How Extra Space Storage Acquires & Grows Properties with Zach Dickens

In episode 10 of the Inside Extra Space Storage podcast, McKall Morris and Zach Dickens, Chief Investment Officer at Extra Space Storage, dig into the acquisition strategies that built one of America's largest self storage companies. Zach also shares insights on how data drives modern acquisition decisions and his prediction for how autonomous logistics will reshape commercial lending in the storage industry.

Transcript & Chapters

00:00 — About Inside Extra Space Storage Podcast

Dickens: We spend hours evaluating properties, and they’re kind of like people. They have their quirks. They have their good sides and some bad sides.

Morris: Who sells storage properties that are the same? Things you want to hide about yourself—

Dickens: Storage properties want to hide some things about themselves.

Morris: On Inside Extra Space Storage, we sit down with the experts building, operating, and scaling Extra Space Storage to not only be the world’s largest self storage operator, but one of the most trusted names in the industry. If you care about where Extra Space and the self storage industry is headed, you’re in the right place.

00:34 — Meet Zach Dickens, CIO at Extra Space Storage

Morris: Welcome to the Inside Extra Space podcast here at Extra Space Storage, where we’re talking to our leaders and some of the best minds in self storage about what’s going on and their leadership philosophy. Today, we’re lucky to have Zach Dickens with us. Zach is our Chief Investment Officer at Extra Space Storage, and he’s been with the company almost 24 years, if I have that right.

Dickens: That’s right. I’m heading that way this May. I’m glad to have been here that long.

Morris: You’re about to hit 25, but not quite there yet.

01:02 — How Extra Space’s Growth Strategy Evolved

Morris: To start, I’ll ask the question that probably comes to you most often. You’re an investments guy and a growth guy. What is the current growth strategy at Extra Space? How would you summarize how we look at growth?

Dickens: The growth of the company has been on a long trajectory over decades. This was Ken Woolley’s vision: to grow the company. We’re now the largest self storage operator in the space, which is exciting for us. We don’t own all of our properties. We do robust third-party management, but we’re continuing to grow.

Dickens: Today, we’ve reached a point where we’ve entered the major markets of the United States. So now we’re starting to look beyond that into smaller hometowns, probably places like where you and I grew up, and getting storage into those places. That’s great because it’s the scalability of our business that leads to profitability. We need more stores where we can apply our formula, and we’ll continue to grow over the next few years.

Dickens: That being said, we’re also very opportunistic. We’re looking for areas where we can invest, make an immediate impact, and show growth for our shareholders. You have to weigh both: growth into new markets and being opportunistic when there’s a chance to acquire another property group. Once properties are acquired by major operators, they may not come up again down the road. They’ll be with us or with one of our peers, and we may never have another shot to grow through that avenue.

Morris: It’s a competitive environment that you’re operating in.

Dickens: It truly is.

02:38 — Acquisition Process from Deal Sourcing to Operations

Morris: When you’re talking about an acquisition, give me acquisition 101. Walk me through the process. What does it look like to get a property acquired by Extra Space?

Dickens: There is a predetermined formula we go through. Around the office, you’ve seen a lot of analysts who underwrite these properties. They come up with opportunities by looking at how a property is performing. We primarily acquire existing properties. We’re not out developing new ones.

Dickens: We take those properties and assess where they are compared with our stores down the street. The majority of the time, we are outperforming those properties, and that has something to do with the operations we have compared with many of the mom-and-pop operators in our space.

Dickens: From there, we put the opportunity through a lot of tests. We make an investment recommendation that gets approved by executives here at Extra Space and fully vetted by the operations team because they are so crucial to the process. At the end of the day, I don’t manage the store and I’m not standing behind the desk. Someone in operations has to work through that and get the most out of the property, and I’m very appreciative of them.

Dickens: Sourcing the deals is another thing. We’ve built up relationships over years and years of experience. We work with brokers who bring us deals. We work with individual operators and owners. Sometimes it may be someone our founder, Ken Woolley, knew years ago. We end up finding those stores and bringing them in. Hopefully, it works as a win-win for whoever is selling to us and for us on the receiving end.

04:16 — Building Great Partnerships by Understanding the Need

Morris: You’re really well known for being a great partner. What do you think makes a great business partnership? What is your philosophy around being a business partner?

Dickens: I think it comes down to understanding incentives. That includes the incentives of the partner. They want to be appreciated and have a real stake in what happens.

Dickens: We’ve done so much through partnerships that it’s part of our DNA at this point. It feels very natural to us. The thing about a partner is that they bring a lot to bear when scrutinizing investments. They’re looking over our shoulder, we’re comparing notes, and they’re finding opportunities too.

Dickens: Most of our partners are also great sources of capital. There are large institutions that often represent groups like pension funds, state retirement systems, university endowments, and insurance companies. An insurance company, for example, has liabilities it has to meet if it needs to pay out someday. These are great investments for those kinds of groups.

Morris: Those partner groups are broader than people might expect. A mom-and-pop operator partner is huge, too.

Dickens: Yes, and that’s what’s unique about this. We’re not like malls, where a mall might run $150 million. Our asset class usually runs anywhere from $5 million for a single investment to more than $1 billion for a large portfolio. That attracts all sorts of capital into the space.

05:51 — What Dickens Looks for When Hiring for Extra Space Storage

Morris: There’s a wide range of deals your team looks at. You mentioned your analyst group, and you have such a strong team. What are you looking for when you add someone to the acquisitions team? What type of person succeeds on the acquisitions team and at Extra Space?

Dickens: There are some basic table stakes. They have to be hardworking and honest. Teamwork is also highly regarded on our team.

Dickens: For the people who really succeed, it comes down to intellectual curiosity. Our storage product looks simple at face value.

Morris: We always make the joke that it’s three walls and a door.

Dickens: But the minute you look at it twice, it becomes much more complicated. It becomes a question of, ‘Let’s find out more about it.’ When I came into this business almost a quarter century ago, I needed to learn the asset class and understand how it works. You have tenants moving in and out every month. Rates are changing all the time to reflect market conditions. You have to ask why a property in Omaha, Nebraska performs differently than one in Los Angeles, California.

Dickens: There’s no prescribed way to do everything in this world. That’s why I need intellectually curious people who can go out and determine the difference. You may notice that on the team. We allow people to talk and compare notes. They often form great friendships at work, and that’s good on its face, but it’s also how they learn about the business. We want to encourage that.

Morris: I think everybody does that at Extra Space.

07:43 — The Data Advantage of 4,300+ Self Storage Facilities

Morris: Like most teams here, your team has access to so much data because of the scope and scale of our business model. How are you using that data as an acquisitions team?

Dickens: It’s very interesting because I don’t know what we may be doing five years from now that’s different from today, other than we need to keep being students of the game and trying to figure out what’s different. Today, we have 4,300-plus stores in our system. There are very few companies that have that amount of data to use and can put it to work like we can.

Dickens: That’s unique in the space. Whether you’re comparing self storage with apartments, malls, industrial spaces, or other uses, we have something unique. There are bricks and mortar behind the scenes, but we live in this technology age, and we use the data to our advantage.

Morris: It’s been cool to see how much data is used across different departments. Every leader I’ve talked to has brought up data in some way and how we are a data-forward company.

Dickens: Intuition only gets you so far. The data is where we’ll make the decisions that make the difference down the road. I’m excited about using artificial intelligence to leverage that even more and get better access to the data. Seeing it go through a couple of real estate cycles will be very informative as we keep moving forward.

09:05 — How Self Storage Became a Mainstream Asset Class

Morris: Big picture, when you look at self storage, Extra Space, and the industry, what are you excited about?

Dickens: Today, I think it’s access to capital. When I began years ago, there was little known about the space. Banks couldn’t get comfortable because when you opened a new facility, there was no pre-leasing. In apartments, they could be pre-leased ahead of time. Back then, that was a real thing. Bankers did not understand how you could have an empty property that, in a year or two, would be full and cash flowing.

Dickens: So there was a lot of education. I think people finally understand that we are in an alternative space, and alternatives are now some of the spaces making the most money in the world. Those are data centers, storage, industrial uses, outdoor storage, and things like that. That is very different from 20-plus years ago.

Dickens: It’s interesting to see capital attracted to the space. That has pros and cons. It’s a desired asset class to be in, but it’s also harder to get the higher returns we used to see. You have to weigh those two things. Institutional investors are here, and their capital coming into the space is driving down returns. That’s different from when I started.

Morris: We’ve seen the reputation of storage change so much over the last 25 years. I think Joe Margolis, our CEO, tells a story about how when he first thought of self storage, he thought of chain-link fences, barbed wire, maybe a big dog on the property—kind of a strange property class. Now there are beautiful buildings in downtown areas. How have you seen the reputation of self storage change?

Dickens: I think you hit it right on the head. There’s also a professionalism that has come into the industry. Back in the day, rents were reset once a year, and that makes no sense in the environment we’re in today. Demand changes. We’re in a seasonal business. We’re busy in the spring and summer months, so rents should reflect that. Before, we didn’t have the ability to do that in real time. Now it’s done with an algorithm, and that has taken it to a new level.

Dickens: We also attract a much more professional manager at the store level than we did years ago. I’ve been in storage properties in the past where people wouldn’t even get up from the desk and the offices were dingy, dirty, and dark. If you go into an Extra Space facility, it’s light. We have podiums, which break down a barrier when someone is trying to rent a unit. Before, a desk could feel like it encased the person.

Dickens: Now our managers are personable. They want to take customers out to a unit and talk about merchandise. We’re getting higher-quality managers, and I think that’s also because we have a strong name. Someone can start as a manager and see opportunities to move into district management or maybe even higher on a regional level. Those opportunities are more prevalent today, and that’s good for us as an industry.

12:28 — Extra Space Storage Culture & the Empowerment Philosophy

Morris: When I visit a store and it’s an Extra Space employee, I feel like I’ve found a friend. I haven’t met all 8,000 employees, but they are such kind and helpful people by nature. It’s interesting to see how the Extra Space culture shows up throughout the company.

Dickens: They tend to know the challenges of our tenants. They show a lot of empathy. They are solution-minded individuals who want to help. I can go into a store and talk to a manager, and someone will come in and the manager will greet them by name. They know their circumstances. It’s interesting to see a highly skilled manager also have that emotional intelligence.

Morris: When people use a storage product, they’re often going through a life transition. It can be a hard time, and our managers navigate that well.

Dickens: They do. They understand it because they’ve seen it a lot, and they have great people skills.

Morris: What do you think it is about the Extra Space culture, top to bottom, that makes it special?

Dickens: I think it’s special because the culture at Extra Space empowers employees to make a difference. You don’t have to go way up the channel to get a decision made. I see this in our day-to-day lives here in the office. I don’t always have to run things by Joe Margolis, our CEO, to see what needs to be done. We take the opportunity to feel empowered and make a solution happen, whether that’s for our employees at the corporate office or for our tenants at the store.

Dickens: Another cultural thing about Extra Space is that I don’t have to check my personal values at the door. I bring them to work, and the company recognizes that. Integrity is held highly here. Having a positive attitude and working well with other people are at the forefront of our values. When you personally feel that way, you stick around longer. That’s part of why I’ve spent a couple of decades here.

Morris: Speaking of your personal values, we work on the same floor, and I’m often leaving work at what I consider late. I look over and you’re still working. I don’t think I’ve ever beaten you into the office. What is behind your drive as an employee, a leader, and someone in this industry?

Dickens: There is always something interesting to work on. I’ve never been bored. We spend hours evaluating properties, and they’re kind of like people. They have quirks, good sides, and some bad sides. Storage properties want to hide some things about themselves.

Dickens: What I’ve learned is that if I can continuously learn more, it keeps me engaged as an employee. Coming in early or staying late isn’t an issue. I also feel a sense of accountability and responsibility to the people I work with and serve. Getting back to them in a timely fashion is something I’ve had to work on in my career. When I started, that was one of my biggest shortcomings, and I hope I’ve made it a strength.

Dickens: We strive for excellence. It’s one of our values: excellence in product and in what we do. That motivates me at a cellular level to do my job well. Thank you for noticing, by the way.

16:33 — Principled Negotiation & Why Reputation Is Everything

Morris: You have a great reputation here as someone who works hard, is smart and curious, and is also known as one of the nicest people in self storage. The industry generally has a lot of nice people, and that’s something I love about it.

Morris: I remember one time when an outside partner was a little snippy with me, and I asked Noah if I had done something wrong. He said, ‘That guy was rude to Zach Dickens once, so you know it’s not about you.’ I felt so relieved because no one has a better reputation for being kind than you. How much do you care about your reputation? Is it something that comes naturally from your values, or have you been conscious about building that reputation in the industry?

Dickens: Reputation in the industry is very important. Don’t sweat the small stuff, especially in a transaction. You have to find a win-win. I know that sounds cliché, but that’s the business I’m in.

Dickens: Being nice is not necessarily a virtue by itself. You have to balance that. If I lean too much into being too nice on a transaction, that’s not good for the company. Nice people want interactions to be pleasant, and you can feel like a people pleaser. But I’m here to represent a company and to be fair. Fairness is an important value, too.

Dickens: If you lean too much toward being nice, something else may not be tended to. The way I’ve figured it out in my own mind is to have principled arguments. That means I have a reason for presenting something to you, and I can explain it. Then we can all agree that it is fair and a good discussion point. You can be nice about it or you can be a jerk about it, but you still have to come back to the principle. Principled negotiation is a key to the success of our company.

Morris: That gives me a lot of insight into your negotiation style.

Dickens: It has to be that way. Otherwise, I’m unbalanced and I’m not getting the best deal for Extra Space. Alternatively, if I take too much of the deal for ourselves, what does that do to a seller down the road? It needs to be balanced, and that’s the only fair way to do it. Ultimately, a win-win comes because of that.

19:27 — 24 Years of Industry Transformation & What’s Next

Morris: Extra Space thinks about a lot of things with a long-term perspective. We’re 49 years old as a company this year, and people are already looking at what the company could look like 50 years from now. You started nearly 25 years ago. What did Extra Space look like then, and where do you see Extra Space 25 years from now?

Dickens: Twenty-five years ago, we still had the walls, the door, and the roof over the top because that’s a basic human need. I’ve often found that businesses with longevity serve basic human needs. We’ll always be moving. We’ll always need shelter, clothing, and so on. It’s a great product from that standpoint.

Dickens: Back then, we were starting to implement a lot of the technology that helped get us to where we are today. I think we’re one of the leaders in the technology space. If we continue down that road and keep investing in that area, it will only help us better serve tenants. That’s good for employees and good for the business.

Dickens: In the future, I think the question is how people access storage and how we can help people get to our properties more easily. Nobody likes the hassle of moving. I hate moving. It gets my stomach all balled up. It detracts from work and family life.

Morris: I’ve never had a good time moving. Never once have I moved and said, ‘Lovely.’

Dickens: The only person I know who enjoys it is my wife. She views it as an adventure, but she’s also okay if our living room looks out of sorts for six months while we’re moving.

Morris: That’s a unique person.

Dickens: She is, and this may get me in trouble if she listens. But I think most of our tenants and customers feel the same way I do about moving. So let’s make it easier. Maybe that’s through logistics down the road. Maybe it involves transportation of goods or autonomous vehicles pulling right up to our property and reducing the labor component. Logistics will evolve.

Dickens: Storage as a concept will always be in need. I can’t imagine a future where we’re all just plugged into a computer. There will still be interaction with physical space. Having it decluttered and organized is a human quality I strive for, so I think we’re headed in that direction.

Morris: It’s fun to see that the baseline of storage is so stable. It’s a need-based, resilient product whether you’re looking 25 years ago or 25 years into the future. But there’s so much technology that has shifted, and Extra Space has been able to stay on the cutting edge.

Dickens: It will only make us more relevant as we implement technology that makes it easier to move. I think we’ll have a nice future. The future is bright for our company.

Morris: We’re talking to someone who feels like an optimist, but I agree. That’s a takeaway I’ve heard from a lot of leaders: everyone is excited about what’s ahead.

Dickens: Absolutely. What’s not to be excited about? We’re getting better and better at what we do, and that is a real source of pride and excitement for our organization.

23:01 — Dickens’ Career Path From Russian Literature to Real Estate

Morris: Changing topics, if you were to look back at Zach right out of college, I think you graduated with a Russian degree. If you were looking at younger, Russian-speaking Zach, what career advice would you give him? What’s something you learned that he needed to know?

Dickens: Russian was a passion I had at the time. I thought about doing business internationally. I had the fortunate opportunity to live in St. Petersburg, Russia, and I learned a lot about the people. I loved the language. It has elements of mathematics in it, with an almost musical flair, and I fell in love with it. I also loved reading Tolstoy.

Morris: Not to brag, but he likes Russian literature. He is smart.

Dickens: At the time, I thought more long term about it. I was really into the liberal arts and the philosophy that was part of Russian culture and our culture, too. I thought maybe I’d become a professor and get paid to sit around, think, and write in Russian.

Dickens: But I realized my career aspirations had changed, and I needed to be more grounded in business. I decided to go back to business school. That was a fundamental shift for me. I could still enjoy the language, but to be a well-rounded individual, I needed something more marketable that I could dig into and use to support a family down the road.

Dickens: I probably went back to school too soon. I would have told myself to get a real job first. At the time, I was a supervisor at a call center for Westin Hotels. They had just been acquired by Sheraton, and now they’re part of Marriott. I learned a lot, but I probably should have stayed in the working world longer and used that time to learn more about what I liked and didn’t like before getting a master’s in business.

Dickens: Finding Extra Space was pure luck, and probably the best luck I’ve ever had. My mother-in-law, strangely enough, found the job for me. She knew Larinde Call, who some of us still remember. Larinde started as a receptionist for Ken Woolley when he developed homes, and she proved she was incredibly smart and worked her way up through the organization. My mother-in-law had become friends with her, and Larinde needed an analyst.

Dickens: Not having my Russian career established, whatever that would have meant, I applied for the job. It was serendipity. I’m glad I’m here. It was one of those moments where you accept a challenge in life and get excited about it. The company was very small. The people were amazing. I had never been in a storage property before, and I took a bit of a risk.

Dickens: At the time, I didn’t have much opportunity cost. Ken Woolley was talking about growth and the excitement he had. I think we may have had 60 properties then, and many were managed for other people, but he had this vision and could talk about it in a way that got everybody excited. I wanted to be part of that discussion. A year and a half later, the company went public, and I felt like I rode this wave of good fortune. I’m glad to be part of it today.

Morris: That’s an incredible career story, going from 60 properties to more than 4,000 now. Starting as an analyst and becoming Chief Investment Officer is one of our classic stories of someone who came in, worked hard, and did right. We love having you here.

Dickens: I feel so fortunate to be here, and I hope to be here for years to come and see the company grow as it has in the past. We have a bright future, and I want to be part of it.

Morris: Me too. I think that’s our time together, even though we could keep chatting forever. Zach and I are known for having too-long breakroom conversations that get a little heated as we debate topics. We could have gone much longer, but I’ll cut us off before any of us say anything too controversial.

Dickens: Thank you, McKall. It’s been a pleasure, and this is a joy to get the opportunity to talk about work and have a little fun doing it.

Morris: Thank you. We’re glad to have you. And thank you to everyone who joined and listened. Please follow us and find more conversations we’re having with leaders here. We hope you enjoyed it. Thanks for listening to Inside Extra Space Storage. Each episode features conversations with leaders and teams behind one of the most recognizable names in the self storage industry. To connect with today’s guests, reach out to them directly on LinkedIn. And don’t forget to follow the show for more insights inside the industry. Until next time, have a great day and an even better tomorrow.

About the Host and Guest

Zach Dickens, Chief Investment Officer

Zach Dickens has been with Extra Space Storage since 2002. He has served in various roles in the real estate department, beginning as an analyst and now as Chief Investment Officer. Dickens has been instrumental in structuring transactions with Extra Space Storage's partners and growing the company's Bridge Loan Program. Prior to joining Extra Space Storage, Dickens oversaw a technical support team at eBay, where he worked in the half.com unit. He has a Master's in International Management from the Thunderbird School of Global Management, an MBA from Arizona State University, and a Bachelor's in Russian Language from the University of Utah.

McKall Morris, Director of Corporate Communications

McKall Morris is the Corporate Communications Director at Extra Space Storage. She joined the company in March 2019 after several years in the airline industry. Since joining Extra Space, Morris has played a key role in advancing internal and external communications initiatives, helping shape how the company is represented across all channels. She holds a Bachelor's degree in Communications from Brigham Young University and an MBA from the University of Utah.

To learn more about Extra Space Storage, visit our investor site, or explore the next step in your career by viewing current job openings. This transcript was auto-generated and edited, including paraphrasing for readability. For the full conversation and exact quotes, listen to the complete episode on YouTube, Apple, or Spotify.