The Top 10 Mistakes in Self-Storage Construction
|Copyright 2014 by Virgo Publishing.|
|By: Tyson Hermes|
|Posted on: 09/01/2005|
By Tyson Hermes
In 1980 self-storage was relatively new, but my family bought several facilities in the Cincinnati market. Back then, there was little concern about competition, long-term maintenance or aesthetics. After all, these facilities were only meant to be temporary income until the property outweighed the value of these “tin shacks.”
Almost 30 years later, we still own our sites. In time, we developed more facilities and expanded the existing ones. With every building, we learned more about what worked—and what didn’t. We noticed small details that create big headaches down the road and discovered some long-term solutions. After repairing our own mistakes as well as those of others, we’ve assembled a list of the most common mistakes people make when developing a new facility:
1. Purchasing a cheap site instead of a good site. Sometimes people buy land that is out of the way or hidden behind more prominent real estate because it’s cheap. But for a facility to be a success, it must be visible and on a heavily traveled street, preferably on potential customers’ commute to and from work. If the value of a self-storage investment is $2 million, a $400,000 site is only 20 percent of the cost, but can be the difference between success and failure.
If you opt for the hidden site and are fortunate enough to be the only facility in a 5-mile radius, customers will still rent from you—for now. But if someone develops a facility on a more visible parcel on the main thoroughfare, prospects will be less likely to pass that site to visit yours. You may be forced into being “the lowest price in town” just to get business. This is not a good position, so think about the future.
Another benefit to a highly visible site is reduced advertising costs. If you don’t have to educate every prospective client about your location, the burden of marketing won’t be as great. Go for visibility on a busy street.
2. Failure to use an experienced designer. Some owners seek the advice of an architect to design their facilities but, unfortunately, most design professionals are unfamiliar with self-storage. Because of this, they design a facility that doesn’t maximize a site’s rentable area.
Use a design-build company experienced in self-storage development to assist you with a demographics survey, site layout, unit mix, etc. By making a few small adjustments to the buildings, a qualified design-builder can typically fit 10 percent to 30 percent more rentable square footage on a site than what the architect draws, while conforming to all zoning and building codes. This additional space goes straight to the bottom line and results in higher cash flow.
3. Including too many driveways and not enough rental space. Not every unit needs exterior access. By using less driveway area but wider buildings with interior corridors, the site gains more rentable square footage. People are usually willing travel up to 100 feet on an inside corridor, but keep in mind no tenant should have to turn more than once to get to his unit, and the corridor becomes a dead end if it exceeds 20 feet without an exit door. Interior hallways also provide an excellent opportunity to phase in climate- controlled space in the future.
4. Not getting a geotechnical survey prior to finalizing the budget. In the budget phase, owners and builders often use an earthwork allowance to establish financing. While it may be tempting to skip the geotechnical survey, it reveals the suitability of the soil for this type of construction. If the soil is unsuitable, the builder can allow for undercutting footings or stabilizing the soil if necessary. The cost of the survey varies, but it gives the comfort of knowing the project can be completed under budget, or serves as a red flag indicating more money may be required.
5. Ordering that “on sale for a limited time” steel-building package. Some owners are lured by the possibility of saving money by ordering a “package deal” offered by a steel-building supplier. In most cases, the package requires a “small” down payment, usually 25 percent. Once the vendor has your money, however, everything seems to change. Items such as the number of door openings, the size of doors, roof slope, building code, engineer’s stamp, etc., often come with additional charges.
Before buying a building package, here are some things to verify:
Once these questions are answered and you compare apples to apples, you may find the package isn’t such a great deal. Most building suppliers that specialize in self-storage can beat the price, delivery schedule, quality and completeness of these packages—without requiring a deposit.
Another problem people have encountered with these building “sales” is the building gets delivered long before construction starts, leaving the structure exposed to the elements and ultimately requiring more work when the building eventually needs to be moved. If you want your project to run smoothly, leave the building in the hands of the builder.
6. Not using a standing-seam roof. Some owners will consider asphalt shingles or a screw-down metal roof for their buildings. But neither has a life expectancy of even two-thirds that of a standing-seam roof; and while the screw-down roof is less expensive, it has a tendency to leak over time.
The panels of a screw-down roof are drilled and attached directly to the building with fasteners. As the panels expand and contract from fluctuations in temperature, the drill holes elongate and allow water to seep into the building. Perhaps the biggest problem with a roof leak is it can go undetected for months. This spells bad news for the owner whose tenants’ goods become damaged. Standing-seam panels “lock” onto clips without any screw-hole penetrations. Fewer penetrations mean fewer possibilities for leaks.
The premium for a standing-seam roof vs. a screw-down roof is about $1 per square foot, but the standing-seam roof will outlast the other by 10 to 20 years. The headaches you will avoid and the longevity of the roof make it worth every penny.
7. Forgetting the weather lip. The weather lip is a small step in the concrete slab, usually about 1-inch high, behind the roll-up door. It prevents water from entering the building, running across the slab, and damaging the goods being stored. Buildings constructed without this lip offer a full-time career in building maintenance to some poor soul, usually the owner. The weather-lip should be on the building drawings and bid competitively. In this case, it adds approximately $2 per lineal foot of wall where you have exterior roll-up doors.
8. Not insulating the building. Climate-controlled or not, every building should have roof insulation. Metal has a tendency to sweat in the spring and fall when the weather changes. Insulation prevents condensation from dripping inside the building. You can even spend the extra money (about 40 cents per square foot of wall area) to insulate the entire building. That way, if you ever decide to convert the building to climate control, you’ll have eliminated the headache of having to displace tenants for this step.
9. No climate-controlled storage. Prospective lenders have asked owners, “Why are you building climate-controlled storage?” The answer is usually, “Because the community could use it.” One lender actually said, “I don’t think climate- controlled storage is right for this area because none of your competition has it.” The response was, “Eureka! That will set us apart from the competition.”
Climate-control works in areas with slightly higher-than-average household incomes. People with nicer items to store will pay a premium to keep them out of extreme temperatures. However, if the facility is 100 percent climate-controlled, you may actually turn off some customers, so a mix of both is usually best. Remember that climate control may require additional “selling” by the manager to be fully realized.
10. Forgetting the gate. An automatic gate allows tenants to access the site after hours, tracks entry and exit activity, and provides priceless information in the unfortunate event of a break-in. Use the gate and fence to ensure only tenants enter the facility. However, it’s important that new customers can access the rental office without having to go through the gate. Sometimes this takes some ingenuity to accomplish in the planning stages.
Many of the items mentioned in this list can be used as selling points for your facility. A clean, paved, nicely landscaped, fenced-in site with an automatic gate is impressive to prospective tenants. If they feel secure and are pleased with the appearance, they will be willing to rent from you, even if they have to pay a little more.
Tyson Hermes is the vice president of Hermes Construction Co., which offers consulting services for site selection, site analysis and site design, as well as full construction services. For more information, call 859.781.7198; e-mail email@example.com; visit www.hermesconstructionco.com.