Management • Section 6
172,000 people or an average of 3.5 employees per facility; and generates more than $3.25 billion each year in state and local property taxes. With 8.96 percent of U.S. households now using storage and the average storage property comprising approxi- mately 51,150 square feet, it’s easy to see how dramatically our industry has grown over the last 40 years. In fact, over that same four-decade span, self-storage has be-
A
come the fastest growing segment of the commercial real estate industry. Today, self-storage is a much more sophisticated oper- ation than ever before with Wall Street analysts now considering the sector to be “recession resistant.” As the industry has grown over the last four decades, so
has the art and business of self-storage management. Given that self-storage is now a shining star to real estate investors, professional management has become commonplace through- out the industry. The various means and methods of manage- ment differ greatly across the product type—from owners who are store operators to third-party management by a REIT or large operator. Given this information and the numerous streams of indus-
try data and statistics, we must look to the current and future importance of professional management for our standout class of real estate. While many assume that the daily management of such facilities is simple and the business itself a simple concept, it is also an industry full of unique nuances. These unique nu- ances and how they are handled separate those facilities that are undermanaged and underperforming from those at the top of the industry that are well managed and highly profitable. Many stores are well managed by individuals as well as by
third-party management companies; likewise, there are poorly managed sites within both groups. The bottom line, however, is that the front line manager can make or break a self-storage operation. Day to day handling of the affairs of a facility and the profit-
ability derived from this process is the result of specific styles of self-storage management. Those various styles are categorized as follows:
• Owner-operated or owner-managed with employees on and/or off site
Approximate Breakdown of Facility Ownership
• 5,800 REIT owned or managed facilities • 110 firms that own or operate more than 10 facilities • 2,450 firms that own or operate between two and nine facilities
• 30,800 own or operate just one facility (30,000 owner-operators)
ccording to the Self Storage Association (SSA), the indus- try now grosses more than $24 billion per year; repre- sents 2.63 billion square feet of storage space; employs
• Owned and operated by a large operator or Real Estate Investment Trust (REIT) such as Public Storage, Extra Space, CubeSmart, or Sovran (Uncle Bob’s).
• Third-Party Fee Management • Local or Regional Companies • REIT Fee Managed
The question is this: How does an owner or investor group
know which of these management options is best for their facil- ity or portfolio?
Looking At The Numbers The various types of management can be seen in Table 6.1. Ap- proximately 54 percent of the facilities that participated in the 2014 Mini-Storage Messenger Management Survey reported utilizing full-time, non-resident managers at their facilities. In addition, 50 percent reported using secondary, assistant, or relief managers. Only 20 percent utilize a management couple or team, unlike in the early days of the industry when this type of management was prevalent. And 24 percent turn to third-party management companies. Only 7 percent of facilities in our survey are man- aged day-to-day by the owner. The number of worked
hours by
managers and other staff members are detailed in Chart 6.1. Total hours worked per store average 78 hours per week, with managers
averaging
45 hours per week. Typically, there will be some overlap of days for the manager and relief manager to ac- complish marketing activities, onsite main- tenance, or to attend local club or chamber of commerce meetings. Most op-
erators would agree that, outside of lo- cation, there is nothing more
impor-
tant than hav- ing the right person at
the helm of your
Chart 6.1 – Average Hours Worked Per Week
80
50 60 70
40 30 20 10 0
Managers Others
Total
Source: © 2014 Mini-Storage Messenger Management Survey
Table 6.1 – Type Of Self-Storage Management Used
Type of Management Full-Time Non-Resident
Management Couple or Team
Third-Party Management Customer Service Reps
Percentage 54%
20%
Secondary Assistant or Relief Managers 50% Owner Managed
7%
24% 6%
Source: © 2014 Mini-Storage Messenger Management Survey 2015 Self-Storage Almanac 73
Average Number of Hours
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