By Noah Springer, Senior Vice President, Third Party and Asset Management, Extra Space Storage, Inc.
Before I had kids, I knew that mine would be the best looking, most polite, and smartest kids out there. They would possibly even be born with a proper British accent, a bowtie, and a firm handshake.
Then, my firstborn came. He was the funniest looking human creature that I had ever seen in my life—sporadic movements, skinny, bowed legs, and almost amphibious looking.
When my wife awoke from the anesthesia she asked, “Is he cute?” I couldn’t lie. My response was, “He’s kind of funny looking,” and she agreed.
Anyone else would have understandably walked away from the hospital empty handed, but he was ours, so we loved him. Now, I believe that he is one of the best things that ever happened to me; he’s my best friend and I love him so much.
As parents, we can’t imagine our kids not being the best. As parents, we should think this way. The problem with this perspective is that sometimes we don’t think as rationally as we should, and our love for a child can cloud our judgement.
Unfortunately, many self-storage developers think of their projects as their children and allow their love of the deal to cloud their judgement. Just because he’s your kid, doesn’t make him the best or the brightest. Similarly, just because it’s your development doesn’t mean that it is the best and should be built.
Lately, I have heard developers say things like, “I know that there are multiple new developments in this market, but my location is better than all of the competitors’ sites,” or “I plan on getting top-of-market rates because my quality is so much better than the competition”. While this could be true, take a step back, look at the stage of the cycle that we are in, and make a rational, objective decision instead of a decision equal to that of an overly excited parent. In many cases, I have seen management companies, consultants, bankers, and many other biased opinions do developers a disservice and tell them that their “kids” are better than everyone else’s.
For those of us who have been in the self-storage business for some time, we remember being shunned by the large capital sources that were reserved for office buildings, skyscrapers, and large retail. Now, we are lucky to have our pick of the litter.
However, now is the time when we must be more careful than ever and ask ourselves, “just because it can get done, should it get done?” Many times, the best deal was the one that you didn’t do. Take a rational, informed, unbiased, objective, analytical look and ask why your deal won’t work instead of the opposite. Also, property managers, bankers, feasibility study professionals, and other industry insiders should have the courage to let people know that their project could have an ugly outcome. Walking away from your ugly deals is OK; walking away from your ugly kids, not so much.