The Texas Self Storage Association (TSSA) is the largest state self-storage association in the U.S. and was named the best state association for 2013 in a poll of readers of Inside Self-Storage magazine. The Storage Facilitator sat down with Mike Gately, the newly installed president of the TSSA and vice president of San Antonio-based Daughtry Properties, to learn about the organization’s growth and what it takes to succeed in self-storage in Texas.
What factors have contributed to the growth and success of the TSSA?
First of all, Texas is one of the original states to pioneer the concept of self-storage. So it had a running start over other parts of the country. In particular, the association here has had real active board members and strong leadership for at least the last 15 years, if not longer. It’s been consistently delivering a lot of value. For example, the lease (template) the Texas Self Storage Association puts out is considered probably the best lease in the country in terms of how it protects storage owners.
Can you elaborate on other ways the association provides value for members?
In addition to the lease, there’s another major component called the Goldbook. It’s basically a compendium of information, forms and legal opinions from the Texas self-storage attorney we have on retainer. There’s all kinds of information that helps operators with legal issues when customers don’t pay rent or they put stuff in units that is not supposed to be there or there’s activity on the property such as a tenant trying to live in a unit or conduct business in a unit. It’s like a bible for the industry.
There’s also a website that has continued to be improved where members can go in and, at no expense, retrieve written information and audio and video information that might explain ways to improve occupancy or ways to protect themselves if have to sell a delinquent tenant’s contents to satisfy the debt.
Some states don’t have a self-storage association or have had trouble keeping an association going. Do you have any advice for owners in those states on how to organize?
What I see that works is you have an active group of owners that are willing to invest time, meet and talk about their common interests to get it going. Once the nucleus of 10 or 20 owners can see the benefit of it, they start talking it up amongst themselves and can bring other people on board. What makes the TSSA work is there’s an active board meeting quarterly, and sometimes more often, to go over industry issues and weigh in on those and make sure the association is getting information out to members that supports the position of the owners. It’s really kind of a grassroots effort.
What does the Texas self-storage market look like now?
We just had our annual conference with 540 attendees. I was able to go into different sessions and talk to folks, and I’d say there’s an upbeat feeling. People feel like in Texas the recession is kind of behind us. Occupancies are stable to improving, and folks are feeling confident they can raise their rents in a modest amount on current customers or on vacant units.
Better times are back. So much so that there are now developers who had kind of gone dormant for years that feel like it’s a good time for them to be building new storage in Texas and feel they can get the financing from lenders to back up their investment. So I would say that things are on the upswing. What drives storage growth is a combination of population growth and job growth–it’s pretty much like other real estate fields. So Texas has been fortunate in that it’s doing better than many states right now.
Are there any major issues the TSSA is dealing with right now?
This is ongoing, not just now. But the one all owners are interested in is that each storage facility primarily serves an area of three to five miles around it. The folks that live or work nearby are the ones who store at that property. So you can have a property in one part of town doing well because it has a good market area without a lot of competitors. But you could have one 10 miles away that has a lot of competitors and are all are suffering because there’s too much storage.
Most operators don’t mind competition, but they don’t want somebody that’s ill-informed that builds units on top of them in the same market. So the concern is that owner-operators make informed decisions about adding new units either to existing property or adding new properties.
What advice would you have for someone wanting to get into the industry in Texas?
The number one thing is to think retail, because you’re operating a business that requires significant drive-by traffic. We have many people who will say, “I have this 5-acre property left over from another development or that I inherited and I’m thinking of self-storage.” You have to do a lot of homework and make sure you have a due diligence analysis done, and if you have a lender, they will require it. You should have a location that will make sense long-term for storage, because just because you build it doesn’t mean they’re going to come. It’s better to pay a little extra and get the right location.
Photo courtesy of Texas Self Storage Association