org Web site: www.wiselfstorage.org
OTHerINduSTryASSOCIATIONS MobileSelf-StorageAssociation Randy Weissman 1600 Woodson Road St Louis, MO 63114 Phone: (314) 872-1600 ext. 12 Web site: www.ms-sa.org E-mail: randyw@storagebanc.com
INTerNATIONALASSOCIATIONS FederationOfeuropeanSelfStorage Associations(FedeSSA) Contact: Rodney Walker Building Park Atrium Rue Des Colonies 11 1000 Brussels, Belgium Phone: 0044 1270 628841 Fax: 0044 1270 623471 Web site: www.fedessa.org E-mail: info@fedessa.org
SelfStorageAssociationofAustralasia Contact: Dianna Napoli PO Box 1216 Epping DC, Vic, 3076, Australia Phone: +61 3 9408 0731 Fax: +61 3 9408 0732 Web site: www.selfstorage.com.au E-mail: admin@selfstorage.com.au
ASSOCIATIONLISTINGS
BelgianSelfStorageAssociationASBL Contact: Frank Boot Quai du Commerce 48 B-1000 Brussels, Belgium Phone: 011-0032-2-229-56-71 Fax: 011-0032-2-229-56-55
CanadianSelfStorageAssociation Contact: Sue Margeson 21122 150 First Street Orangeville Ontario, L9W 4S7 Canada Phone: (888) 898-8538 Fax: (519) 941-0877 Web site: www.cssa.ca E-mail: info@cssa.com
CzechrepublicAsociaceSelf-Storage 170 00 Praha 7 Czech Republic Tel: +420 2967 88 203 Fax: +420 2967 88 222 E-mail: lbi@cityselfstorage.com
France La Chambre Interprofessionnelle du Selfstockage Contact: Jean-Pierre Mincel, 19, Boulevard de la Madeleine 75008 Paris, France Phone: 0033144357040 Fax: 0033144357040 E-mail: contact@self-stockage.org Web site: www.self-stockage.org
Germany Verband Deutscher Selfstorage Unternehmen e.V. Contact: Martin Brunkhorst Beethovenstrasse 9 D-65189 Wiesbaden Germany Phone: 49 611 377 507 Fax: 49 611 377 507
Italy Associazione Imprese di Self Storage Contact: Cesare Carcano Via Panama 62 I-00198 Roma Italy Phone: 0039 0332 491 084 E-mail: cesare.carcano@casaforte.it
Japan Japan Self Storage Association Contact: Tatsuya Saji Japan 101-0051 Tokyo 2-11-4-301 Jinbocho Kanda Chiyoda-ku Phone: 81-3-5211-8933 Fax: 81-3-5211-8944 E-mail: rsaji@trwinds.com
denmark Contact: Peter Jakobsen c/o Shurgard Real Estate ApS Banemarksvej 50 D - Post box 249 2605 Brøndby, Denmark Phone: 011-0045- 70-22-42-50
Finland Contact: Kimmo Vesander c/o Omavarasto Ahventie 4 02170 Espoo, Finland Phone: 011-358-(0)9-4242 7676 Fax: 011-358-(0)9-4242 7660 E-mail: info@omavarasto.fi Web site: www.varastointia.com
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ASSOCIATIONLISTINGS
LatinAmericanSelfStorageAlliance Contact: Nancy Torres 13048 SW 120th Street Miami, FL 33186 Phone: 770.880.4659 E-mail: nancyt@janusintl.com Web site: www.lassaincc.com
TheNetherlands’Self-storage Association Contact: Russell Jordan Van Lennepweg 10 2111 HV Aerdenhout The Netherlands Phone: 0031 6 54 27 47 92 Fax: 0031 23 5444 080 E-mail: secretaris@miniopslag-selfstorage.nl Web site: www.miniopslag-selfstorage.nl
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202
Spain Asociacion Espanola de Self Storage Contact: Sandra Noy Calle Balmes 92, 2˚ 1ª 08008 Barcelona, Spain Phone: (883) 708-993 Fax: 938-963-157 E-mail: aess@aess.es Web site: www.aess.es
SelfStorageAssociationSweden Contact: Jan-Peter-Aleksejgren c/o Shurgard Sweden AB Solnavägen 21 - P.O. Box 36 171 11 Solna Sweden Phone: 0046 8 470 14 00 Fax: 0046 8 470 14 55
RV & Boat
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Turnkey Design/Build
Self-Storage Almanac 2012
SwissSelfStorageAssociation Contact: Christian Schmutz Hardstrasse 14 CH-4052 Basel Switzerland Phone: 0041 61 312 44 88 Fax: 0041 61 312 44 89
SelfStorageAssociation OfTheunitedKingdom Contact: Rodney Walker Priestley House, The Gullet Nantwich, Chesire CW5 5SZ, UK Phone: +44 (0) 1270 623150 Fax: +44 (0) 1270 623471 Web site: www.ssauk.com E-mail: admin@ssauk.com
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ASSOCIATIONLISTINGS
OntarioSelfStorage Association Contact: Joseph Kormos 1031 McNicoll Avenue, #3 Toronto ON M1W 3W6 Canada Phone: 416-492-9090 E-mail: joe@onssa.com Web site: www.onssa.com
If your self-storage association is not listed in this guide please call (800) 528-1056, ext. 3579.
OTHerSOurCeS Agencyrecords,Inc. www.agencyrecords.com BrBPublications,Inc.-www.brb.com
SelfStorageAssociation OfSouthAfrica Contact: Stephani van der Lingen, Administrator 31 A Jelicoe Avenue Rosebank, Gauteng South Africa 2196 Phone: +27 (0) 11 3273700 Fax: +27 (0) 86 638 6901 E-mail : info@ssasa.co.za
BureauofLaborStatistics http://www.bls.gov Claritas-www.claritas.com eSrI - www.esri.com Integrarealtyresources-www.irr.com MapInfo www.mapinfo.com
InternationalCodeAdoptions StateandJurisdictionInformation www.intlcode.org/government/ adoptions.htm InternationalCodeCouncil(ICC) www.intlcode.org NationalConferenceofStatesonBuildingCodesandStandards(NCSBCS) www.ncsbcs.org TheNationalFireProtectionAssociation (NFPA)-www.nfpa.org Publicdata.com-www.publicdata.com u.S.CensusBureau-www.census.gov u.S.ChamberofCommerceWebsite http://www.uschamber.com
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Glossary AbsorptionPeriod: The period immediately following the opening of a selfstorage facility to the general public. On average, this is between 12 and 18 months. Excluding storage facilities in their absorption period often gives a more accurate picture of a given market when measuring such figures as rental rates and occupancy rates. Baby Boomer: This demographic represents those born between 1946 and 1964. Included in the largest population growth period with over 76 million people, the lifestyles of the Baby Boomers have a tremendous impact in the United States. Cap rate: Capitalization rates are a measure of performance and an indication of value. They reflect expectations for income growth, duration, and perceived risk. In general, the lower the initial capitalization rate, the greater the expectation of the future durability and growth in income, and the lower the risk. Capital: In most cases, capital implies owner’s equity. Capital also refers to money generated by longterm debt. Central City: A city whose name is included in the title of a metropolitan area or that fits the necessary population and employment criteria to qualify it as a central city. The name of a market in the Self-Storage Almanac includes the name of the largest city and the names of other area cities that meet this criteria, based on the definitions provided by the U.S. Office of Management and Budget (OMB). If no city qualifies as a central city, the market is named after its central counties (for example, the NassauSuffolk, N.Y., metro market).
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City: An aggregation of people and retail outlets with set corporate limits, within which city government, as an incorporated state agency, exercises legal authority. CoreBasedStatisticalAreas(CBSA): Core Based Statistical Areas (CBSAs) are made up of Metropolitan Statistical Areas, Micropolitan Statistical Areas, and County-equivalent metros/micros in New England. Larger areas called Combined Statistical Areas (CSAs) are a combination of Metropolitan and/or Micropolitan Statistical Areas. Component CBSAs are still PMSAs or Primary Metropolitan Statistical Areas. debt Service Coverage (dSC): The ratio of cash flow available to pay for debt to the total amount of debt payments to be made. depreciation: The systematic allocation of the acquisition cost of various assets to the particular periods or products that benefit from the use of the assets. discountrate: Also known as an “internal rate of return,” the discount rate is an annualized rate of return that an investor expects a property to yield. In general, In general, a lower discount rate reflects a lower perceived risk in the investment. division: A subsection of a region equal to one of the nine areas in the United States as defined by the U.S. Bureau of the Census. The nine U.S. divisions are: New England, Middle Atlantic, East North Central, West North Central, South Atlantic, East South Central, West South Central, Mountain and Pacific. With the exception of the South Atlantic division, which is the same as the Southeast region, a region is formed of two individual divisions.
econometric demand Model: Designed by Self Storage Economics for the estimation of market demand for a self-storage property, this formula is based on variable regression to show a relationship between demand and the four variables of population, percentage of renters, household size, and average household income. eGIM (effective Gross Income Multiplier): The ratio between the sale price (or value) of a property and its effective gross income. FeasibilityStudy: A preliminary study undertaken to assess whether a planned project is likely to be practical and successful and to estimate its cost. Generation X: Representing the 41 million people born between 1965 and 1976, this demographic group is much smaller than the Baby Boomer demographic. Generation X is marked by high levels of education and persistence. Generation y: Consisting of the 29 million people born between 1977 and 1998, this developing demographic currently includes college students and children. Gross domestic Product (GdP): Estimated every quarter by the Bureau of Economic Analysis, GDP is the most vital measure of the economic performance of the United States, gauging the total market value of all final goods and services produced in our country during any quarter or year. GDP encompasses the facets of consumer spending, government spending and investment, and business investment, plus the value of exports, minus the value of imports.
GLOSSAry
HeavyIndustrial: A specific area saturated with companies that manufacture products, often with manual labor. Households: A household consists of all of the people occupying a single housing unit under the 1990 Census rules. A housing unit is defined as a house, an apartment, a group of rooms, or a single room. In addition, the members of a household need not be related, and a single person living alone in a housing unit is also considered a household. Persons who are not counted as members of households include those living in group quarters such as institutions, college dormitories, military barracks, hospitals, and nursing homes. Although the total population of a given geographic area
will include those people residing in group quarters, household totals do not, which means that calculations of personal household income and retail sales may not adequately reflect an area’s true residential makeup. Index: A relative measure showing a given ratio or percentage above or below some given figure. Usually, an index is compared with a national average. For instance, the Saturation Index for any given area is compared with the national index of 100. A regional index of 50 would indicate an average value equal to half the average value for the U.S. in total. Internal rate of return: Also known as a “discount rate,” the internal rate of return is an annualized rate
of return an investor expects a property to yield. Generally, a lower internal rate of return reflects a lower perceived risk in the investment. Institute for Supply Management (ISM): The Institute for Supply Management™ (ISM) is home to the Manufacturing and Non-Manufacturing ISM Report On Business®. These reports are considered by many to bethe vital, leading economic indicators, and they are followed by economists, organizations, and media outlets throughout the world. Mean Average: Also called the “arithmetic average” or “arithmetic mean,” this is the most common method for finding a value for a list of numbers. It is determined by adding up all the values and then dividing by the number of items.
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GLOSSAry
Metropolitan Statistical Area (MSA): A geographical entity, defined by the Federal OMB for use by Federal statistical agencies, based on the concept of a core area with a large population nucleus, plus adjacent communities having a high degree of economic and social integration with that core. Qualifications of an MSA requires the presence of a city of 50,000 or more inhabitants, or the presence of a UA and a total population of at least 100,000 (75,000 in New England). The county or counties containing the largest city and surrounding densely settled territory are central counties of the MSA. Additional outlying counties qualified to be included in the MSA by meeting certain other criteria of metropolitan char-
acter, such as a specified minimum population density or percentage of the population that is urban. MSAs in New England are defined in terms of cities and towns, following rules concerning commuting and population density. MSAs were first defined and effective June 30, 1983. Operating expenses: Expenses incurred from normal business operations that do not include cost of sales, capital expenditures, debt service, depreciation, or income taxes. Population: Updated from the Census Bureau’s 2000 Census of Population and Housing, Total Population is a headcount estimate of all people living in a geographic area as of April 1, 2000. It includes all people
living in group quarters, such as colleges, institutions, and nursing homes, as well as armed forces personnel permanently assigned to the area. In terms of statistical analysis, Population refers to the particular group that is the focus of the analysis. Population density: An area’s total population divided by the area’s square miles of land. This is a simple basis for relating population to a county’s size. Proforma: An accounting term that denotes estimates or projections. It is often associated with feasibility studies. region: An area of the United States as defined by the U.S. Bureau of the Census. The United States can be divided into either four or five regions. The five-region classification system, which is used in the Self-Storage Almanac, includes West, South Central, North Central, Southeast, and Northeast. reIT: Real Estate Investment Trusts (REITs) are mutual investment funds for real estate. REITs allow small investors to invest directly in institutional grade property through shares of freely traded stock. The life of a REIT is open-ended, and profits can be used to acquire new assets and expand the enterprise. REIT income is reported on the IRS form 1099. At the time of publication, there were four self-storage REITs. rentableSquareFootage: The total amount of space at a facility that is available as rental space. This figure does not include the office, apartment, hallways, and other non-rentable space. rent-upPeriod: The period immediately following the opening of a selfstorage facility to the general public.
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GLOSSAry
On average, this is between 12 and 24 months. Excluding facilities in their rent-up period often gives a more accurate picture of a given market when measuring figures as rental rates and occupancy rates. residential: A specific area saturated with houses and/or apartments inhabited as living quarters. Sample: A smaller collection of units randomly selected from the population that is being studied for the purpose of gaining knowledge of the larger population. Saturation Index: This is measurement developed by MiniCo, and the Self-Storage Almanac in order to determine the amount of available self-storage space per capita.
This figure uses the total rentable square footage for all enclosed selfstorage spaces within a given geographic area divided by its total number of inhabitants. This figure is then converted to an index to provide a quick determination of an area’s saturation as compared with the national average. Statistical Inference: The process of generalizing from representative sample data to make probabilitybased statements about the population that is being examined. Supply Index: The supply index refers to the average number of rentable square feet of storage space per capita, or per person, for the area being measured, divided by the average number of rentable
square feet per capita in the nation. Gauging against the supply index of 100 that represents the nation, the supply index for a particular area is then considered under-supplied (less than 100), or over-supplied, (above 100), or in equilibrium (100). uniform Crime report: This annual report of crime statistics is produced by the Federal Bureau of Investigation (FBI) and is compiled from almost 17,000 nationwide law enforcement agencies. urban: A specific area in a city or densely populated town. Working Capital: The excess of current assets over current liabilities.
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Advertising Index AC Commercial Property ............................................................. 201
On The Move ................................................................................. 209
Access Results ................................................................................ 142
PAL Insurance Brokers LTD. ............................................................ 139
Anne Ballard Online Course ......................................................... 135
Parham Group ................................................................................... 3
Baja Construction Co., Inc. .................................. Inside Back Cover
Parkline ........................................................................................... 195
BSC Group, LLC .............................................................................. 133
Pegasus Group .............................................................................. 197
Caliber Metal ................................................................................. 198
PhoneSmart Call Center .............................................................. 206
Colliers International ..................................................................... 184
PTI Security Systems ......................................................................... 11
Cowan Insurance Brokers ............................................................. 191
Self Storage Association ............................................................... 194
Cushman & Wakefield Self Storage Industry Group .................... 14
Sovran Self Storage ......................................................................... 12
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DBCI .................................................................................. Back Cover
StorageFront ............................................................................ 10, 140
eMove, Inc. ..................................................................................... 205
Storage Investment Management, Inc. .......................................... 8
Extra Space Storage ......................................................................... 5
Storage Post ....................................................................................... 9
Holliday Fenoglio Fowler, L.P. ............................................................. 7
Strategic Storage Trust, Inc. .............................................................. 6
Janus International ........................................................................... 4
TLW Construction ........................................................................... 202
Jerry Jones, CPA, a PC .................................................................. 207
Top Operators Data ...................................................................... 208
LAI Group / Lock America ........................................................... 192
Tripemco Burlington ...................................................................... 183
Litton Property Management, Inc. ............................................... 203
U-Haul International ...................................................................... 199
MiniCo Insurance .......................................................................... 193
Universal Management Company ............................................. 196
MiniCo Canadian Insurance ....................................................... 136
Universal Storage Containers ...................... Inside Front Cover, 138
MiniCo Products ............................................................................ 210
XPS Solutions .................................................................................... 18
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The improvements and additions to this year’s 2012 Self-Storage Almanac are the direct result of the comments and suggestions that we have received from readers of previous editions of the Almanac. The implementation of these improvements affirms MiniCo’s commitment to provide professionals in the self-storage industry with the information they need to achieve greater precision in analysis and planning. Any questions, comments, ideas or suggestions should be addressed to:
Poppy Behrens, Publisher Self-Storage Almanac 2531 West Dunlap Avenue Phoenix, Arizona 85021 While this material has been published to provide authoritative information about the business of self-storage, it must not be interpreted as a rendering of legal or professional advice. Any questions about such advice should be directed at the reader’s legal counsel or professional advisors. The data obtained for this publication is assumed to be correct. MiniCo assumes no responsibility for errors or omissions.
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