August Client Spotlight: 10 Federal Storage
Amy Daniels |August 27, 2015
At storEDGE, we’re always curious about the decisions our customers are making as they run their storage facilities. With factors like target/local market needs and the wide variety of product vendors and storage unit management software from which to choose, it seems each facility could have a unique story to share.
So we decided to find out.
10 Federal Storage, a storage operator in central North Carolina, is a company we consider to be one of the earliest adopters of the unmanned model of self storage. Our director of sales, Austin Jones, worked together with our support team to launch 10 Federal as one of our first clients on the storEDGE Rental Center and storEDGE management software. But we knew that they were utilizing several other forms of technology to move toward a completely unmanned experience.
Brad Minsley of 10 Federal Storage had seen parallels between the storage industry and other markets, including apartments, banks, and even movie rentals. He combined his experience in self storage with thorough research of construction financing options and, together with his team, determined that they would rely on technology to offer the same functionality that many operators have long employed property managers to provide.
I got on the phone with Brad to learn more about his story and to understand the thought process behind his team’s decisions. Check out our interview below and tell us in the comments section what you think!
Amy: I was wondering if you could tell me about your facilities. You’ve got two and they’re both in North Carolina, correct?
Brad: That’s right. The one in Durham is the one we acquired, and the one in Graham is under construction. We’ve got another one in Durham, and then we’ve got two vertical deals in the Raleigh area. This time next year we’ll have five properties.
Amy: What kind of technology are you using (or do you plan to use) at these properties?
Brad: All of them except for the urban deals will be unmanned. The ones in Raleigh will be staffed and managed by Cubesmart, but the two in Durham and the one in Graham will be unmanned and managed by us. We’ve been working with Austin [storEDGE Director of Sales] and the support team to prepare for opening the Graham facility as an unmanned property.
Unmanned facilities are not new. I mean, obviously there’s been mom and pop shops that throw a phone number on a fence, and that’s been around for more than 40 years. Then you’ve got groups like Storage Express that have been using an open-tech kiosk successfully for a number of years. What’s unique about what we’re doing is that we’re using the door lock system from Janus International. It’s really unique. It’s hard wired on the interior of the door, which allows for a lot of the functions that an onsite manager would bring.
You can overlock units automatically, which is useful for tenant collections. We can make sure that our unrented units stay securely locked. It’s also an added level of security for our renters; if somebody cuts their padlock, they still can’t get into the unit until it’s been unlocked with the tenant’s personal code. We see this as the next evolution of the unmanned facility. We’re also very excited to work with storEDGE on it. We tried some other providers, but we found them to be resistant to change and very archaic. Meanwhile, storEDGE feels like the Apple of the industry — very responsive as we work to make this the best experience we can for the renter.
Amy: Wow, thank you very much. I’m glad your experience has been good so far. So, you’re not running unmanned just yet, but that’s definitely the direction you’re headed. At what point did you think, “Should we go unmanned?” And what led you to go that route?
Brad: It was a culmination of three things:
One, I’ve had experience with self storage. I worked very early in my career with storage, so I was familiar with the business and I have an appreciation for it. When we thought about going unmanned, we were getting ready to revisit the industry. Looking at it, and looking at the operating expenses and the payroll numbers, it just didn’t make sense to me to need a property manager onsite at the facility. The image that came to mind was when I studied abroad my junior year in Europe. We used to backpack all over the country, get off the train with our big backpacks, and there would be these lockers. You’d swipe your credit card and rent them for eight hours. We’d put our big backpacks in, take our little ones, and go explore. Frankly, if you weren’t back when your eight hours were up, then the door just popped open and eviction would happen automatically. So I wondered, “Why is the self storage industry operating any differently?”
When we thought about it in even more detail, we asked ourselves this question: “If you went back in time 30 years and asked somebody which of the following three actions would not be automated in 30 years: Getting cash from a bank, getting your entire car washed, or renting an empty box, which would they guess?” When you put it that way, it’s staggering that self storage isn’t unmanned. It made too much sense, so we decided to make sure that user experience is as easy and simple as using a Redbox. That’s our goal. We want to be Redbox-level simple in renting a storage unit. We don’t want you to fill out pages of data; we just want you to give your name, email, and credit card, and be on your merry way.
We’re also complementing your software, which is locked onto an iPad with an automated vending machine. We’re pioneering a vending machine that will sell 30 different self storage goods. In fact, that’s one of the biggest testimonials we’ll be bringing forward at the SSA conference this year. We’ll put the vending machine with the credit card reader right next to the storEDGE Rental Center, and I’ll bet we can do 99% of the functionality that a manned facility can do. The only thing we haven’t figured out just yet is how to provide truck and van rentals, but we’re working on that, too.
With respect to how we’re better than a manned facility, I can rent anyone a unit 24 hours a day, 7 days a week, 365 days a year, and I can probably do it at a lower price point. Without getting too far down the rabbit hole here, if I wanted to build a manned facility, I’d have to build an office to house a person. If I have to build an office, I have to put in a bathroom. If I have to put in a bathroom, there are plumbing costs, and I also have to pay for water and sewer. If I have to pay for water and sewer, more often than not, I have to be in a city and not a county.
For example, the deal we’re doing in Durham, if I were going to make it a manned facility, I would have to annex into the city. But because it’s unmanned, I can stay in the county area and I don’t need water and sewer and other public services. Here’s why that makes a difference: The city has higher taxes and we would also have to pay to bring water and sewer lines out to our site. Not only do we save a couple hundred thousand dollars in construction on the facility in Durham, but our operating expenses will be lower as well. All I need for the Rental Center is a tiny little 10’x10’ room.
Amy: Those are really good points. I’m glad you segued into the city versus county idea because I wanted to ask what the market looks like in central North Carolina. What does your target market look like and, if applicable, how do all of the points you’re bringing up address their needs?
Brad: Sure. So, for these horizontal, unmanned facilities, we’ve got two target groups we’re going after:
In our suburban tertiary markets, like in Graham, I’m bringing a better product to that market. The groups I’m competing with in those markets are 1-store operators that are either unmanned (so they just have their phone number on the fence), or they have an office but they have limited office hours. I’m bringing a better service to the customers in that market. I can rent to them 24 hours a day, I’ve got better security, and I’ve got a better product. I expect to lead the market in pricing and performance out there.
When I get into a market like Durham, which is suburban but not tertiary, I’m competing with big groups like Extra Space and other 10-50 store operators. They’re all manned facilities. But what I can do is strategically locate myself in these little pockets of county land that haven’t been annexed yet. Because my construction and operating costs are lower, saving on payroll, taxes, and utilities, I can pass those savings on to my customer. While I may be equal, or maybe slightly inferior, to the bigger guy’s product — which I may be if manned facilities are better than unmanned facilities from a customer service standpoint — I'm at least more competitive on price.
Amy: Of course you’ve put a lot of thought into this beforehand, but I really like how you’ve identified the differences between Graham and Durham. Have you had any feedback from your customers yet?
Brad: We’ve been beta testing this setup for a number of months. The first thing we did was build a fully functioning 1-unit facility inside of our office. You can come in now, and there’s a Janus 650 door framed up in our intern’s office. You go in and use the iPad to rent that unit. You can pay real money for it, move in, move out, and create work orders. We’ve been doing that for about three months now and that’s been very helpful.
The next step in the beta testing was putting two kiosks up in the Alston Avenue facility: one showing the Rental Center and the other showing our marketing website. Our property manager’s main role now is to mimic a call center, answering any questions as they come up. Right now, 100% of the customers’ interactions is through one of those two interfaces. If they’re paying their rent, we direct them to the kiosk with our property’s website. They can hit the “pay here” button and do it themselves. They can even do it from home next time.
The response has been great. People get it. We’re not pioneering with respect to people’s interaction with technology; after all, they’re using many of these features in other industries. What we’ve got is a seamless experience that resembles our customers’ experience at a bank, ATM, a Redbox, or with any of the other computer interfaces that are becoming increasingly abundant in the marketplace.
Amy: That’s a very good point. I like that. For my final question, is there any technology that you feel is a piece of the puzzle you might be missing or plan to implement in the future?
Brad: The next thing we’re doing is launching a cloud-based call center. We have a red phone we bought from Amazon, and customers can either pick that up at the facility or use their personal phones from anywhere, and either of those will take them directly to our call center so that we can interact and help. Plus, one of the things I like about Janus’ door lock is that we’ll be able to remotely unlock doors and remotely open the vehicle gate. We really have the essential nervous system that operates all of these facilities remotely.
What do you think about 10 Federal Storage’s model? Has your facility ever considered operating without a property manager? Do you think your renters prefer manned or unmanned models of storage? Have you incorporated technology in different ways at your facility? We want to know! Leave us a comment with your thoughts.