It’s safe to say business is booming for 5 Star Storage which has opened 7 new facilities since the start of the new year. We caught up with Chief Operating Officer Ben Hendricks for a quick chat.
It seems like Five Star Storage is really expanding!
Correct, we’ve added seven locations since the start of the year and we’re at 27 total locations right now. We should eventually have 13 in the Fargo-Moorhead soon and 28 total. We also have another facility that we started construction on in Rochester, Minnesota in October.
That seems like a very aggressive expansion.
In terms of the number of facilities, definitely. But the size of them always varies greatly as well. So, it can sound crazy at first, from a surface-level perspective. However, you may have one location with 350-400 units, but another location only has 63.
Why make such a big push right now?
We’ve kind of been in a growth phase for quite a while here. We restructured our company about five years ago and things have really taken off. We’re constantly looking for new opportunities. We even hired a new acquisitions and development director based in the Twin Cities.
Does that mean most of your facilities are at capacity?
It really depends upon the market and what’s going on in that market. You are dealing with month-by-month renters. Most people are not renting storage for over a year. So it can be a longer process to get to a good stabilized level. It can be two steps forward and one step back. So it can be a little bit of a challenge, especially for those that haven’t been in the industry before, but it’s fun.
This is our core business and there are not a lot of other operators in self-storage in our region. For most other businesses similar to this, it’s almost like a side job. They might have had extra land and they decided to put up 100 storage units or whatever. For that individual, they’re going to kind of have a different business model. They don’t necessarily care about revenue management and providing top-notch amenities and services. They just care about having their facility full and having good-paying renters in there because then they don’t have to do any work. They’re not spending any money on advertising. That’s what makes us a little bit different.
How much more expansion is on the horizon?
So, we expand in two different ways. One of those primary ways is through acquisitions. In that case, we’re buying an established facility that already has renters in place. The other way we expand is through new developments.
Interestingly enough, there are going to be some increase in needs for the Fargo-Moorhead community, meaning we may be looking at developing in the area. But, we need to do our due diligence before pursuing those sorts of things.
What are some of the biggest misconceptions you run into in the industry?
When you’re talking about storage facilities, you have to use the term very loosely. Unfortunately, a lot of people hear the term “storage facility” and if they’re from a smaller, more rural community, they may think of a facility with a few garages, a gravel driveway and weeds up to their knees. When in reality, a lot of the very urban storage facilities in the country have very high-end amenities like office spaces, conference rooms and coffee bars. Because of this, it can be very difficult when you’re dealing with municipalities and trying to get your neighbors and city officials to understand what we’re bringing to the table. We feel that the type of product we want to develop is just as aesthetically appealing to the eye as an office space out there.
Do you think storage needs have increased lately?
Definitely, especially with the pandemic. We’ve had a lot of people starting to move back with their parents—people in their 20s, 30s and 40s that needed to move back because of financial issues. And they need somewhere to put their belongings, at least for the short term.
What’s interesting right now is that we’re seeing that millennials are actually one of the largest users of self-storage. However, we have all sorts of people using our facilities from 18-year-olds to parents of college students to businesses.
Who would you say your main customer is?
Our number one customer is somebody in the middle of a move, whether they are moving for good reasons or bad reasons.
We’re dealing with people that had a life event happen—they got married, they got divorced, they had a kid, they had a death. Those events happen every day, but they make a big impact in people’s lives. We’re there to help in those transitions.
What’s it like working with family members?
I wouldn’t have it any other way. It doesn’t mean that it works perfectly for all families and it doesn’t mean that we haven’t had issues here, but I love working with my family. Bill Schneider is also a very key member of our team and he isn’t blood, but he really is family.
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