Storage Authority sees post-pandemic bump for self-storage franchises
These are fast times at Storage Authority LLC, which is the only company nationwide that sells self-storage franchises to investors and other interested parties.
The Sarasota, FL-based company expects to launch seven new franchises in the first five months of 2022, aiming to finish 2022 with between 20 and 24 new franchisees.
That would double the 10 new franchisees onboarded in 2021, which was double the number that joined in 2020.
A post-pandemic rush
Why the sudden rush of interest from interested parties during a time of economic uncertainty?
“It seems that one thing they have in common is to establish a secondary income stream,” said owner Marc Goodin, 63, who owns two self-storage facilities himself. “We are the only company selling franchises for self-storage. There are other storage-related franchises, but they’re based on home delivery, such as PODS.”
The trend echoes an overall post-pandemic rebound for franchise businesses in general. According to the International Franchise Association, new franchises jumped 16% in 2021 from the shutdown era a year before. New growth is expected to stabilize this year, with new franchises growing just 2.2%.
New franchisees on deck
Storage Authority launched in 2015 and onboarded its first franchisee a year later. Over the years many have developed, operated and sold their facility for a profit.
Currently Storage Authority has three locations open: two locations in Connecticut owned by Goodin, and one in Millstone, NJ. The incoming class of franchisees are planning new locations in additional states including California, Florida, Michigan, North Carolina, Arizona, Utah and Pennsylvania. They are all in different phases of progress with two currently under construction. Several are currently in design, and others are still looking for sites.
New franchises could potentially open anywhere, as long as the applicant can secure a suitable site.
“You can make good money in California, but you need $2 million in cash,” Goodin said, “Northern states like Montana are difficult because rental rates are super low; you want 15,000 people within three miles.
The goal is to be able to rent up swiftly at premium prices, Goodin said.
Build it, run it, sell it
Goodin said interest is mostly coming from well-to-do professionals looking to invest in an asset they can hold onto for a few years, then cash in with a lucrative sale. Goodin says if they follow that playbook, franchisees could follow in the footsteps of previous owners and become a multimillionaire in five years or less.
During the last six months, three franchisees recently sold their Storage Authority facilities and netted six figure gains or more. One sold their location in Lakeland, FL and made a $7 million profit after six months of operation, Goodin said. Another operator made a $14.2 million profit selling their location after two years.
Goodin is a civil engineer who previously owned an engineering firm that designed for companies such as Dunkin Donuts and Burger King, working on more than 1,000 site plans. Storage Authority typically draws those of similar professional backgrounds such as physicians, attorney, IT professionals and other high earners who are carefully planning for retirement years.
Some purchasers have stayed in their profession. Some will go to work at their storage facility; others will hire a management company to run the self-storage business. Some will put in work hours at their franchise, others will leave it to their employees.
An avenue into the self-storage business
“For me, I’ve retired but it could be a lot of fun, and I also believe it makes a lot of financial sense,” said franchisee Mike Becktel, 39, of Brigantine, New Jersey. Becktel has a background in commercial real estate finance.
Joined by partners Barry and Amy Polen, their Storage Authority franchise will go up in Egg Harbor Township, outside of Atlantic City, NJ. Their architectural plan is ready and they await their groundbreaking, which could happen as soon as this summer.
“We wanted to find some avenue into the storage business that provided us with a level of expertise that we felt we didn’t have,” Becktel said. “Storage Authority are experts. The franchise model, for some reason, made more sense for us than trying to go it alone and then bringing in one of the REITs to manage it.”
Expertise not required
Most of Storage Authority’s investors lack a self-storage background.
“They don’t need to be experts to run a franchise,” said Goodin, who said the company has built strong platforms in development, operations and management to teach and guide owners.
Few people equate self-storage operations to be a night at the Ritz. But Goodin can see it.
“We operate like the Ritz. We provide remarkable service; people don’t forget it and refer us to friends,” Goodin said.
“There are self-storage places you can go to and they won’t show you a unit. We do show them a unit. It’s an attitude; none of our managers are allowed to be behind the counter when they talk to a customer.”
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