Member Profile: Space Base Self Storage

Space Base Self Storage in Coconut Grove Darwin has been operating since 1988, when it had only 68 storage units, and was managed by a tenant, who ran a diving business! Over the past 28 years the business has progressively been expanded to include a further 432 units and 4 office/warehouse units over 2 different sites.

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In 2013 tenants of the warehouses decided not to renew their leases. With an occupancy consistently above 90%, the decision to convert the warehouses to self storage spaces, incorporating a mezzanine level, was relatively straightforward. As part of the expansion an additional adjoining building was constructed to further increase the total no. of units.

The design (by a local firm of Architects) produced 150 new self storage units of varying sizes. Space Base also chose to use a local builder familiar with the NT Cyclone code as well as Steel Storage for the fit-out. The expansion enabled the facility to better utilize space, without the need to acquire additional land.

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Initially, NT Planning was reluctant to approve the additional building, and the Darwin City Council was even stronger in their opposition due to their perceived belief that there would be an increased demand for car parking in Delatour St. However, armed with the SSAA Demand Study, photos of the facility and streetscape, and the gate access data, Space Base were able to convince them to approve the development.

This was not the only challenge faced though, with the building phase commencing during the ‘wet’ season. Planning with the builder before construction commenced ensured continued access to the office and facility, which was a crucial due to the business having 450 existing customers. When drainage work was necessary, Space Base emailed or called all storers who may have been impacted, and when necessary, discussed one-on-one with them, their specific requirements.

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In addition, the business recently installed solar panels (made in South Australia) to utilize the free sunshine so readily present in the NT. This will help Space Base cover the additional electricity requirements of the new units will not cause significant increases in their electricity costs. The number of 24/7 CCTV cameras at the facility has also been increased to ensure excellent security for storers in the new building.

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To promote and enhance the new addition, Space Base have also undertaken the following:
• Upgraded website.
• Social media campaign
• TV/Radio advertisement
• Large banners and new corporate signage outside the facility
• Special paint treatment on the roof of the new extension to minimize the impact of Darwin’s heat.

Space Base Self Storage
Space Base Self Storage

Despite being a small facility by national standards, operating in a city of only 120,000 people, Space Base Self Storage is clean, well designed facility that and prides itself on helping clients find the right space to suit their needs.

Gobox expands with new Dandenong facility

Mobile storage provider Gobox is growing its presence in Victoria, the company has just constructed a brand new warehouse in Dandenong.

The new state warehouse can accommodate 400 of Gobox’s storage containers, making it one of the largest self storage facilities in the state. The purpose-built facility took six months to construct from steel and concrete, and includes some innovative features. A wash bay with its own canopy and silt pit filter allows storage units to be cleaned easily and quickly using recycled water that is stored in on-site tanks.

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A network of security cameras and sensors around the entire site keeps the facility secure 24/7, with continuous back-to-base monitoring.

With customers able to access their storage boxes on site, it was also important that the facility be pleasant to visit and work in, so a dedicated customer viewing and inspection point was also constructed.

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Gobox Sales Manager Renee Wainwright says:

“The new Gobox warehouse is great for our customers. When they come down to visit us, they are super impressed with the modern design and how well looked after and protected their items are.”

“The warehouse’s modern and professional design was purpose built and specifically tailored to be as functional as possible. I think it gives us a real edge on the competition and makes us stand out.”

“With Gobox continuing to grow at such rapid rate, establishing the new warehouse at our Dandenong site was a natural yet necessary progression of the business.”

The Flaws of Leasing Self Storage Premises

Self storage is a capital intensive and location sensitive business. The globally preferred modus operandi is to acquire and own the real estate that the business occupies. This has proven to be the successful and enduring MO for a number of reasons.

Having debated this idea for many years with people who firmly believe leasing storage premises is the ‘new way’ or superior to the classical self storage investment strategy, I remain amused that it persists. It is apparent my arguments are not convincing enough.

The temptation for a self storage operator to lease a self storage property often come with the arguments that:
a) The accountants say a business shouldn’t have such a ‘lazy balance sheet’ holding so much capital in real estate;
b) There is a scarcity of property to be acquired, so leasing is the only way to grow; or
c) The operator lacks the capital to acquire so leasing helps fund the real estate.

In my observations of the self storage industry in more than 2 decades, leasing self storage property has almost always accompanied an impatience of the operator who wishes to grow quickly. These ambitious players hope to assert themselves in the industry quickly.

In the 1990’s, Global Self Storage entered the market and through leasing expanded to 17 locations in only a few years before collapsing.

Other small players have entered on a leasehold basis but haven’t been able to really move ahead.

In 2003, APN created a retail investment product to enable National Storage to sell and lease-back its properties. In a later twist National re-acquired many of those same assets to make them again a more classical self storage owner-operator, but retaining and operating on a leasehold basis in other circumstances.

The largest and most successful self storage operators in the world own their real estate.

In Asia, securing freehold is very difficult and expensive. Leasing for self storage operators is common, but remains riddled with problems. Leases are short (3 years is typical in Hong Kong) and land owners are keen to ensure their returns are optimised. This commonly forces self storage operators to close or relocate.

Long leases are common in the UK, and the law provides for a somewhat sympathetic rent review and lease renewal. However, major storage operators prefer to acquire freehold.

There are a number of flaws with leasing self storage premises:
1) Risk of forced relocation – Australian landlords typically only offer short-term leases. A landlord committing for longer than 10 or 15 years is unusual. (In Hong Kong, getting a lease longer than 3 years is unusual). This means the substantial capital investment to fit out must be written off in the lease term. The business should also prepare to start-up again in a new location when the lease expires, along with the requisite capital investment and rent-up.

2) Risk of an unfavourable market rent review – Leases will re-set the rental to market every few years. A significant market based rental increase may not match the income position of the self storage business at that time, and possibly causing operating losses. This may force relocation and re-starting the business. Problematically, an alternative location may not be available in the area.

In addition, self storage customers do not like being moved. The practical challenge of undertaking the moving of 500, 600 or more of people’s personal effects is not to be underestimated. It takes many months and comes at quite a cost while also losing a significant proportion of the customers.

All this means, the business may have to choose to simply close down, or absorb losses until the income eventually recovers.

3) Leasing constrains capital investment, upgrades and improvements – as the lease expiry approaches, the storage operator will resist undertaking the necessary upgrades and enhancements to keep the business relevant and competitive. Expanding, upgrading and basic maintenance will be deferred until new lease certainty is reached. The tiredness and deteriorating condition can be observed in many leasehold self storage businesses.

In addition, there is a constant wave of up-zoning. Governments around the world are increasing density and changing the zoning uses to enable more productivity from existing real estate. Self storage operators need to keep up and increase their density. If an operator leases the property, the owner will eventually want to crystallise this value.

There is no escaping that self storage is capital intensive and location sensitive. Acquiring and owning the real estate addresses the property cost, giving the operator fixed expenditure for the property it occupies. Importantly also, it enables the flexibility to adjust the service, scale and product offer at any time. Enduring successful self storage businesses own their real estate.

By Sam Kennard

Sam joined the Family Self Storage Business in 1991. He was appointed Managing Director in late 1994. In that time Kennards Self Storage has grown from 8 locations to over 80 today. The company is an active and specialised developer of property, focussing on expanding the Kennards Self Storage portfolio in Australia and New Zealand. Today, Kennards Self Storage is the market leading Self Storage Brand and industry innovator and employs over 230 people in Australia and New Zealand. The company remains a privately owned and family run business.
For more blogs by Sam visit: www.kss.com.au/kblog

Chairman’s Report – 2016 Wrap Up

This year’s AGM signifies the end of my first year in the Chairman’s seat and 3rd year of involvement at board level.

My review of Gary Vick’s 2014 AGM Chairman’s address reminded me of the significant challenges that the SSAA office had faced in the months prior to the 2014 AGM. The SSAA board and office, for various reasons, were confronted with some tough decisions and, fortunately, as I speak to you today, our situation couldn’t be more different. I am very happy to report that our situation has vastly improved over the past 12 months and, in my opinion, the SSAA is in an extremely strong position and looking towards a very positive future.

The foundation and strength of this position can be quantified by the direct member benefits offered by the SSAA so far in 2015.

Some of these include:
• An extensive update to the Standard Self Storage agreement.

• Updated OH&S manuals.

• An update to the employment handbook, including updated modern awards.

• In terms of advice & training, the SSAA office has received and given advice on over 1000 legal queries.

• Simone has held over 72 hours of legal training in major cities across Australia.

• In addition to this, over 100 hours of face to face training has been carried out.

• The SSAA insider blog has posted over 200 articles and had over 200,000 hits to the content displayed. This success has promoted to the SSAA website onto the front page of most google searches and we are working on ways to leverage this high ranking into additional enquiry opportunities for our members.

• In terms of major networking and events. 2015 saw the 1st ever Staff in Storage Training & development retreat. More than 90 people attended and many of them had never experienced a SSAA event in the past. Recently, the Uluru Owners and Managers summit reeived over 140 people and was hugely successful. Planning is in full swing for the 2016 Melbourne convention and registrations are already coming through. The success of these events has underpinned the strategy for alternating years of the summit / retreat and major convention schedule.

• The list goes on… exclusive insurance was negotiated for NZ members, more than 8,000 searches were completed on Storer Check, the mystery shopping service continued and the recent Awards for Excellent program received over 30 nominations. Attendance to regional meetings has never being as strong and positive.

I think that we can all agree that the new look SSAA office and Association is working extremely well.

I would like to acknowledge Simone Hill for her tireless efforts over the past 14 months in the CEO position. Simone lives and breathes the Association and her extensive industry expertise, sound advice, unwavering determination and steady hand has transformed the SSAA office and association. Simone has earnt great respect within our membership community and we couldn’t ask for a better CEO and ambassador for our industry.

Rachel Muir, our Membership Services Officer, has shone over the past 12 months and absolutely excelled in the MSO role. Rachel’s ability to go above and beyond for the members and Association attributes directly to the fantastic benefits that our members receive on a daily basis. Rachel’s organisational skills are exceptional and we are all extremely thankful for her efforts and lucky to have her as an integral part of the team.

I would also like to acknowledge Jeannette Jones, Kate Ruhl and Melinda Wyper for all of their support and hard work in the administration, paralegal and accounts payable roles.

Behind the scenes, your board has also worked very hard. On behalf of the association I would like to thank all of them. It is a voluntary role and we appreciate all of the time and knowledge they donate.

Recent nominations saw the election of Andrew Eastwood to the Large Operator position. This is Andrew’s 2nd tour of duty and we are looking forward to working with him. I would also like to congratulate Sally Steele on her election to the regular member position after stepping down from the Large Operator position. Thanks also to Darren Marshall for his continued commitment and re-election to the Major operator position.

This 2015 AGM sees Lee Cameron finishing in the regular member position. On behalf of all members, I would like to extend a big thank you for all of his hard work, advice and support to the board over the past 3 years. We wish him all the best in the future.

Finally, I would like to congratulate Keith Edwards on his election to the role of Vice Chairman. Keith is a passionate board member and his hard work, especially with our NZ members, is extensive and dedicated.

Looking to the future and 2016…
The office and board is working on many initiatives. First and foremost we want to continue with the momentum seen over the past 12 months in relation to direct quantifiable benefits available to our members. We also want to continue with the extensive promotion of these benefits to current members and potential members, that we would like to attract to the association.

2016 is certainly looking very bright and the SSAA office and board will continue to build on the strong foundation that has been demonstrated over the past 12 months.

Thank you and all the best.

Guy Wilson

Making the most of your self storage unit

Self storage is a great solution for those unruly piles of boxes and objects that you have in your spare room, garage or wardrobe. It provides a practical and affordable option for storing objects away from your home in an environment that is well-organised and secure. The different unit sizes and designs mean you can choose the space that suits you.

Some units have wide roll-up doors which are perfect to back a vehicle through so you can unload directly into the storage unit. Other storage units are locker sized and are suitable for a couple of boxes, storing a few tools or seasonal exercise gear. Slightly larger units can fit a motorbike or jet ski and are great for an easily accessible space outside your home (perhaps closer to where you intend to use the item). The majority of storage rooms are designed with domestic storage in mind and are useful if you are planning a big relocation and are unsure what furniture is going to fit or look good in your new home. If you are budget conscious you might also want to consider using a storage container as they can fit most of the larger items from a 2 or 3 bedroom house.

When storing items it is always a good idea to measure your unit and then set out the unit size at home so you can consider the best way to arrange your goods. This will make it quick and easy when you go to fill the unit, as you will already know the best way to arrange items. You will also be able to work out where to leave gaps for a corridor or walkway if you need to regularly access your goods. Planning your space helps highlight the best place to put shelves and racks, or how to arrange boxes so they don’t block any lights or windows. Another important aspect to consider is the door of your unit and how it opens. Many units have roller doors or outward opening doors which means you don’t lose any space. If your unit is climate controlled with an individual system you should make sure that access to this is possible.

From ease of access to their size and layout, self storage units can provide you with the extra space you need to store your household goods.

Ella Andrews is blogger and freelance writer, who is very passionate about home improvement, remodeling, interior and exterior design ideas. She’s been writing about similar topics for a long time, but is also constantly searching for new sources of inspiration. More helpful tips and advice on removals and storage can be found at: hampsteadmanandvan.com

Aussie Moving Trends

Taxibox recently commissioned a survey of 558 Australians to find out how often they move house and whether they use self storage in the process. There are some pretty interesting findings. For example, moving house is the most popular reason people take out self storage, and nearly one in five (18%) of us have a box of possessions that we move from house to house, but never go through.

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Not all Self Storage Facilities are created equally

No two businesses are the same – especially nowadays, as companies adapt to a changing marketplace & become more creative with their offerings in an attempt to “stand out from the crowd”. With this in mind, it’s important to make sure your prospects (potential customers) understand your points of difference. After all, if they’re shopping purely on price, the more-expensive facilities probably won’t even make it onto the list! If that’s you, then it’s time to give prospects a reason to choose you! Let’s take a look…

Self Storage facilities are different?

We work in the industry, so we know this – but do your prospects? If they’ve only ever seen self storage on TV (and it’s a bunch of rusting shipping containers on a block of land with a chain-link fence around it), then that’s what they’ll assume it is. If they get your quote and it’s substantially more expensive than your competition, they may not stop to ask why.

Your facility may be at the opposite end of the quality scale – but if your prospects don’t know this, then you may not even get considered as an option – even if you’re genuinely worth it.

Some examples of points of difference may include:

  • Price
  • Ease of access
  • Covered driveways
  • Range of unit sizes available
  • Location
  • Size of goods lift (small lifts mean many trips – especially for removalists, who usually charge by the hour)
  • Security offerings (PINs, individually alarmed units, on-site manager, cameras, guard dogs, CCTV, etc)
  • Customer testimonials, your Google reviews or your Google star-rating

Our goal here is to make sure your prospects understand that not all self storage facilities are equal… so how do you make sure your prospects are comparing apples with apples? Easy – start with the bananas.

Discover your Points of Difference

The first step to finding out where you stand is to mystery-shop your competition. Ask a friend or colleague (someone they won’t recognise) to visit a competitors facility and find out a little more about their offering. More importantly, find out where they excel, where you excel and what tactics they’re using to sell against you.

The traditional rent increase method creates a lot of work

 

If your competition runs a facility like this, you may never be able to compete on price – but you could certainly compete on looks & security!

From this information, we can create two lists (frequent readers will know that I love lists) and begin to ascertain our businesses strengths and weaknesses.

Here’s how it works:

  1. Start by writing down everything that both you and your competition offer. This is the POP (Points of Parity) list. It’s basically a list of things that you can’t compete on, because you’re both the same in this respect. These are your apples.
  2. Secondly, write a POD (Points of Difference) list. This is a list of areas where your business excels in comparison to the competition. These are your bananas! It’s these exact reasons that you need to highlight when you’re talking to potential customers.
  3. Finally, you may wish to create a POD (Points of Difference) list for your competition too – this is made easier if you’ve visited them and seen their offering first hand. It’s this list that you’ll need to have “ammunition” ready for, because your competitors are likely using these against you.

Give customers a reason to choose you

Now that you’ve worked out your facility strengths and weaknesses, it’s time to weave these into your sales process! Highlight your PODs in your sales spiel, on your website and in your marketing materials.

The traditional rent increase method creates a lot of work

 

Find your Points of Difference and use these to stand out from the crowd.

 
Develop some strategies in dealing with your competitors PODs, too – it can be something as simple as helping a colleague come up with something to say in response, if a prospect says something like “I understand you don’t have undercover areas in all of your facility, is that right?” – to which you might reply: “That is true, but all of our access corridors lead to an undercover area where you can park your car to unload, so you & your goods will be dry while you’re putting them into storage”.

Turning negatives into positives

If analysing your competition has revealed a series of weaknesses in your business, spend some time working out how to make changes or improvements. You may also be able to turn a negative into a positive, as per some of these examples:

  • They have 24/7 access, we don’t: Turn this into a positive by selling the benefits of a daytime-only facility. “Do you really want strangers roaming around at night time when there’s no one here?” – or evaluate the storers requirements on a case-by-case basis.
  • They have a move-in truck, we don’t: “We’ve decided not to have a move-in truck, in order to keep costs down for our customers. We do, however, have a trailer that you can use for free during move-in… and if you did need a truck, we have a deal with XYZ hire company for 20% off van & truck rentals.”

Further reading…

If you come across a customer that isn’t sold on storage (in order words, they’ve called to inquire about pricing but they think storage in general is too expensive), you might like to direct them to my other blog post, “7 reasons why Self Storage is a good idea“.

Additionally, you might also like to learn a few new ways to stand out from the competition, by being appealing to your customers. Happy selling!

Regards,
Andy (Customer Experience & Marketing Manager, StorMan Software)

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