As the self-storage industry sees rapid growth, Ben Shirey sits down with Brett Copper, a millennial with deep roots in the business, to understand the forces driving this expansion. His insights might just surprise you. Dive in now!
Transcript
(00:00) Ben Shirey: Welcome to another episode of the Self-Storage Insight podcast. I’m Ben Shirey and today I’m joined by Brett Copper. Brett has a long history in the self-storage industry. His father was part of Self-Storage 101 as it got started up years ago, and so he’s kind of grown up in the industry. And so, very excited to share his insights with us and some of his knowledge. Really good conversation, super excited about it. We’re going to talk a little bit about what attracts new tenants? What are some features tenants are looking for based on some SSA studies that have been done recently? As well as then diving into why the industry is still growing at such a rapid pace? What does it look like over the next few years, and what does that mean for your business? So, really excited for today’s episode. Brett, if you don’t mind, take a few minutes and introduce yourself, and let us know kind of how you got into the industry.
(0:54) Brett Copper: Of course, yeah. So, I was one of the nepo babies. I was born into self-storage. And so about 20 years ago my dad started a consulting firm called Self-Storage 101, and that firm does about 90 percent to the country’s worth of Self Storage Consulting. So, you know, 900 feasibility studies a year, a few hundred due diligences. And so, from the time I was 9 or 10 years old, I’ve been coming to trade shows and learning about the industry, and then working at the firm.
(1:22) And so then in 2019 decided to start my own management company, after having those 20 years of experience in the business. And so, the trick was, I wanted to bring Remote Management to the space. And so, when we started Copper Storage Management, the whole idea was a third-party management company that all of our stores are remote, and now currently we’re up to about 200 stores in almost 30 States.
(1:46) Ben Shirey: Awesome. Awesome. So, it seems like you have a decent background, and you know kind of where the industry’s been and that kind of thing. What kind of gave you that idea to start fully automated or unmanned facilities? Where did that vision kind of come from for you?
(2:01) Brett Copper: Yeah, it’s a good question. So, there are some influences in the industry. So, I’m 29, so you could think from that Millennial base it makes sense to go that route, but looking at Red Dot I know when they started coming up, I was enthralled with how good their system was. The low Opex, how easy it was for them to expand by property, and then 10 Federal, I’m good friends with the Minsley brothers and their group, and love Da Vinci, and so watching those two companies prove that it could work on a big scale.
(2:31) Then it just went oh, well why not try third party management? Because no one was doing third-party remote, it was just private equity or private groups running their own. I said I bet we could find a way with this experience we have, to be able to run them for other people without that heavy cost burden, and that’s kind of where it started. We got lucky, though, because right after that, Covid hit, right? Which really sped up the industry.
(2:54) Ben Shirey: Right. Yeah, as far as with the unmanned part of it, for sure, everybody went crazy with the whole Covid rush. So as far as what your experience then, I know you’re a little bit younger than some of the facility owners I talk to, but I really like to talk to people about where do they kind of see the industry going. You’ve been in the industry for a long time already. As far as the last 10 years with the rapid growth the industry has seen, I even know, you know, over the next few years the landscape’s going to change a decent amount. And so where do you kind of see the industry heading and what do you think the space looks like in five to ten years?
(3:30) Brett Copper: You know, at the at the firm we used to get asked that question all the time. And really, up until the last couple years, we all thought including the other industry leaders, companies like CubeSmart and Extra Space and Life, all great people that are very smart in the space. We thought that my generation would end up being kind of the death now to storage. That once we got to the younger generations like millennials, that we didn’t care about consumerism, we buy cheap goods. So when I move, I throw away or give away most of my stuff because it’s off Wayfair.
(4:03) And so, we kind of have that idea, but then the new demand study just came out from the SSA. It came out in March of this year, and overwhelmingly millennials had become the largest rinsing population, which no one expected to happen this quickly. I think it’s 36%, if I remember off the top of my head. Which was unbelievable. I mean that change happened so quickly, and we dove into why that is and what that kind of means for the future.
(4:29) The real reasons are with interest rates going up, housing costs, payments, car payments. Everything has gotten so high, but income hasn’t followed that same scale. And so, people cannot afford the extra space in the house. They can’t afford the types of places that we’re used to seeing people in their 30s living where you start a family, you have a garage, you live in a suburb. It’s really people downsizing, they can’t afford it. And so, it’s weird to see storage somehow becoming more popular as we go forward. So, the next outlook of the next five years is it’s just going to keep expanding at such a rapid rate that I think it’s going to surprise most of us. I really do.
(5:09) Ben Shirey: Right. I’m in a pretty rural area. Altoona, Pennsylvania, so there are smaller towns around me. At my home, though, I have some acreage with it, and so it’s a pretty remote area. And so, a lot of the facilities that I see aren’t these big elaborate buildings. But you get into the cities, the storage facilities that they’re putting up now are just incredible. I mean, they are five or six stories high, it’s all climate controlled or temperature controlled. And so I just feel like over the last few years how quickly that change has kind of happened to where a lot of climate controlled, temperature-controlled storage facilities are growing in demand even more rapidly than I thought they would for sure.
(5:51) I also, just to kind of go back and touch on what you were saying there with the generation, our generation. Millennials, myself and yourself, would be the ones that kind of put the industry at a standstill a little bit. I really did enjoy the clip that you did on your LinkedIn profile, or on Copper Storage Management’s LinkedIn profile, so if our viewers want to check that out. Are you going to do more videos like that? Like the render by generation type video that you did?
(06:14) Brett Copper: Yeah, that’s a great question. Well, I think we’re going to try at least for maybe the next year, do about two a month. So yeah, that’s great that you actually watched that, that’s funny. Thanks for watching.
(06:23) Ben Shirey: I was checking out some of your stuff and I was like, oh it was good content, you know, informative, and I always enjoy seeing stuff like that. If at some point, or even just now, if you just let people know where they can check out your LinkedIn profile.
(06:37) Brett Copper: Yeah, just look us up- Copper Storage Management on LinkedIn. It’s really easy. We have connected there and I’m open, so if anyone ever just wants to DM me or call me whatever, just let me know.
(6:48) You said a really interesting point, though, a minute ago, that the type of market you’re in, right, it being more tertiary rural in talking about where the industry is going is fascinating. In that same study, which I’ll point out at some point. I don’t know if it’s in one of the more recent videos that’s coming out. They also showed suburbs, urban and then rural tertiary markets, and then the percentage of the population that rents in each. And for the first time since they’ve been tracking that stat, which is probably 30 years, tertiary has become the largest percenting renter base by population. It’s like 13% of the total population in rural tertiary are now renting, which beats Urban, which doesn’t make any sense to me. You’re seeing this super big development across these tertiary markets.
(7:40) And the good news is, you know, all the main cities have been overbuilt for the last 20 years in storage, especially the last 10. Everyone’s put their money into major cities, but there is always going to be a hundred-fold more room to build in these tertiary markets and now we’re seeing demand hit. So it it’s kind of going to be the wild west again as far as expanding into those markets because we have all this raw land, it’s cheaper to developed there’s more room, so it’s interesting.
(8:08) Ben Shirey: Yeah, that is very interesting. The one other thing I think that’s interesting, just the space in general. If you saw the merger between Life and Extra Space, I think it was that merged last week or completed their merger last week. So, do you feel like the market’s going to kind of go that way too? Where some of the big players are going to try and buy up a bunch of other big players? Or they’re going to merge together to create, you know, bigger market shares?
(08:33) Brett Copper: I think so. You know, a lot of people in the industry come from multi-family, and so it’s kind of really, it’s a paradox between the two. Right now, multi-family, about 75% of all assets are owned by private equity companies and managed by REITs. So 75%. In storage it’s about 18 to 20% are owned and managed by private equity groups and then run by those REITs, and so we still have this 80% gap to catch up. Which is good for us, right, as individual owners?. At some point in our lifetime those numbers are going to shift where the majority will be private equity in large operators. But luckily, we just have a lot longer runway
than some of these other asset classes that we’re used to.
(09:20) Ben Shirey: Yeah. One thing, and I’m going to bounce back to it a little bit, was that you talked about the SSA, the demand study that you were working on. And one of the things that I heard that you were part of was a features for tenants. A portion of that. Do you mind filling us in a little bit about what you’ve discovered or what your research has kind of showed on what kind of features are tenants looking for within the facilities that they’re that they’re renting from?
(09:44) Brett Copper: Of course, yeah. So it’s kind of interesting as well. So that study breaks down really two versions, I guess technically three. It took overall what do tenants want the most now? What’s the biggest reason that they’re going to rent at your facility? And then later in that study it breaks it down by geography as well as by generation, which is really interesting.
(10:04) But let’s just talk about overall what people, why we’re renting. For the first time since I’ve been in the business, pricing is now the number one reason why people rent, which is just mind-boggling. I mean, it’s been safety, location, cleanliness, and then pricing for 20 years. And so, it goes back to those interest rates and payments, but 87% of people are choosing to rent because of price.
(10:30) So, it’s created an environment where you now don’t even just have to be the lowest in the market to get someone to rent, you have to be low enough that they are making a decision in their head that I’m willing to pay for storage at all, and it never was that way. I mean it used to be if you were $5 less than the competition, someone was going to rent from you. But people have become so money conscious recently that the only way to attract them is to have these low rates. So, you’re seeing rates across the country just plummet overnight. I mean it’s down 20, 30% across the country for rental rates, which is just staggering.
(11:09) Ben Shirey: Right, yeah. And as far as that goes too, I mean I don’t know how much the marketing side of it would play into it. Typically, at least the storage owners that I’ve talked to, they never really had to do much marketing, at least in my area, to fill their units, right? The demand has just always been here and so their units were always just full, right? Most of the people that I talked to since they purchased their facility or built a facility, they’ve been at max capacity or 90% capacity, and so as the demand comes down a little bit because the production has been so high over the last few years, I feel like that’s going to continue to be a bear on, you know, as far as driving that price factor down even more.
(11:47) So kind of the things that you see what do you think is a good marketing strategy? I see a lot of people offering the first month at a dollar or whatever. SpareFoot does some different things as far as giving a big discount on that first month. Do you feel like that’s pretty effective or is there better strategies to go about getting your units filled?
(12:04) Brett Copper: It definitely is a good strategy to have low rates and good promotions. Typically, we go back and forth, depending on the market, between move-in for free or a dollar, or three months 50% off. If you’re looking at when to use one over the other, lower income areas you do three months 50% off. You don’t want people to be able to come into the facility you know, homeless people to be able to come and live or break in. So you want to mitigate it.
(12:30) In a perfect world we could do a dollar move in everywhere, that would be best. But then on the marketing side, we’re seeing the same thing where all of our dollars are having to increase. You know, our average Google pay ad budget per month, per facility was about $300 a month before August of this last year. Now that average budget’s up to $600 a month, which is double. In some cases, you have facilities having to pay $1500 a month for ads, which has never been the case since we kind of got in here.
(13:04) We’re also seeing an increase to other marketing strategies like Facebook ads. That’s now become a lot more prominent. So, we’re having to find new mediums to attract people and spend more dollars per rental to get them in. And then SpareFoot, as you said, has just skyrocketed in most markets of how many months people are having to give up front to be able to get that that rental. It’s really changed very quickly.
(13:30) Ben Shirey: Yeah, it’s very interesting and it’ll be very interesting to see how that plays out, you know, even over the next few years as that competitive drive for demand continues to increase. If you don’t mind talking to us a little bit more about your company, maybe give us a high-level view. Why go fully automated? What kind of benefits do you bring to the table when you get a customer that has employees, or however they run their facility, to a fully automated, unmanned facility like you were talking about?
(13:59) Brett Copper: Yeah, so it’s a good question and I’m a big proponent, even if you don’t want to use a company like us, trying some form of automation yourself is really kind of paramount in today’s age. You know, with interest rates, with mortgages, with rates becoming super low, it’s just hard to maintain 50,60 grand a year in CapEx or OpEx to be able to pay a manager to sit behind a desk. It’s become extremely difficult.
(14:26) Most businesses we deal with today, whether it’s airlines, restaurants, anything. They’ve taken down the amount of people needed to have a face-to-face interaction. And so, they’re taking away, so consumers have become really used to it. In storage it’s about the easiest customer experience to show a good as possible.
(14:44) I mean you think about Best Buy, right? You want to go buy new furniture, TVs, whatever it is, how complicated the experience is because there’s a million variations of every product. In storage it’s three walls and a door. Either it’s climate controlled, it’s not, it’s inside, upstairs, it’s parking. It’s so easy now to educate the customer off-site without them having to be on-site. It doesn’t make sense to spend all this cost on these daily operations to have someone to be able to show that product anymore.
(15:14) And so our company, we took the managers on-site that were sitting behind desk and we just worked them from home. So we said, all right, from now on we’re going to utilize managers on the phone so they interact with the tenants either chatting on the website, over the phone, email, whatever the tenant prefers and then on the facility level we just utilize 1099 contractors. We call them “boots on the ground”. A lot of independent owners are starting to emulate this as well. You find a local person, pay them a few hundred bucks a month. They go by a day or two for a couple hours a day, a week. They clean units and pick up trash. And now all of a sudden, you have one manager doing the more important task of renting units and collections and auctions, but that manager can work 10 facilities instead of being relegated just to one facility.
(16:04) So, the concept is extremely simple. Very, very simple. But it’s just so that we can really save money, because saving money is more important than it’s ever been. And it’s always been important.
(16:17) Ben Shirey: Yeah, for sure. So would you feel like, as far as Copper Storage Management, are you more geared towards multi-facility businesses as far as multi-location facilities?
(16:29) Brett Copper: You know that’s a good question. So, we do actually both. Compared to most management companies, we actually have a higher percentage of individual single-owner operators than most. So out of those almost 200 stores, I think we have maybe 53 owners, which is pretty good. So, we do a lot of single stores. We’ve got owners with 80 units in the middle of nowhere that have us run it. And then we have owners with a thousand units, and they might have 10 to 20 stores that we also run. So, it’s an interesting question because we get it a lot, but the model really does work on either end of the spectrum. We just have to adjust a little bit per facility to make sure that we’re accommodating the tenants and the number of units.
(17:13) Ben Shirey: Okay, yeah. It’s very interesting and I think that, for sure, as the younger generations come up through, we’re more used to seeing that sort of thing anyway. As you said, less people working in in retail shops and the more automated, more stuff happens online obviously than it used to, and our generation, that’s kind of been built into us, right? So, it’s a very interesting model, and I think it’ll start to take off as far as gaining some market share and stuff as well. It’s a really good concept, I like it a lot.
(17:46) Ben Copper: Thanks.
(17:48) Ben Shirey: One other question I’d like to talk about a little bit is, with you being in storage or in the storage industry for a really long time, have you had any horror stories or anything crazy happen to you or with your facilities that your family owned or anything like that?
(18:02) Ben Copper: Yeah, always. I mean every time I think I’ve seen it all there’s always something new. The amount of times I’ve seen a prostitution ring in a facility, that happens so much more than you think. Because if you think about the monthly cost, right, and compared to a hotel room, much cheaper just to pay for a 5 X 10, you know? We see that a lot. Obviously, you see people that die on site. Whether it’s drugs or whether it’s just a heart attack. We’ve seen it all.
(18:32) I think the craziest though, and I won’t say what company I was with when we saw this, even though this could happen anywhere. I had the FBI show up one time and they basically had been tracking a drug dealer. A very prominent one who went to jail, no other connections, no other family or anything, and he ended up passing away. And the day before the FBI got there, I had someone win an auction on a unit and so they cleaned it out. It turns out this person found $100,000 in cash in this unit. He didn’t tell anybody, which I probably wouldn’t have either, to his credit. The FBI shows up and they’re like, we think there’s money in there. Well, it turns out we put them in contact, and the guy didn’t have to return the money. There was some loophole in a state law that allowed, because he won it through a fair auction somehow, that the FBI couldn’t get it. And so that’s probably the craziest thing I’ve seen.
(19:26) Ben Shirey: Yeah, what a good bid on that auction, right? That’s the kind that we’re looking for. Anything that you’d like to share with our listeners before we kind of wrap up this episode? Any final thoughts? Anything you’d like to kind of say about your business or anything like that that we didn’t cover?
(19:46) Brett Copper: I think the biggest thing is, whether or not anybody ever wants to use any of our companies, we touch a lot of the space, even if you don’t want to, we’re always available to talk to. We would love to at least point you in the right direction of other good companies to deal with. 90% of people in the industry are friends to us and vice versa, and so we just want to make sure people are taken care of. And so anytime anybody needs help, you’re never going to bother me. If you want to call me, email me, DM me, and I’d be more than happy to help even if you don’t you don’t want to use us.
(20:17) Ben Shirey: Thank you very much, Brett. It was awesome to talk to you for a couple minutes here today, and I look forward to speaking with you more in the future.
Brett Copper: Thank you, man. I really do appreciate it.
(20:25) Ben Shirey: This podcast episode was brought to you by CC Storage. CC Storage is a property management software that helps you pass the fees of credit card processing onto your customers, so you don’t pay credit card processing fees ever again. If you enjoyed the podcast, there’s a link below where you can fill out a form and be interviewed on the podcast with myself. If that interests you, please click the link below and we’ll be in touch. Hope you enjoyed this podcast episode. Don’t forget to check back next week for another interview with another Self Storage property owner.
