When the self-storage industry first began booming in the mid-1970s, owners relied heavily on resident managers to run facilities. This often meant hiring a husband-and-wife team to live in an on-site apartment or house, minding the store while also enjoying rent- and bill-free living.
Now, industry experts say, this trend is grinding to a halt.
“When the first few facilities started cropping up, it was all about the mom-and-pop operation,” said self-storage expert Bob Winet, a self-storage expert and one of the original owners of Public Storage Inc. “You’d hire a couple to live on-site and manage the facility, and owners started figuring this was a cheap way to run a business, so it caught on. But over the years, I’ve seen operators start to wise up and realize they really don’t need this business model anymore.”
For at least the past decade, more and more self-storage owners have been turning away from resident-manager couples and, instead, hiring single property managers and assistants who live off-site and work 40 hours a week. Winet has been advocating for this switch since he first entered the self-storage business in 1972.
“Back in the old days, I was against the process of hiring couples and essentially turning them into indentured servants,” Winet said. “I believe strongly that this is a further evolution of the self-storage business. And it’s necessary to move forward.”
Here are a few reasons why the couples trend has been steadily cooling, and what it means for the future of self-storage management.
According to the Self Storage Association, more than 50,000 self-storage facilities were operating in the U.S. in 2011, making it one of the country’s fastest-growing commercial real estate sectors. But this rapid growth has led to some market saturation. Between 2010 and 2011, fewer than 450 new self-storage facilities opened in the U.S.
According to Garo Derian, treasurer for the New York Self Storage Association and owner of Glenmont Self Storage, new construction and climbing real estate prices have made it more difficult to expand existing facilities or open new ones. As a result, on-site apartments that once housed resident managers are being converted into additional storage or retail space.
“It’s just getting too expensive to build facilities with apartments these days,” Derian said. “And owners are also building on smaller lots. So if you have a 2-acre site, you’re not going to waste space with a residence. You’re going to opt for an additional hundred storage units to generate more income.”
More Hassle Than It’s Worth
When Carol Krendl worked as a corporate trainer for National Self Storage in 1987, resident couples managed all 69 of the company’s facilities. That year, the company tried to build another location in Fort Lauderdale, FL, but the city wouldn’t let National Self Storage include an on-site apartment.
“We almost nixed the project, but we decided to build it without a residence, and we had less problems at that location than any other property we owned,” said Krendl, founder and CEO of SkilCheck Services, a management consulting firm for the self-storage industry. “That was an eye-opening experience for me.”
According to Krendl, resident-manager couples not only were hard to find, but they were also “a bit problematic.” For instance, the job tends to attract older couples who either are retired or have recently found themselves out of work. And since many of these couples aren’t coming to the table with self-storage or retail backgrounds, training and managerial oversight can be more time-consuming than it’s worth.
What’s more, Krendl said, the talent pool gets much smaller when owners start hunting for resident-manager couples.
“How many people in the potential talent pool want to work side by side with their spouses? And how many of those couples are also looking for a new home? The numbers just get a lot smaller when you go down that road,” Krendl said.
Finally, if a resident-manager couple decides to quit (or must be fired), the owner often is left without a backup.
“With couples, an owner has all his eggs in one basket, which means if the couple quits, the store may have to shut down for some time before they find a replacement,” Krendl said. “However, if you employ several individual managers, you have a backup if someone needs to leave.”
Winet said he’s also seen several instances where a resident-manager spouse dies and the surviving husband or wife simply can’t handle the responsibilities alone.
“When one of them dies, it’s really gruesome, and I’ve seen it happen all too many times,” Winet said. “Whoever is left just doesn’t have the fire power to continue operating the business, and there’s no safety net. It’s grim, and it broke my heart every time to see what happened with these people.”
New Technology, Fewer Resident Managers
According to Jerry Jones, a self-storage CPA who represents dozens of property owners across the U.S., advancements in self-storage technology have lessened the need for 24/7 management.
“Simply put, credit card and security technology is making it less and less important to have someone on-site seven days a week,” Jones said.
For instance, electronic kiosks are making it easier for self-storage owners to install automated gates that open with a simple card swipe. Jones represents a client who owns several hundred units in South Dakota, and this type of kiosk guards every one of them.
“This is what you’re starting to see all over the country, especially in coastal, metropolitan facilities,” Krendl said. “In the old days, you needed someone there to open the gate and close it behind you, but for the most part that’s just not the case anymore.”
A More ‘Professional’ Appearance
According to Derian, the industry as a whole is moving toward a more professional, corporate look, and resident-manager couples don’t seem to play much of a role in that new future.
“Customers are increasingly looking for more professionalism,” Derian said. “They’re not looking for a mom-and-pop operation where the manager is eating and sleeping in the same space. They want three- or four-story, climate-controlled facilities, and it’s hard to work a resident manager into that scenario.”
Ironically, Derian lives in house he built at his facility in Glemont, NY, along with his wife (who also works at the facility) and three children. But he also got into the industry 13 years ago. If he were looking to launch his business today, it probably would look quite different.
“I don’t think it would be possible to do it the same way,” Derian said. “The industry is definitely weeding out the resident-couples concept and moving toward more corporate-style management. It’s unfortunate for some managers out there, but we all have to change with the times. If we don’t, we won’t survive.”
Bottom three images courtesy of makosteel.com, blog.perecruit.com, opentechalliance.com