Getting to ‘Go’
Copyright 2014 by Virgo Publishing.
By: Victor Lopez
Posted on: 09/01/2005



 

Perhaps one of the greatest analogies for the real estate business is the game of Monopoly. During play, there are opportunities for easy money when you pass “Go”—if you don’t draw the wrong cards. But getting to “Go” isn’t the objective of the game. Neither is it the goal of developing a self-storage property. It’s only critical in the initial stages, when a “go” or “no go” decision must be made.

While there are numerous factors that can make or break a self-storage deal, you can never fully evaluate a property until you have a site plan and unit mix. Once you plug construction costs and rental income into your pro forma, you find you have reached a crossroads. Do you continue with development? The journey to a decision can be riddled with obstacles. Many don’t interfere with basic planning, but they can create distractions that waste time and money.

Obstacles Along the Way

These days, the fundamentals of site planning are more complex, as development itself has become “fancier.” For example, the next time you see a couple of construction workers kicking the dirt, you can assume they’re setting up a nuclear densitometer to test the compaction and moisture content of the soil. Take a closer look at those big yellow dirt-moving machines—most have laser controls as well as GPS systems. Detention ponds are no longer just holes in the ground. New water-quality systems are designed to filter storm-water runoff, detain the initial volume of water, and then discharge it slowly, preventing downstream flooding.

Unfortunately, you can’t always rely on past information or even that obtained during preliminary due diligence. Jurisdictional data, too, can be inaccurate. Some states have moved to adopt an international building code, offering hope the development process will become similar in various regions. But alas, many jurisdictions have affixed their own amendments, creating as many divisions as before. Code analysis is, therefore, critical.

The increased requirements of planning and zoning departments, particularly in hot markets, have made the approval process longer and more difficult. An increasing number of authorities are calling for architectural elevations, color renderings and, in extreme cases, actual product and color samples to be submitted with the site-plan application. Some presiding agencies even seek to control growth by delaying new development in 30-day increments, denying site plans or permit applications.

Now that you’re aware of some of the potholes on the road to “Go,” you can settle into planning the layout of your site and designing the unit mix.

Site Planning

Site planning requires a great deal of research concerning zoning restrictions, setbacks and other jurisdictional provisions. It’s imperative to have an experienced design-builder or civil engineer with self-storage experience provide guidance regarding the controlling authorities. A regional engineer with knowledge of current zoning restrictions will save weeks and months in your journey.

While hacking out your site plan, some of the most important considerations are land cost, land coverage, site improvements and building layout. The key is to understand these variables and their costs. Land cost and coverage go hand in hand. What you pay for the dirt and how much gross square footage you squeeze out of it will affect the financial performance of the facility.

The first items that minimize your coverage are the site’s requisite setbacks and buffers. You can confirm these by examining the plat and verifying regulations with the city. But it doesn’t stop there. The fire marshal and arborist will also steal valuable space. Check local statutes and with the fire department for fire-lane widths and turn-radius directives. Also verify the compulsory landscape areas and buffers. Sometimes these are disguised by referring to them as “pervious cover areas” or “green space.”

Once you’ve established your site’s physical parameters, consider the improvements necessary to fully extend your coverage. By now, you should have determined what utilities are present or how far you have to go to get them. Don’t cheat yourself by not using available utility locations to your advantage.

Again, you’ll need to satisfy the fire marshal by installing the designated number of fire hydrants and lines. Make sure you know the exact requirements: the size of lines, if check valves are needed, and if the fire lines must be looped or can be dead-end. Looping a fire line can double your costs!

Other site improvements include excavation and grading. Will the site require you to move a lot of dirt, or can you design buildings to follow the natural grade? Consider using split-level buildings to take advantage of steep grades. Retaining walls can help capture more space on a steep site, but use them as a last result, as they can be expensive.

Finally, storm drainage is a significant factor. Use surface drainage as much as possible to keep costs down. Make sure your civil engineer has carefully determined the requirements for storm-water detention and filtration. Detention ponds can consume valuable space and reduce your coverage. They also add significant cost if you use concrete or underground detention. Water-quality or filtration ponds become costly if not carefully placed and sized.

Now that you’ve established how much of the site you can use while keeping the fire marshal and arborist happy and spending as little as possible, you can start laying out the buildings. This is where the site plan begins to take shape and overlaps the unit mix. Buildings of different widths will yield various combinations of unit sizes, so don’t make all your buildings the same. Likewise, don’t line your property with single-loading buildings of the same width. The objective is to maximize the financial performance of your facility by achieving the right unit mix.

Unit-Mix Formulation

How do you determine the right unit mix? Some owners have tried the recommended mix of their metal-building supplier, only to find it was suggested because it was the easiest way to erect the building. Others have applied a particular formula because it’s what other stores used. The best approach is to conduct a detailed analysis of the market, identifying its trends and shortfalls, and carefully examine the existing competition.

The feasibility study conducted during your development process should tell you what you need to know about your competitors and the people living in your market. When it comes to the competition, you need to know the number of facilities as well as their size (including number and type of units), percentage of climate-control vs. regular storage, occupancy level, prices, overall appearance/condition, and staff. Demographic data should include population make-up, income level, renter-occupied housing, level of commercial activity, traffic count, major employers and traffic generators.

This information must be analyzed and compared to historical data from the same or similar markets. Since the source of information is essential, contact a good property-management company that has taken the steps to track its stores and customers. Information regarding storage use—where people rented storage, the type they chose and why—can be used to establish a baseline unit mix you can later tailor to your market.

For example, if your market has a higher percentage of renter-occupied housing, decrease your average unit size, as renters typically lease smaller units. If there is a larger commercial presence in your area, increase the average unit size. After comparing each category in your baseline mix and making the necessary adjustments, you’ll have a unit mix specific to your site.

Put It All Together

Now that you have the right unit mix, you can fine-tune the site plan. As you manipulate the layout and building sizes, remember that a good storage project facilitates use. Keep customers in mind:

  • Put your largest units on fire lanes (the widest travel paths) in drive-up facilities and near entry doors and elevators in multistory projects.
  • Use building setbacks to increase vehicle-stacking room in front of the entry gate.
  • Place required parking stalls so customers can easily access the office.
  • Put trash receptacles in sight of the office or a video camera.
  • Use bollards at the corners of buildings to help customers maneuver their vehicles through the site.
  • Don’t forget safety and convenience items such as water fountains, vending machines, intercoms and signage.

Proper site planning and unit mix will create an economical facility that can compete in today’s competitive environment. What it means for you is the best possible return on investment. By gathering the right information and sticking to the basics, you’ll find yourself getting to “Go” and beyond.

Victor Lopez is the president of NDS Construction, a full-service design and construction company. NDS has completed more than 200 projects totaling more than 8 million square feet of storage and has won numerous awards for design as well as “Facility of the Year.” For more information, call 888.980.8250; visit www.ndsinc.com.