Amy Nolan, the newly elected president of the Texas Self Storage Association, has witnessed ups and downs — mostly ups — in the Lone Star State’s self-storage industry.
Nolan co-owns Corpus Christi, TX-based The Storage Place with her husband, Pat. The Nolans started the company 17 years ago and now own nine facilities in the region, with three more in the planning and zoning stages.
Nolan discusses her thoughts on how the industry has changed since starting her business, the current development cycle, and the effect that REITs are having on the Texas self-storage market.
Here is an edited transcript.
What is the overall state of the self-storage industry in Texas from your perspective?
I think the industry overall is soaring in Texas. We are seeing a lot of development coming up. There was a lack of development for several years when financing tightened, but now that that has loosened back up, we see a lot of new development going on. It has, however, become harder to operate as an independent with the REITs focusing on Texas.
How are independent operators in Texas faring against direct competition from REITs? How can they maintain an edge?
What we’ve seen in the smaller markets is that they seem to be a lot more successful competing than in the larger markets like San Antonio, Dallas, Houston and Austin, where the REITs are buying, unless the independent operators have a specific niche. Those operators need to focus on customer service and their referrals.
What is attracting the REITs and other national operators to Texas?
It is the economic growth here. The economy has been stable for a long time. When everybody else had a major crash, we got soft a little bit, but no crash. The oil and gas industry is just rolling along. There has been a strong need for employees here. We’ve had a hard time hiring employees because they are all out in the oil fields. With all of that growth, we have the REITs’ attention.
There’s a lot of development on deck for Texas. Are you concerned at all about overdevelopment?
There are a lot of projects, and there is a lot of concern. I hope everyone is doing their due diligence as to what projects are on the drawing board. We don’t want to end up with a lot of supply in the market that they can’t fill, which would result in a problem with rates and occupancy.
I am based in the Houston market, and almost everybody I talk to either has a site checked out or a facility in the development or planning process.
What is the biggest difference operating a self-storage business today than when you started yours 17 years ago?
It is a lot more sophisticated industry now than it was. Seventeen years ago, you picked a piece of property and put storage on the back and sold the front off for retail. Now, storage facilities are front and center — they are the attraction. It is a lot more sophisticated marketing a storage facility than it was 17 years ago. It is a different kind of animal.
How has the Internet changed that?
We find we aren’t spending thousands of dollars on the Yellow Pages. Instead, we are spending more time and effort optimizing websites and making sure that customers can find you on their cellphone. Back then, reviews were word-of-mouth from a friend to a friend. Now, they are on the Internet, and you have to make sure they stay positive.
It used to be we wouldn’t consider renting a unit to someone who didn’t walk through the doors. We wanted fingerprints back then. Now, we are looking at online leasing, where we may never meet our customers. Our customers are changing, and we have to change with them.
What about those operators that don’t change with the times? Are they at a disadvantage?
There are still customers that don’t want to be on the Internet, either. There is a need for both, so it is just about finding where you fit in the market and giving customers what they want. Some customers want to meet face-to-face and hand you cash.
It is not a one-size-fits-all industry. You can’t be afraid to change, but don’t change because you think you have to.