Client Spotlight: Castlerock Interests, LLC
Jana Haecherl |December 05, 2016 |7 min read
Castlerock Interests, LLC is bringing creative innovation to self storage management and development.
Mike Castleman, owner of Castlerock Interests, LLC, is an unorthodox self storage owner. For starters, he joined the self storage industry less than two years ago after working in real estate consulting for over fifteen years. He runs a winery on the side. He owned two technology companies in the ‘90s that built software systems for the auto and telecommunication industries. And after less than two years in self storage, he is running three facilities almost entirely by himself, with a fourth facility currently under construction.
Castlerock Interests, LLC started in September 2015 when Castleman bought Flower Mound Self Storage of Flower Mound, Texas. Shortly after, Castleman added Addison Airport Self Storage in Addison, Texas and Cutting Horse Self Storage in Weatherford, Texas to his portfolio.
“It was purely a lifestyle decision for me to get into self storage,” Castleman says. “I was working hard. I was flying 100,000 miles a year. I have a family, and I didn't want to do that anymore. I still wanted to work hard, but I wanted to do it exclusively for myself and I wanted to have full visibility into everything that my business was.”
Building a portfolio in self storage
Before making his first deal and getting into the self storage business, Castleman attended the SSA Valuations & Acquisitions Course in Seattle in the spring of 2015. Since then, Castleman has attended several more trade shows, acquired three facilities, and started construction on another. He has also been invited to be a guest speaker at several self storage trade shows around the country for his talk, “Anatomy of a Self Storage Startup.”
The first facility Castleman purchased was Flower Mound Self Storage in September 2015. Flower Mound facility offers 27,000 square feet of storage with 197 units. When Castleman purchased the facility, it had an on-site rental kiosk, but no sign, office, or website. The first thing he upgraded was the facility’s web presence. He partnered with storEDGE to roll out a website, upgrade his software, and optimize his site for search engine ranking. Flower Mound’s occupancy rates jumped to around 98% after implementing the new website, and Castleman has carried out four price increases since acquiring the facility. “The most profound aspect of the last year was growing Flower Mound’s gross revenue by almost 20%, and doing so without degradation of occupancy or the presence of on-site personnel,” Castleman says.
Castleman’s second facility, Addison Airport Self Storage, offers 37,710 square feet of storage with 279 units. Addison, Texas is a suburb of Dallas, and the facility sits in close proximity to a general aviation airport. When Castleman bought the facility, it had a live-on-site manager and office hours. Castleman decided to conduct his own case study to see if he could transform Addison into an unmanned facility like Flower Mound.
“I structured my time to be in the office at the Addison facility every day for thirty days. I was trying to figure out how valuable having an on-site manager was for this facility. During that thirty day period, only one person walked in off the street who had not called in ahead of time or visited the website first. In every case except one, someone interacted with the website or made a phone call before they came in.”
“I walked away from that experience with the decision that I could save money on resources, overhead, time, everything, by making Addison completely unmanned. I walked away with even more determination around my business model. The unmanned facilities were saving a ton of overhead and it didn’t change my engagement factor with the customer at all.”
Castleman’s third and most recently acquired facility, Cutting Horse Self Storage, offers 33,800 square feet of storage with 261 units. Castleman is currently in the process of adding another 22,000 square feet of storage space to the facility. Cutting Horse is located in Weatherford, a growing city just to the west of Fort Worth. The facility offers remote-monitored, temperature controlled units as well as RV, boat, and vehicle parking.
DECONSTRUCTING THE STATUS QUO
Although the concept is relatively new to the self storage industry, Castleman thinks unmanned facilities with online rental center services are the obvious choice for owners like him. “I know there is some variability out there, and that has to do with the market you’re in. For unmanned facilities, I’m interested in markets that have consumers who profile as having high engagement factors online. The kind of people who are experienced and comfortable shopping on Amazon, who pay their bills online, and aren’t intimidated by technology.”
When completing tenant move-ins remotely, Castleman utilizes e-sign for lease documentation and legal paperwork. “E-sign was the final piece of the puzzle. You’ve got to operate and engage 100% remotely, otherwise it doesn’t work. They can sign up remotely, they can pay remotely, but if they can’t execute a legal document remotely, it doesn’t work,” Castleman explains. “The storEDGE platform offers those kinds of solutions for operators like me. I still have operations that seem to need personnel, but I’m targeting a direction where it all can be remote. I’m striving for a business that is completely paperless, remote, and personnel-free. A customer at my facility can move in on their own in less than ten minutes using storEDGE.”
Castleman also upgraded the gate at the Addison facility to PTI gate systems to utilize EasyCode functionality and he plans on doing the same for the rest of his properties. “Customers approach the gate on their phone and can access it without rolling down their window. They don’t have to punch in their code on a keypad. They can just do it all through the phone. I have the ability to open and close my property gates from anywhere using my device, and I can even look at live video on my phone of the person sitting at the gate at the same time through my security monitoring.”
Customers immediately saw the benefits of the technology upgrades, but the change did come with a learning curve for his customers. “The biggest challenge is dealing with people’s fear of doing something new,” Castleman explains. “And that can be something as simple as not having a manager on site or raising a price.”
“There are always challenges with new technology. A perfect example of that is the new gate at Addison. When I bought Addison, the gate was 35 years old and it was going to blow up any day, so they left it open all day because they were afraid it would break when it kept opening and closing. After I ripped it out and got a new one, I found out there were some customers who had been there forever who didn't even know their gate code because they’d never had to use it. So naturally, they were a little frustrated by the change. But later they told me it was good to finally have some security and they thought it was terrific.”
LOOKING TO THE FUTURE
Castleman says after a year of operation, he is already planning to get rid of the on-site kiosk from his Flower Mound facility.
“To me, the kiosk is just more hardware. In my opinion, the modern day version of the kiosk is the smartphone. It’s the ‘kiosk in a pocket’ idea. The only thing smartphones can’t do is spit out a lock,” says Castleman. “It’s just like when you go to take a flight. You book your flight from home and you get your ticket through your phone. You can do it all from your house and you don’t have to wait in line to talk to a person or use an airport kiosk.”
“Kiosks are a fixed solution. They’re bolted to the ground. My business model is about interacting with the consumer where they are, not where you are. I think the future is the smartphone. It goes wherever the customer goes, and it’s wherever the customer needs it,” Castleman explains.
With one eye on the future, Castleman will tell you that he thinks the biggest limitations facing self storage from a technology standpoint are integration and real-time communication. “I think there’s a need for more call center integration and integration with security systems. I also envision self storage companies being able to real-time chat with customers on facility websites and stream live video in the future,” says Castleman.
Castleman’s most recent property venture is still under construction. Situated on five and a half acres in Pflugerville, Texas, Pflugerville Self Storage is a soon-to-be 100,000 square foot facility with approximately 700 units. The new facility will offer state of the art systems like 24-hour camera surveillance, remote-monitored temperature controlled units, and a remote-monitored gate system with smartphone gate access. The facility will also offer drive-up access, on-site truck rental, and RV, boat, and vehicle parking.
Thank you Castlerock Interests, LLC! At storEDGE, we are proud to work with clients who excel at what they do, care about their customers, and lead the industry in technology. If you liked this article, you may also like: Client Spotlight: Beyond Self Storage, Client Spotlight: Smithville Self Storage, and October Client Spotlight: Eagle Self Storage.