Public Storage 1996 Annual Report Download - page 6

P UBLIC S TORAGE , I NC . 1996 A NNUAL R EPORT
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choose to rent or which
of our other storage-related ser-
vices they choose to use.
Market share. By concentrating
our properties in or near major
metropolitan areas we can take
advantage of market share and
economies of scale. Indeed, clus-
tering our properties around a
common economic focal point
allows for the cost effective distri-
bution of marketing expenditures,
economies of scale, and manage-
ment supervision. These factors
contribute to our properties’ oper-
ating margins. Additionally, operat-
ing numerous properties in a market helps
our national reservation center maximize its
capacity to effectively shop space for cus-
tomers, simplifying their search for the
exact size, location, and price.
Geographic diversification. Our sizeable
portfolio is geographically diversified, pro-
viding additional competitive advantages. No
single self-storage property accounts for more
than one percent of revenues. We also believe
that we can generate more stable cash flows
because a large, diversified portfolio can
better absorb local economic downturns.
Management. Another strength of Public
Storage is the substantial experience and
expertise of our senior officers. They have
significant operating and financial experi-
ence. They have been responsible for the
acquisition of more than 350 self-storage
properties, the development of more than
650 self-storage properties and the man-
agement of more than 1,000 self-storage
properties over the last 25 years. We also
benefit from our efficient property manage-
ment team. They use systems and controls,
performance standards, and operating
procedures to effectively manage the day-
to-day demands of our enterprise. The
property management division is comprised
of approximately 2,800 personnel. A
continuing objective of our management
system is to cultivate a customer base
which is satisfied with our product and
services.
D EVELOPING N EW
C OMPETITIVE S TRENGTHS
We are developing new ways to market our
self-storage properties, portable self-storage,
truck rentals and retail stores, to enhance
the visual appeal of our properties, to
improve how customers locate a Public
Storage property and how we manage our
operations. These new activities encompass:
•National reservation center
•Directory advertising
•Visual repackaging
•Systems and controls
•The Internet
National reservation center. We designed
the national reservation center to contribute
to our competitive edge by continuously offer-
ing our customers new and better services
and products. We inaugurated the center in
December 1995. At December 31, 1996, 87
representatives were on staff using an inte-
grated telephone and computer system to
access current information about space avail-
ability and rates for the majority of Public
Storage’s properties. A customer calling a
property, or Public Storage’s national toll-free
number (1-800-44-STORE), can be connected
with the center. The center currently receives
about 120,000 calls per month. We can mar-
ket all of our business lines through the
national reservation center. We believe that
improving and expanding upon our ability to
generate customer demand enables us to
support favorable occupancy trends through
the national reservation center. We believe
that we alone offer a broad, technologically-
advanced service such as this.
Directory advertising. We are expanding
the number of markets in which directory
advertising is used and the number of direc-
tories in which a Public Storage display ad
appears. We are currently using Yellow Pages
advertising in over 700 directories in 80 mar-
kets. We are utilizing larger-sized ads to
identify all the properties in a given market,
and where appropriate are using ads for our
portable self-storage business in tandem
with ads for traditional self-storage space.
Directory advertising is the most important
of the print media in promoting our services
since about one-third of our customers locate
a property through our directory
ads. We have an internal Yellow
Pages agency.
Visual repackaging. Many of our
properties have now had their
appearance improved to augment
their competitiveness in an increas-
ingly cluttered visual landscape.
Modernizing the look of the old
orange and black “Ps” logo and
facility signage should also add to
the customer-friendliness of our
image and convey the cutting-edge
nature of our approach to property
management. Reaction to our new
orange and plum logo and signage
has been favorable. The program should also
help promote consistency in appearance
from property to property. We added to the
value of our properties by investing about $6
million in 1996 with this program and expect
to invest approximately that amount in 1997.
Systems and controls. Last year we began
to update and expand the software used in
our computerized property management
system. The system, installed at each of our
properties, transmits and receives data
regarding unit availability, delinquencies,
accounting and cash management. We
enhanced the software package to allow us to
track the sales activity of all the merchandise
products and to monitor the effectiveness of
our national reservation center.
The Internet. The number of hits our
user-friendly home page receives is steadily
growing. Customers can complete rental
applications through our Internet site. We use
our national reservation center to follow-up
on rental applications received through the
Internet. We expanded our investor service
function on our home page, providing alter-
native methods for shareholders to commu-
nicate with us and with Public Storage’s
transfer agent. We are exploring additional
ways to benefit from the Internet. Our Internet
address is http://www.publicstorage.com.
We welcome your suggestions or comments.
F UTURE O PPORTUNITIES
During 1996 Public Storage continued to
grow. However, not everything is clear sailing
in the mini-warehouse industry and there
could be a squall or two on the horizon. Supply
and demand factors fluctuate, variables which
are intensified by new construction activities.
Supply/demand disequilibrium could result in
negative trends in mini-warehouse occupancy
levels and rental rates in affected markets.
Nevertheless, we are optimistic that our com-
The Public Storage Property System