Self Storage: An All-American Export Vendors find reward in foreign markets ripe for development.
By Laura Williams-Tracy
Vendors are exporting the great American idea of self Cultural, Language Differences storage to lands where there’s no fear of over-building and Every foreign market has different cultural idiosyncrasies the only competition is awareness. that must be learned for storage to be successful. A slower development period in the United States has PhoneSmart, an off-site call center based in Columbia, made self storage in places like Brazil, Central America Missouri, is targeting all of Latin America with call and Hong Kong challenging but potentially rewarding center services as self storage takes hold in those markets. markets for self storage vendors. Especially in countries Currently, the company has customers in Mexico, Guate- where there’s a growing middle and upper class, a nascent mala, El Salvador, Panama and Columbia and is working self storage industry is taking off and delivering U.S.-based with more Spanish-speaking customers in Spain. storage vendors an opportunity to replicate what works so well here. “I thought the market was strong in Latin America, but after coming back from Asia, the opportunity there is about three times as great,” said an enthusiastic David Blum, president of Better Management Systems LLC, of Coral Springs, Florida, after attending a trade show for the newly formed Self Storage Association of Asia. Blum’s company offers consulting for first-time storage developers in other countries, and he has opened projects in São Paulo, the largest city in Brazil, as well as projects in Israel, Greece, Portugal, Panama and Peru. The international realm has long been a source of new business for Arizona-based PTI Security Systems, which offers access control, site security and facility products. PTI Security has more than 25,000 systems installed worldwide and in more than 30 countries, and maintains offices in Australia and London. PTI Security sponsored a recent storage trade show in Hong Kong, where developers have formed a new trade Metro Storage International has opened one storage facility association as they expect self storage to be a growing in Brazil and has two more under development, branded as asset class there. MetroFit. In Portuguese metro means “meter” or “measurement,” “In Asia and the Pacific, given those densely populated so customers think of renting certain measurements of space to store their belongings. countries, the self storage industry in general has incred- ible potential,” said Jon Loftin, PTI Security’s vice president of business development. “But the kind of penetration of While development is happening at a faster pace in Latin self storage that we see in the U.S. is going to be unrealistic America than in the states, the business there is growing over there in the short term.” more slowly than in the U.S. because there are so many PTI Security is also supporting the incubation of the self fewer facilities, said Lucia Darnell, assistant vice president storage industry in Brazil, where changing demographics of PhoneSmart and a native of Peru, who brings knowl- are ripe to grow the industry. edge of the language and culture as PhoneSmart expands. “We see a lot of opportunity in the next few years.” “From the security aspect, we want to make sure people realize that it’s important to have a system designed for the Darnell said the first developers have worked hard in self storage environment instead of trying to use something those countries to introduce the concept, and it has off the shelf that can create issues for the operator and for been well-received, initially strongly among commercial customers,” Loftin said. “Our products are designed specif- customers; however, she admitted that communicating ically for the self storage environment and integrate with about self storage in multiple countries is challenging. other management and accounting software.” See International Vendors, page 26
PAGE 24 SSA GLOBE JUNE 2014 A Yardi Company
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Centershift is now part of the Yardi family of companies EXPAND INTO THE International Vendors, from page 24 PORTABLE STORAGE “We have to understand the culture for each area that we are going to serve,” she said. “For example, self storage is BUSINESS called ‘mini bodegas’ in Mexico, and ‘bodega’ in Panama, but in Spain the correct word is ‘trastero.’ Even if it’s the same language, there are different words.” Duty and import restrictions can also cause headaches. “We recently had a job where the equipment sat in Customs for a week and a half,” said Jon Reddick, vice president of Sentinel Systems Corp., a family-owned management software and security access products company based in Lakewood, Colorado. “Working internationally, you can’t say this job is going to have a challenge and this one won’t because you just don’t know.” VERSATILE “We have to understand the culture for each area that we are going to serve. For example, self storage is called ‘mini bodegas’ in Mexico, and ‘bodega’ in Panama, but in Spain the correct word is ‘trastero.’” ~ Lucia Darnell, Assistant VP, PhoneSmart
SIMPLE Still, Reddick says the 17 years his company has spent culti- vating relationships in Australia, Asia, Europe and South America have paid off. “You need good partners who help build up the trust, and you must go to the trade shows so your customers see you over and over again,” Reddick said. “It’s a bit of a longer sales cycle than normal, and good partners are really important.” The lure of opportunity on other shores led Metro Storage LLC, one of the largest privately held owner/operators in the U.S., to start Metro Storage International in 2012 to expand its reach internationally. Metro Storage Interna- INEXPENSIVE tional has opened one storage facility in Brazil and has two more under development. No Franchise Fees • No Royalty Fees “The idea is to take advantage of what we’ve learned over Low Start-Up Costs • It’s Your Business 40 years in this great U.S. business and form partnerships with local partners,” said Jay Harron, president of Metro Storage International. In Brazil, Metro’s facilities are branded as MetroFit; in Portuguese metro means “meter” or “measurement,” so customers think of renting certain measurements of space to store their belongings. MetroFit is a partnership between Metro Storage and a development company in Brazil that found the land and capital, while Metro Storage www.aaportablestorage.com infused the operational know-how. Management software company Centershift expects its 434-528-0040 international business to grow after a recent acquisition. 434-660-4020 • 434-841-8211 Centershift, which provides management software to the See International Vendors, page 28
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International Vendors, from page 26
self storage industry, was acquired in March by Yardi, a real estate investment management software designer and developer. “Yardi is a multi-national company with offices all around the world and more resources, so I expect our strategy will change,” said James Hafen, former president and CEO of Centershift and now general manager of Yardi’s self storage division. “Yardi is too big to confine its self storage vertical to the U.S. only.” Centershift had made a decision previously to not pursue business outside the United States after researching opportunities in Australia and Europe, Hafen said. “At that time we felt the market opportunities were large enough in the U.S.”
Awareness is the Biggest Challenge The goal for most self storage vendors is to be in select international markets where self storage has a chance to thrive, but introducing a new asset class isn’t always easy. “The biggest challenge is awareness,” Harron said. “No one knows what self storage is in Brazil. But a lot of emerging markets are dense and very urban with high-rise apart- ments. There is an inherent need. People just don’t know what the solution is yet.” Emerging markets with growing consumerism and a rising middle and upper class offer the greatest opportunity for storage. “Brazilians love to follow the lead of America, and the TV show ‘Storage Wars’ is on in Brazil,” Harron said. “We sponsor the show, because the awareness is good. The show is about just one small part of the business—auctions—but we’ve had fantastic response from our brand affiliation with the show.” Investors and vendors say international markets are increasingly ripe, but deals can’t be done over the phone. “If you are not on the ground living there and have local connections, the challenges are beyond overcoming,” Blum said. “You must be a local individual or have someone connected who can navigate the challenges. Government officials don’t know what the product is. There’s no existing zoning laws and codes that apply. You are pioneering.” Harron agrees that strong partners are a must, but he says foreign markets offer a different but equally appealing opportunity to the States. “We are equally bullish about the U.S. and foreign markets,” Harron said. “We don’t feel like we are anywhere near satu- ration in the U.S. And in Brazil, a country of 200 million, there are maybe 100 facilities in the entire country. Even if we never reach the same penetration as the U.S., equi- librium is certainly more than 100 facilities.” v
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