Diane Botwin Alpert repressed a wave of revulsion when property consultants recommended a self-storage development for her property. Yuck. That was my thought, she says. I was so sorry I couldnt legitimately engage in retail in the neighborhood and commercial area because the market wouldnt support it.

Like many people, Alpert regarded storage as an unattractive if necessary service, the real estate equivalent of ugly feet. But since the feasibility study appeared to be accurate, she resolved to approach the business on her own terms as a woman and mother. It would have to be reflective of my sensibilities, she says, something I could be proud of.

To Alpert, this meant relying on the same values she used in raising her sons: high expectations, respectfulness, accountability, creativity and a sense of humor. The result is one of the most unusual self-storage facilities in the country. Flex Storage Systems of Topeka, Kan., has won architectural honors, but it ranks as more than an impressive building. Its an organic child of the community, a flower of collaboration. If thats not unusual enough, consider that Flex also mounted a major art exhibit within its walls, attracting several hundred visitors and national press.

In the Zone

In researching the industry, Alpert and her husband read about 300 Inside Self-Storage magazines and attended the 2001 ISS Expo in Nashville, Tenn. They quickly learned zoning approval can be a mammoth obstacle for storage developers. So many of them come in and try to slam into neighborhoods. Neighbors dont like it, and they shouldnt like it, Alpert says. Rather than brace myself for a fight, I went to the neighborhood association on the front end and showed them what I wanted to do.

Alpert also presented her vision to city officials. This facility would be an economic spark in a depressed residential area near downtown Topeka. Every department at city hall was asked for ideas on design and sustainability. Together, they created a flexible zoning classification allowing the climate-controlled building to be converted to retail, as dictated by the communitys changing needs. Plus, Alpert agreed to reserve a pad site on the corner exclusively for retail development.

Its all geared toward stabilizing the neighborhood, which is how I conduct my business, she says. You cant just be in a neighborhood; you have to be part of it. When the zoning change went before the planning and zoning board, the facility received unanimous approval. Alpert says the entire neighborhood came out to show its support.

Winning Design

Flex Storage Systems architecture also proved a feat of synergy. Alpert called upon the Kansas City, Mo.-based architecture firm El Dorado Inc., known for innovative design. She challenged principal architect Josh Shelton to rethink the mundane and exploit the simplistic, telling him she wanted a facility that effuses a sense of responsibility to the neighborhood and initiates long-needed renewal. After opening in April 2004, the facility won honor awards from the Kansas City and Central States chapters of the American Institute of Architects.

One common complaint among storage tenants, particularly women, is facilities tend to be dark and uninviting. Alpert made sure Sheltons design placed a premium on illumination. The low-slung, 17,000-square-foot main building is encircled by panels of greenhouse plastic that lets in waves of natural, diffused daylight. The roofline of the building shoots up, and as you open the door, you capture all the light coming in, Alpert explains. We used photocell lighting up and down all of our aisles. The architects also used cove lighting in the corners so they glow. Its absolutely beautiful.

Shelton mixed concrete and prefab steel buildings with pine-plank flourishes and a sloping shed roof to add warmth and enhance aesthetics. Traditional metal roll-up doors were used but were painted in four subtle, appealing colors. Outside, Alpert planted plugs of natural Kansas plains grasses, enhancing the post-industrial, contemporary look. A writer for New York City-based Metropolitan Magazine deemed the result the most beautiful mini-storage facility shed ever seen.

Moving In Moving Out

The art show, titled Moving In Moving Out, grew from El Dorados connection with Kansas City artist Jim Woodfill, who designed the facilitys sign. Eventually, local curator Hesse McGraw told Alpert that Flex would be an excellent place to install an exhibit. She was taken with the idea and commissioned works by five local artists. I wanted to integrate myself into this community, and thats how the art show came to be, Alpert says. It was a great opportunity to bring in people who ordinarily wouldnt come into this part of Topeka.

Again, collaboration reigned, with artists, architects and the owner communicating daily via e-mail to review artist Mike Sinclairs photos of the neighborhood. The area had degenerated decades ago when the military base closed and investors transformed devalued homes into cheap rentals. The art pieces were crafted to reflect this history of decline as well as the potential for urban renewal, hence the exhibits name.

Artist Marcie Miller Gross installation, Use-re-Use, embraced the themes of storage and the reality of a struggling neighborhood: In the lobby, she neatly stacked hundreds of pounds of freshly washed clothing and towels bought from the thrift store next door. After the show, the items were redonated. Sinclair displayed dozens of photos taken of the surrounding area, including kids at the grade school.

Moving In Moving Out opened last fall, attracting more than 200 people to the launch. Over the next few weeks, school children, art teachers, university classes, city council members and other notable visitors came to the facility for tours and discussions. McGraw wrote that the exhibit was a public collaboration that optimistically suffuses all who choose to participate.

To Market, to Market

Alpert concedes an art exhibit is an offbeat way to publicize ones storage facility. But it was right for Flex and for Alpert long-range community goals. I think marketing is an elusive thing, she says. A lot of it is word-of-mouth with storage.

Since development began on the Flex project, five other storage facilities have opened in the vicinity. How is Flex faring? Less than a year after opening, the main building with 131 climate-controlled units is well over 50 percent leased. The facility recently opened another 168 conventional units, which are renting daily.

The leading lady of the facility says shes pleased with how Flex has progressed. I think if women are going to be happy in business, they have to be true to who they are, Alpert says. Women bring a wonderful, intuitive sensibility to business. For more information, call 785.267.2233.

Local promotional tie-ins are a cost-effective marketing technique. They carry a high return on marketing dollars, meaning very little money invested results in a lot more money coming in. First, lets define our term: a promotional tie-in involves linking your storage facility with other businesses in your local market.

For example, lets say you have a Dominos Pizza a mile or so down the road. You go in and introduce yourself. You find the store needs some storage space, and you strike a deal: The pizza parlor gets a free 10-by-10 unit for three months in exchange for putting your coupon on every pizza box that goes out the door during the 90-day period. One owner used this exact approach. In three months, he got 20 extra rentals through the pizza-box coupon. Considering he only sacrificed about $300 in revenue (to cover the free unit over three months), thats not a bad return!

Moving Companies

Another business that works well with promotional tie-ins is the moving industry. About six years ago, one storage owner contacted a new moving company in his area. He knew the business was struggling and asked the young owner if both his moving trucks were being used to full capacity. It turned out they werent, so the storage owner said he would pay the moving company 50 percent of its usual rate to book the trucks for storage customers during off times. Not only did the moving owner agree, he was willing to put a large magnetic sign on the side of the truck that said, Well move you for free to ABC Self Storage.

Over the years, both parties have been delighted with the arrangement. The storage facility uses and recommends the moving company exclusively, recommending it as his in-house mover. If a customer agrees to rent a unit for six months, he gets a three-hour move for free. If the customer agrees to rent for a full year, he gets a five-hour move.

Lets look at how the numbers might work. Lets say the moving company usually charges $25 an hour for a move. You only pay him $12.50 an hour, providing your customers use the truck during designated times when theyre not in use at the full rate. A six-month customer will cost you $37.50 in moving fees, while an annual customer will cost you $62.50; but when you consider the value of that six- or 12-month contract, you see its well worth it.

Not only that, but providing a moving truck to customers is a fantastic USP (unique selling proposition). Your customers get free use of a truck, and you never have the hassle of vehicle maintenance, insurance, etc. When the opportunity presents itself, there is no reason for you to go to the expense to offer something a moving company already does.

Real Estate Agents

Real estate agents provide another great tie-in opportunity, as they are constantly doing business with people who are moving and need storage. To get started, approach a number of agents with an offer of free booklets of moving and storage tips they can pass out to clients. The title of the booklet might be something like The 17 Things You Must Know Before Your Next Move. While its content will remain the same for all agents, you can customize the cover to each business.

Include a coupon for your facility on the inside of the back cover, and add a code unique to each agent. This way, youll know who is sending business your way. Finallyand most importantreward the agents for their cooperation. For example, consider giving them gift certificates to a local restaurant or shop. And cash is always popular! Again, this is a win-win situation. You get your company name in front of an untapped market, and you help real estate agents help their customers. The trick is to sell your site in a way that is subtle, more informational and less sales-oriented.

Use Your Imagination

There are many other businesses with which promotional tie-ins can be successful. The important thing is not to prejudge any industryyoud be surprised which ones will work for you. Be creative in your approach and consider all possibilities. And keep in mind that tie-ins can also work online. Link your website to that of other local businesses, and always track your results. Whether you work with a business physically or virtually, you want to know the source of your new customers.

Be active in your community, especially local business functions, and be on the lookout for opportunities. The chamber of commerce provides an excellent venue for networking with new business owners in your area. The smart storage operator is always looking for ways to effectively market his services through others. Dont be concerned about approaching business owners and being turned downthat is their loss. Your goal is to have the greatest number of people sending potential renters your way at minimal cost. The cleverer you are, the more profitable you will be.

Fred Gleeck is a profit-maximization consultant who helps self-storage owners/operators during all phases of the business, from the feasibility study to the creation of an ongoing marketing plan. He is the author of

Secrets of Self Storage Marketing SuccessRevealed!, available for purchase at www.selfstoragesuccess.com. He is also the producer of professional training videos on self-storage marketing. To receive his regular insights via e-mail, send a blank message to tips@seminarexpert.com. For more information, call 800. FGLEECK; e-mail fredgleeck@mac.com; visit www.fredgleeck.com.

Q: A tenant injured herself at my facility and expects my insurance company to pay her medical expenses. The woman lost her balance and fell on the stairs while exiting the rental office, but the steps and handrail were painted yellow for visibility and are in excellent physical condition. There was no evidence of water or any other material that could have caused her to slip. Will my insurance company be forced to pay for her injuries, even though her accident was not caused by negligence on my part?

A: Unfortunately, accidents happen, and its not always a direct result of negligence on the insureds end. Your self-storage insurance policy includes medical-payments coverage (also known as medical expense), which is designed to cover expenses incurred for bodily injury caused by an accident with no regard to fault. Most policies include medical expense with a limit of $5,000 per occurrence, which can be increased to $10,000. The coverage will pay for first aid, medical, surgical, X-ray and dental, ambulance, hospital, professional nursing and even funeral servicesas long as the costs do not exceed the insurance limits.

If the tenant decides to seek additional damages, your self-storage insurance policy should respond with a defense. If it turns out you are legally liable for her injuries, your insurance should pay out the sums for which you are obligated, up to the limits stated in your policy.

Q: I am considering a guard dog for my storage facility. I read that having a guard dog roam the property at night is a great and inexpensive way to deter crime during off-hours. Will this affect my insurance policy?

A: When deciding which security measures you will incorporate at your facility, first determine if you are trading one liability exposure for another. While a guard dog may deter some crime, professional offenders will quickly disarm a dog, while novices may attempt to outrun it. If they get mauled, your facility could face litigation.

A guard dog may make your facility less attractive to your insurance company, which could increase your premium or decline to renew your policy. If you use a dog, your insurance provider will probably ask you a variety of questions, such as what breed of dog it is, where you plan to keep it during business hours, how you plan to avoid tenant contact and if you have warning signs posted on your property. As some breeds are more volatile than others and can be unpredictable, most insurance companies prefer you keep the dog away from customers, especially children.

If your insurance provider decides to insure your facility with a guard dog on the premises, you will probably be asked to sign an animal-exclusion form to keep or obtain coverage. This contract excludes coverage for property damage, and bodily or personal injury that occurs as a result of any animal owned, maintained or leased by you, your facility or your employees.

Some would argue that dogs who attack would-be burglars are only doing their job, but that doesnt mean the injured party or his family will not attempt to sue. Litigation could be very expensive, and since your policy may exclude coverage for acts by animals, you could be left with quite a bill.

Q: My insurance agent recommended I purchase hazardous-contents removal coverage as part of my policy. Isnt this already covered under pollutant cleanup and removal?

A: Pollutant cleanup does not cover expenses to legally remove hazardous contents such as tires, oil, gasoline or chemical biohazards left in a unit by a tenant. Hazardous-contents removal is an optional coverage that will reimburse you up to certain limits for expenses you pay to remove such items. (Please note this option does not include any related fines or legal fees you may have to pay.) Even a small disposal job can cost thousands of dollars, so check your insurance policy to see what type of disposal coverage you have or may want to consider purchasing.

This article is a guideline to aid in minimizing risk in self-storage facilities. The information it contains is intended to be of general interest and does not address the circumstances of any particular individual or entity. Nothing in this document constitutes legal advice, nor does any information constitute a comprehensive or complete statement of the issues discussed or the laws relating thereto.

Amy Brown is part of Universal Insurance Facilities Ltd., which offers a comprehensive package of coverages specifically designed to meet the needs of the self-storage industry. For more information, or to get a quick, no-obligation quote, call 800.844.2101; visit www.universalinsuranceltd.com.

Construction Corner is a Q&A column committed to answering reader-submitted questions regarding construction and development. Inquiries may be sent to construction@ministorage.com .

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Q: In the past two months, I've had two keypads at my storage facility knocked over by trucks. What is the best way to protect my keypads at the gate?

Jack in Albuquerque, N.M.

A: That depends on the type of keypad and how it is mounted. Keypads are commonly installed on a gooseneck and bolted to a concrete slab at the gate. In this situation, you can install bollardssteel posts filled with concretearound the keypad to protect it from vehicle-related mishaps. Sometimes a keypad can be mounted on a wall or gate post, making it a less likely target. When placing your keypads, keep convenience and equipment safety in mind. From a customer-service perspective, it's best to put them where tenants can access them without getting out of their vehicles; but this will obviously require additional safeguards.

Q: Is there any way to prevent an access system from being damaged by lightning or electrical surges?

Nancy in Wichita, Kan.

A: Nothing will protect equipment from a direct lightning strike, but there are several measures that can prevent damage from electrical storms and surges. Lightning only needs to strike a nearby area to send surges to electronic components, so check your power supplies for safety. All equipment and computers should be plugged into a surge protector. Some security vendors offer devices with a grounding plug that will divert harmful electrical charges to the grounding source of the building. If you live in a lightning-prone area, ask your supplier what protections it can offer.

Unfortunately, while a surge protector can help, electrical charges do not need to go through power wires to cause damage. They can flow through any conductive source, such as an unprotected data wire. Higher-end keypads have special protectors for data wires that can dissipate an electrical charge before it damages the keypad circuitry. Check with your vendor to see if this is available.

Rod Davis is the installation manager for QuikStor, a provider of self-storage security and software since 1987. For more information, visit www.quikstor.com.

They had little idea they would become partners in a successful self-storage enterprise when they met. Though Robert Kortright and Greg Porteus had ambition, drive and a wealth of business experience, their backgrounds were profoundly diverse.

Porteus attended college and became a New York state trooper. After retirement, he ran a successful construction company for several years. Kortright grew up in a mobile home in Kingston, N.Y., and began working at age 10, selling tire tubes on the roadside. At age 16, he purchased his first real estate. While in his twenties, he owned and ran a successful tire company. But Kortright dreamed of having a storage facility on the property adjacent to his boyhood home. In 2001, he received municipal approval to build one on his 3.3 acres.

It was not an easy process for a young entrepreneur to gain the towns approval for a state-of-the-art self-storage facility, Kortright says. And he had a problemhis financial resources were exhausted. I started this project when I was 29 years old, spending every cent I made.

Believing he had no choice, Kortright put the property on the market. He was on the verge of selling to a local storage facility when he met his future partner. Porteus says he saw a future in an industry with only a 4 percent failure rate nationwide, especially when combined with Kortrights unique ideas, great location and approved plans. Within days, he secured financing for the development of Accessible Self Storage.

What the Market Needs

Accessible Self Storage sits at the juncture of two main roads, one-quarter mile from State Highway 9 in Wappingers Falls, N.Y. Opened in October 2002, the facility comprises three double-story, steel-and-concrete buildings containing 600 units. Monthly rates range from $60 for a 5-by-5 to $310 for a 10-by-30. Accessible has the technology and design to provide custom-size units for clients, and there is outside storage for RVs, boats and trailers.

Research showed that to best serve clients in New Yorks wildly fluctuating climate, the self-storage trend was toward 100 percent climate control. Porteus and Kortright incorporated heat and air conditioning into all the facilitys buildings, including the downstairs, drive-up units.

Building 1 is named The Whitely Building in memory of a U.S. Marine killed in action in Vietnam. The ground floor features easy access to units with exterior roll-up doors. The second story has four entrances, all with wide staircases, and a centrally located freight elevator that loads from the outside at ground level. Building 2, opened in June 2003, is slightly larger with the same design.

The design of Building 3, unveiled last December, ensures more convenient moveins. Each ground-floor unit has an exterior and interior door, so customers can access their units from inside the building if they prefera real bonus during severe winter weather. The second floor also has two hallways, and center units have doors on either side.

Greater Expectations

Self-storage is an industry that must cater to customers demands, Kortright says. The most important thing is customer service. If you concentrate on customers needs and making it easy for them, you will always be full, he asserts. To this end, Accessible strives to provide more than people expect.

Customers within a 40-mile radius of the facility are moved in free via the companys pick-up service. An enclosed trailer, complete with blankets and hand trucks, is dropped off at a customers home, business or another storage facility. Once loaded, Accessible picks up the trailer and parks it next to the customers unit or the freight elevator.

The sites security includes a high-tech CCTV system that allows the owners to view facility activities via any Internet connection. Exterior lights are set on timers and interior lighting is motion-activated. The coded entry gate allows 24/7 access, and entry and exit times are logged. The facility is kept immaculate, not only for safety but visual appeal. And in winter, snow is promptly removed using the facilitys own equipment. We want to ensure our clients peace of mind and security, Porteus says.

Customers can request to have Accessible staff accept outside deliveries on their behalf, to be kept for pickup in the main office or directed to the unit. We have changed the way people store their valuables, says Kortright.

Running the Show

With the increase in property costs, the partners chose to eliminate an onsite managers apartment and use all available land area for storage. A high-tech technology system allows them to run the facility with four employees, while Kortright and Porteus handle most of the repairs and facility care.

Before hiring, the partners conduct careful and thorough interviews with candidates. New hires work daily with the owners. Certain standards are instilled, including excellent customer service and the importance of maintaining an immaculate work place. And, of course, employees must understand the importance of putting on a smile when a customer comes through the door.

Accessibles marketing program consists of direct mail, Yellow Pages advertising and door-to-door campaigns. Kortright says the facility is also enjoying the rewards of word-of-mouth. Our customers are our best advertisement, he says. The facilitys second most effective marketing medium is employees with excellent phone skills and pleasant-sounding voices.

On the Horizon

Although Korthright believes his area is saturated with self-storage, he and Porteus plan to expand if the opportunity presents itself. The partners see the industry growing and changing to meet customers needs and believe self-storage should be a pleasant, hassle-free experience. According to Kortright, All the advertising in the world wont make a business a success without wowing clients with unsurpassed customer service.

A lot has been written about how to make a sale, but I would like to address the ways in which you can fumble a simple self-storage transaction. There are plenty of means to this end, but the best can be summarized with a few general guidelines. If you really want to blow the sale:

1. Be disinterested.

If your prospect feels youre not interested in his needs, you will succeed in blowing the sale. Failure to make eye contact or smile, allowing yourself to be distracted, and showing general disinterest in what your customer has to say are great ways to get him to walk out the door empty-handed. Put this guideline into practice early in your sales presentation and you wont need to learn any of the other great ways to lose a sale, because youll never get that far.

2. Dont ask any qualifying questions.

If you dont know anything about a prospects situation or needs, you will certainly blow the sale. Let the customer tell you whatever he wantsjust dont ask him any questions that relate to how he might use your product and service or what hes looking for in a provider.

3. Dont paint any visuals for the prospect.

If a customer cant visualize himself putting his belongings into storage or picture what a particular unit might look like, he will not do business with you. You can also blow the sale by failing to describe your security features and conveniences. If a prospect cant see how his storage experience will be great, hell choose not to have the experience at all.

4. Dont make any agreements with people.

During a sale, you are negotiating a storage contract, and there are many items on which you and the customer must agree. If you fail to see eye to eye, youll be sure to blow the sale. So dont encourage the customer when he compliments your location or pricing structure, and dont go out of your way to help him or give him anything he wants.

5. Dont ask any closing questions.

If you fail to ask closing questions that help people make the small decisions that go into renting a storage unit, you will blow the sale. So dont ask if the property is conveniently located or if they like the extra effort youve made to keep the place clean and secure. Dont ask if they think the size unit you showed them would suit their purpose. Dont ask if your price sounds right. If youre careful to avoid asking closing questions, people will shrug their shoulders and walk away.

6. Dont ask for the sale.

This is the easiest way to blow a deal. If you never ask a prospect to rent with you or invite him to sign a lease and move in, chances are he wont. If you do not ask for the business, most people will be glad to oblige and move on to the next facility on their list.

Now that you know exactly how to botch a sale, I hope youll weed these common errors out of your selling repertoire. Were all guilty of failing to focus on prospects from time to time. But theres always a chance to redirect our energy on maximizing revenue. Every sales interaction has the possibility of going south, but by keeping these anti-guidelines in mind, youll avoid the most common pitfalls. Good luck and good selling.

Tron Jordheim is the director of PhoneSmart, an off-site sales force that turns missed calls into rentals. This rollover call service serves as a backup for self-storage managers. Mr. Jordheim has started several successful businesses in addition to assisting with acquisitions as general manager of the Missouri-based Culligan Bottled Water franchise. For more information, call 866.639.1715; e-mail tron@phone-smart.net.

Over the past five years, the Canadian self-storage industry has grown considerably, in some ways mirroring the boom the U.S. market experienced 15 years ago. This can be partially attributed to the maturation self-storage has undergone to meet public demand, but also to local market conditions.

After the crash of the markets in 2000, REITs and other real estate funds experienced a major influx of capital as investors moved their holdings into more traditional brick-and-mortar investments. Low Canadian interest and bond rates (approximately 100 basis points lower than U.S. rates) also spurred industry activity by allowing investors to acquire facilities at lower capitalization rates, which translated into higher sales prices. These factors have contributed to creating current opportunities for self-storage investors in Canada.

Differences by Region

Self-storage growth has not been uniform across Canada, and there remain some startling discrepancies in the price per square foot of rentable space from region to region. In Vancouver, British Columbia, storage owners are averaging $20 per square foot. In comparison, operators in Montreal, Quebec, are collecting considerably less, at roughly $12 per square foot. More tellingly, Montreal facilities are charging the same rental rates as those of similar quality in Sarnia, Ontario, two hours southwest of the Greater Toronto Area (GTA).

Taking into account industrial land values in the respective cities— $370,000 per acre in central Montreal and $50,000 per acre in Sarnia—regional differences become all the more evident. By looking at the macro view of the Canadian market, a new investor can gain a better understanding of what the future will hold for self-storage in the specific city or market he has selected. For example, it’s easy to see the Montreal market has room for an upward shift in price per square foot, whereas the Vancouver market has likely come close to reaching its natural price ceiling.

Different Canadian regions require varying investment strategies. For example, a business model that works in Edmonton, Alberta, may not be suitable for Toronto. The GTA is the most modern and developed Canadian market, and land has become increasingly scarce and expensive. This scenario has led investors to concentrate on conversion projects and create A-class facilities to prosper in the competitive marketplace.

In Calgary, Alberta, however, most new facilities are ground-up developments on the periphery of the city where the land is affordable and readily zoned. As new subdivisions expand the boundaries of this growing area, investors will reap the dual benefits of an increased clientele as well as rising land values. Both provide ideal circumstances for long-term investment.

Montreal, Canada’s second largest market, presents its own, unique investment opportunity. Traditionally low rental rates and the perceived difficulty of entering a predominantly French-speaking market have kept many outside investors from moving into this major city. However, with the maturing of the industry across Canada, Montreal’s low per-square-foot average indicates an opportunity for strong return on the initial investment, as rental rates are certain to increase.

The Birth of Corresponding Business

The storage boom in Canada has spurred the growth of businesses related to the development and management of facilities. These periphery enterprises eliminate many of the stumbling blocks once present in establishing and operating self-storage in Canada.

In recent years, financiers have emerged who focus on securing funding for self-storage as one of their core services. Their experience in the industry facilitates the acquisition of capital, as most lenders are wary of unfamiliar businesses. Also, their willingness to provide financing for sums below the minimum loan amount of most financial institutions allows smaller investors the opportunity to realize their development projects.

Consulting for self-storage is also becoming readily available to owners and investors, offering services such as feasibility and demographic studies—crucial components to any analysis of an investment opportunity. Insurance brokers who specialize in self-storage can be found in most metropolitan areas, tailoring policies to specific facilities and providing advice on reducing the number of annual claims. Finally, there are organizations that specialize in training facility staff in sales techniques, while others offer products specific to the retail side of the industry.

Unclear Indicators

A clear distinction between the United States and Canada in terms of self-storage real estate is the reluctance of Canadian owners to openly list their properties for sale. Last year in the GTA, only one facility was publicly listed. In the entire province of Alberta, two were listed in 2004. In neighboring Saskatchewan, there were none. These numbers in no way reflect current availability in these markets. To the contrary, industry growth is spurring many self-storage transactions, but the majority of deals remain off the open market.

There are many reasons for this peculiarity of the Canadian self-storage business community, including cultural business practices and the relative smallness of the industry when compared with the United States. The fact remains, however, that newcomers to the Canadian market are at a distinct disadvantage because of this lack of accurate indicators. They do not have a true picture of the opportunities available. As the storage market grows and prospers, the demand for facilities will increase, and with it the need for more precise information.

David Anderson and Michael Foy are partners in Anderson Foy (AF), the only brokerage firm in Canada specific to self-storage. They have been in the self-storage and commercial real estate businesses for a combined 22 years. AF offers comprehensive consulting and advisory services, development opportunities, financing, and management sourcing. Committed to helping individuals, corporations and asset managers maximize their self-storage potential, the AF team is expert in pricing assets, investigating financing options, structuring joint ventures, site selection, feasibility studies and target marketing. For more information, call 877.567.3800; visit www.andersonfoy.com.

At the time of its inception, financial projections for Staffordshire, U.K.-based De/S/eM Lifts Ltd. indicated the going would be tough. But the company soon realized it had seriously underestimated response from its chosen market: self-storage. Our original £350,000 sales target for the first year was exceeded within the first trading quarter, says Mike Carp, sales manager. The companys revised target is £1 million for the fiscal year ending in May.

How did a company formed less than two years ago achieve such remarkable results? In May 2003, owners David and Louise Martin incorporated a lift manufacturer to serve the storage industry. Their philosophy comprised a strong belief in customer care. The companys first nine months were spent developing quality-control manuals and seeking approvals to design, manufacture, install and commission goods-passenger lifts. No start-up company had attempted to achieve these standards since the implementation of the Lift Directive in 1997, making De/S/eMs application the first.

Achieving ISO 9001 and the Notified Body approval was a considerable challenge, says David Martin. One approval depended on the other. But despite the difficulties of the process, the company succeeded in meeting all requirements, and approvals were in place just in time to install the first lift for Armadillo Self Storage in Liverpool.

Customers and contacts made during the Martins previous employment were very keen to get De/S/eM and the Lift-Master goods-passenger lifts in their new facilities, says Carp, who joined the company in March 2004. The his and hers lift-package concept has received tremendous support. It consists of two lifts in a twin-shaft steel structure. One lift has manual doorsproven to be more reliable over prolonged useand is used to move heavier items. The other has automatic doors and services lighter, domestic goods.

A Lift for Everyone

The Lift-Master packages are designed to minimize running, maintenance and compulsory testing costs, which buyers often overlook. The initial cost of most lifts is a major expense, and operating costs over the first 10 years can often match the purchase price. De/S/eM designed out as much as 70 percent of these ownership expenses by using direct-acting hydraulic rams, which eliminate the over-speed governor and its corresponding counterweight, as well as their monitoring devices and circuitry. Fewer components mean savings in annual, 5-year and 10-year tests in addition to maintenance and repairs.

The firms technical expertise is self-evident, particularly in projects that involve design innovation. For example, a facility may have to install a lift in a particularly tight space, or need a mansard in the roof directly over the lift shaft to create the necessary headroom for engineers. Clients often overlook this requirement or are reluctant to address it, especially where municipal consent is mandatory. By using alternative arrangements of the hydraulics, Lift-Masters use the minimum possible headroom. Another of De/S/eMs innovations is a top hat section that can be incorporated into the rear of a specially designed lift to accommodate long items that dont fit horizontally.

Close attention to detail and a willingness to experiment have allowed De/S/eM to expand its customer base. Recent contracts include several London hotel projects as well as some with a local engineering company. Orders for several goods-only, pitless lifting machines (which the company imports from Holland) have also started to flow in. Lift-service contracts are self-generating as projects are completed, and some clients even opt to purchase service contracts for their other lift stock.

New Digs

With business moving forward at a staggering pace, the Martins realized a new base for operations would be necessary. They converted a 2,000-square-foot brick warehousea former pottery factoryin Longport, Stoke-on-Trent, into new offices, a product-storage area and small manufacturing plant. Though it involved major time and effort to make the move while meeting project deadlines, it was necessary to decrease costs and lead times in the long term. Despite the long hours, our employees cooperation meant all lift-project targets were met, some ahead of schedule, Carp says.

This is a remarkable feat considering installation sites for the companys clients cover the breadth of the United Kingdom, from Dundee, Scotland, to Portsmouth on the U.K.s southern coast, to Belfast, Ireland. De/S/eMs central location is ideal, with the nearest new site in Derby, less than 40 miles away.

And a Cherry on Top

The companys phenomenal first year was topped off with an unsolicited nomination for a new enterprise of the year award, part of a regional industry-awards program. The business continues to grow at a rate surpassing expectations. De/S/eM is considering the manufacture of several new products without diverting attention away from the original concept of being a committed, self-storage supplier, David Martin says. Our aim is to become the preferred supplier of lifts to the industry, and current projections suggest this is readily achievable. For more information, visit www.desem.co.uk.

The U.S. self-storage market is more than 30 years old and comprises more than 37,000 properties, with an average occupancy of 84.6 percent. It has grown rapidly from 1992, when 19,500 properties experienced an average occupancy rate of 84.8 percent. The U.K. market, on the other hand, is in its early stages, with only 400 facilities. U.K. investors and financiers, encouraged by cross-cultural comparisons, are hopeful their immature self-storage market will follow the product growth enjoyed in the United States over the past few decades.

The U.K. storage market has two distinct characteristics: It is highly fragmented and growing extremely fast. Both are attractive to financiers, as consolidation and growth in any industry require money. The rapid expansion and earning potential of self-storage in the United Kingdom is driving consolidation at the top and bottom ends of the market. The bigger companies in the sector are using their tremendous buying power to seize market share and force operational efficiencies via information-technology systems.

A year ago, the four major U.K. self-storage players were quoted on the London Stock Exchange (LSE): Big Yellow, LoknStore, Mentmore and Safestore. These companies used their quoted status to raise capital through the equity markets. The strategy allowed them to avoid expensive debt and finance growth early in the establishment of businesses that, at the time, weren't generating cash, let alone profits.

The consolidation that has taken place in the United Kingdom over the past year is largely due to U.S. financial institutions that see the enormous potential for growth. U.S. private-equity business Bridgepoint bought Safestore in August 2003 and took it private. In 2004, following a bidding war against Guy Hands, another private-equity player, Safestoreagain backed by Bridgepointbought Mentmore. Mentmore was removed from the LSE and assimilated into the Safestore business. It's now the largest U.K. self-storage player, with 70 stores across the country.

Debt vs. Equity Financing

Top-end consolidation of the market is sensible because debt is a cheap way of financing growth in a period of sustained low interest rates. The cost of capital has decreased relative to equity finance, which is relatively expensive in a low-interest-rate environment.

In neither the equity nor debt-financed models are businesses run for dividend flow. It isn't yield that interests either set of investors at this early stage. They are looking at capital growth and gaining a strong market position for future expansion and dividends. At this point, all the U.K. players are driving for scale and site location, key tenets to a successful business going forward.

There are advantages to both financing models. Being quoted on the LSE allows businesses to issue paper to finance growth, and that motivates those involvedincluding board members, storage managers and sales teams. Lok'nStore aligned the interests of much of its staff with shareholders by issuing options and discounted shares. The move has yielded significant results, creating motivated team members focused on what they need to make good money for themselves and, therefore, shareholders.

Big Players and the LSE

After the sales of Safestore and Mentmore, the only other LSE quoted player is Big Yellow, which has 32 stores and has just been reclassified from the Support Services sector to the Real Estate sectoran interesting move. This has been done to encourage the City to valuethe businessnot on a discounted cash-flow basis, but in terms of its net asset value. Big Yellow accompanied its announcement with news the company will commission an external valuation of its property assets, all in an attempt to get a higher rating.

The U.K. industry expects Safestore to come back to the market and list on the LSE at some point as Bridgepoint looks for an exit. The move will come as the cost of debt increases in the future and the entire industry matures; all the players will generate not only significant cash, but profits to pay generous dividends to shareholders.

This move would be welcomed by LoknStore. A problem with having only two quoted self-storage companies listed on the LSE is the relative lack of comparative businesses. The more quoted players there are, the more interest broking houses will show. Also, it increases the following of sell-side analysts and attracts more investors in the sector, which, again, helps communicate the value of the business and drives liquidity. LoknStore's rating would likely improve if there were more listed self-storage companies.

The relatively green U.K. market is growing fast and already generating noteworthy amounts of cash. It is showing every sign that it will follow the United States in terms of growth, profitability and continued consolidation. An interesting and exciting few years lie ahead for the industry and its financiers as U.K. self-storage grows from adolescence to adulthood.

Andrew Jacobs is chief executive of Lok'nStore Group PLC, one of two self-storage companies quoted on the London Stock Exchange. For more information, visit www.loknstore.co.uk.

The terms marketing and sales have different connotations, and they are sometimes convoluted in peoples minds. The dictionary defines marketing as the business activity of presenting products or services to potential customers in such a way as to make them eager to buy. Sales is defined as the exchanging of goods or services for an agreed amount of money. To simplify our understanding of these concepts, marketing is everything you do to put your product or service in front of a customer, and sales is everything you do to close the deal.

In the end, it boils down to communication, which can be a big problem for businesses. Anytime you convey an idea or concept, the listener interprets it from his own perspective, which is colored by his cultural, linguistic, educational and social experience. The question is how to effectively communicate messages about your offering to make it enticing to the greatest pool of prospects.

I asked Dr. Frank Jaster, a professor of communications at Tulane Universitys A.B. Freeman School of Business, to describe communications as he would to his class of businesspeople in the schools MBA program. He said, Communications is the strategy, structure, substance and style you choose that enables a person to make a decision in your favor. To define the components:

• Strategy is your plan to understand a customers needs and expectations by asking yourself three key questions: What does this person know? What does he want to know? What does he need to know to make a good decision?
• Structure is the organization of the information you share.
• Substance is the facts, data and information meaningful to the decision-making process.
• Style is the manner and context in which you present the information.

Assuming you accept the above definitions of marketing, sales and communication, how do you, as a self-storage owner or manager, express the value of records storage to customers in terms of their needs and expectations? Lets answer that question based on Jasters four pillars.

Strategy

What do your customers know? They probably have little or no knowledge of the value of off-site storage and the outsourced management of their business records. Its usually the last thing on a small-business owners mind until theres a problem (i.e., an audit, litigation or employee theft).

What do your customers want to know? They want to know how the records-storage service can save them money, today and in the future. They also want to know it can save them hassle and offer protection from liability.

What do your customers need to know to make good decisions for their businesses? They need to know why records have real and tangible value and, most of all, that outsourcing records management is less expensive than managing the files themselves. They need to understand this is serious business, and many companies have not survived audits, litigation and embezzlement. They need to appreciate that sound record-keeping practices are simple and easy, but they require a method. You have what they need and can provide it at a lower cost than what they already spend on a regular basis.

Structure

The structure that communicates records storage must be simple, clearly stated and unambiguous. Generally, it requires a script, a pitch book and an IBS (initial benefit statement) crafted to get a customers attention.

Substance

The substance of your communication must be clear and meaningful yet simple. The IBS should hit customers square between the eyes. Use persuasive questions such as, Did you know we offer a service that could save your business 50 percent or more of its record-keeping costs? Once you have caught their attention, display the cost and benefit in a simple graphical form with a standardized cost-benefit analysis. Your small-business packages (discussed in detail in the September 2004 issue of this magazine) are designed to cost less than a self-storage unit but ensure very high profitability to the storage owner.

Style

Always be professional, competent and courteous, but never miss an opportunity for a sale. Never sound canned or scripted. Your salespeople or telemarketers must be well-trained and understand the value of the service for the prospect (saving money and time), the owner (long-term revenue) and themselves (a sales commission).

Everyday Communication

We all communicate every single day, but less than 20 percent of what we say is heard or understood by our listeners. If this is true, your approach to communicating your records-storage service must be thorough, well-rehearsed and directed at the heart of a clients pain. You must develop an easy, user-friendly communication method that does the magic of saving the client money while enhancing your revenue. Thats why more and more self-storage operators are attracted to this ancillary service. Its not magic, just the simple logic of renting cubic instead of square feet.

Cary F. McGovern is the principal of FileMan Records Management, which offers full-service assistance for commercial records-storage startups and sales training in commercial records-management operations. For help with feasibility determination, operational implementation or marketing support, call 877.FILEMAN; e-mail fileman@fileman.com; visit www.fileman.com.