Site in the Spotlight - 2003

Owner:	Richard Kleinknecht
Developer:	Cole Hayes
Location:	Miller Place (Long Island), NY
Specs:	Two two-story buildings (50’ x 430’; 80’ x 380’), Climate control on second floors and first floor interior corridors, Stucco and brick face, 106,000 total square feet, 855 rentable units
Color:	Classic Beige jambs and Evergreen doors, eave and rake trim, Standing seam roof

How long have you been in the self-storage industry?

RK: This is my first venture in self storage.

CH: I’ve been involved in self storage since the early 1990’s.

What profession did you hold before entering self storage?

RK: I am an Electrical Contractor. I still own our family electrical business that started in 1916. In addition, I also owned a global telecommunications business that went public. With my electrical business, I have 1,000 employees. With self storage, I have 2 employees and loving it!

CH: I was a Landscape Architect before I became involved in self storage.

What sparked your interest in self storage?

RK: Self storage is a money-making proposition. It has a minimal amount of employees and the (return on) investment is substantial. Once you’re rented, it is extremely profitable. In fact, I expect to break-even by year’s end.

CH: Self storage is a very attractive business because it is stable and requires little management. The key (to a successful self storage business) is a good manager.

Describe your self storage experience.

RK: We found the land and bought it at an auction. The property had one of those bubble tennis courts and a building. We had a lot of difficulty obtaining a demolition permit but after some negotiation, we received it and began preparing the property for construction. We invested a lot of time visiting with the neighbors in the neighborhood and convinced them that self storage would be an asset to the community. We attended a hearing and received the zoning permit. Thirty days later we received our building permit and began construction. On October 15, 2002 we held our Grand Opening complete with a live radio broadcast, food, and me at the grill making hot dogs.

CH: Once we deconstructed the tennis court, we had 4.2 acres to work with. We decided to reserve the back acre as a wooded parcel, which is surrounded by a residential neighborhood. We then attended one of Trachte’s free seminars and began developing the site plan. We ran into some problems with the city of Brookhaven, which redrafted a specific ordinance on self storage. The ordinance consists of set backs from residential areas, parking requirements, and a minimal site size of three acres. After we got past the ordinance, we received the building permit and began construction in February 2002. So far we have rented, on average, five units a week.

How did you select the site of your facility?

RK: The property is located on Route 25A which is a scenic thoroughfare that runs from New York City and Long Island. I knew without a doubt that is was a great location.

CH: The location had excellent exposure. A traffic report indicated 35,000 cars per day.

Who is your target market?

RK: Self storage has four markets: contactors, franchisees’ (i.e. pharmaceutical sales reps), residential, and moving companies. We are going after the moving companies (as another segment of our customer base). We purchased a truck and added a sign with our name. We rent the truck to service just the local area—it is not allowed in New York City! To use it to move in, it’s free. To move out, we charge.

How do you differentiate your facility from competitors?

RK: We have two entrance gates instead of one. This is a big selling point because of the ease of access to our facility. Cole is also a Landscape Architect. His finishing touches really made the facility striking. In fact, the head of our Chamber of Commerce said that our facility is the "new benchmark for all self storage". We have a dynamite office manager and our location is great. My philosophy is "quality pays…do it right, or don’t do it".

CH: We have a more high-tech facility than our competitors. We offer controlled heating and air in the units. The facility looks more residential than typical self storage businesses. We also offer free community service space, i.e. the fire department keeps an antique fire truck in one of our units. In addition, we store the belongings of fire victims.

What is your occupancy rate?

RK: We opened at the wrong time…right before the Thanksgiving. Despite the holidays, we had almost 100 units rented by the beginning of January. Right now, we have 180 units rented. We plan to breakeven by the end of the year with 300 units rented.

How do you manage your facility?

CH: We employ one full time manager who offers 12 years of experience. We feel that our manager is the key element to our success. In fact, we flew her to the Trachte seminar in Las Vegas this year.

RK: I am really proud of our manager. She is customer-service driven and as the philosophy of "If they are in the door, they’re not leaving". I really depend a lot on her because of her many years of experience. She’s definitely a keeper!

What would you say to someone considering a self-storage business?

RK: It’s really all about location. Conduct traffic pattern research and surveys to make sure the area isn’t over saturated. Choose your market carefully. If it’s at all questionable, then phase it. Don’t over build! If you can phase your project, do it! This will lock in your ability to build (depending on demand and available funds). It is definitely worth the additional cost of building in phases because you don’t have to rent all at once.

CH: Buy the right piece of land. Make sure it offers the proper exposure and negotiate the right price. Make sure you are listed in the Yellow Pages. Self storage is a destination business...customers shop by appearance and management. People are looking for high-end service. You need to provide them with the personal touch and a manager who is a pro.

What is your opinion of the self-storage investment concept?

CH: Self storage is a use that has a large demand and is developing rapidly. The population is very mobile. People are building houses, moving, and divorcing…all of which sparks the need to store their goods.

Trachte congratulates East End Storage on a successful business venture.