By Cecile Blaine
Self-storage facility developers used to ask themselves when it made financial sense to offer climate control. Today, they ask themselves when doesn't it make sense to have the amenity. In this article, we'll take a look at recent trends and changes in climate control.
Upscale, multilevel facilities, urban and Southern facilities have brought climate control to the forefront of amenities that are becoming status quo for self-storage. While the percentage of facilities that are 100 percent climate-controlled is still quite small, many predict that a majority of facilities around the country will soon have a portion of units that are heated, cooled or ventilated.
We normally associate climate control with air conditioning, but it also includes heating, humidifying, de-humidifying and other types of climate modification. It's probably no surprise that the 1997-98 Self Storage Almanac estimates that the Southeast has the highest percentage of climate-controlled facilities--approximately 21.6 percent--compared with other areas of the country. But many self-storage developers and gurus predict that trend is quickly changing.
There are, of course, facilities in which climate control would not be financially feasible, especially those that store vehicles, automobiles, RVs and boats, for example. Being able to offer climate control, on the other hand, enables a facility owner to capture a broader market share than ever, offering an edge over the competition and therefore boosting a facility's profits. It can make the difference between a customer choosing one facility over another. Also, it can help draw commercial tenants, who typically stay longer than their residential counterparts.
William Smith Jr., director of sales and marketing with Ruffin Building Systems in Oak Grove, La., says about 30 percent of the facilities he recently designed have climate control, compared to less than 5 percent in 1987.
Smith says controlling humidity is the key to climate control in a facility. "When the humidity gets up around 90 percent, things start to go bad," he says. "And when you get down to 20 percent, things start to dry out and break."
So, it makes sense that climate control is more popular among Smith's customers that are closer to the Gulf of Mexico, where both the humidity and the average income are higher than inland. "Believe it or not, we have more climate control along the Gulf Coast in Alabama and Florida" due to the humidity and strong economy, he explains. "Down there, it's a more sophisticated customer base and they have better stuff to store--stereos, electronics, photos and files."
The Amsdell Companies, a Cleveland, Ohio-based self-storage management company that currently manages 96 facilities with 52,000 units, held three grand openings in January and three in February of this year. While President Todd Amsdell says approximately 10 percent of their current holdings are climate controlled, between 40 percent and 60 percent of the units in new facilities are climate controlled. It's no surprise that the six facilities that recently held grand openings are all located in Florida, but Amsdell says even the facilities that are on the drawing board for North Carolina and New England have between 40 percent and 80 percent climate-controlled units.
"We are moving climate control into areas that we have never had climate-control storage facilities in the past," he says. "Actually, last year we built a new building on an existing facility in Cranford, N.J., and we made that 100 percent air-conditioned."
In terms of the physical equipment needed, Larry Jenkins, business development manager with Trachte Building Systems of Sun Prairie, Wisc., says you can generally assume that a facility will need one ton of compressor power for each 1,000 square feet of climate-controlled space.
For many development companies, retrofitting is the answer. For example, Amsdell recently retrofitted a project in North Canton, Ohio, with 100 percent climate control.
Geography plays a part in which facilities are retrofitted, says Amsdell, but it is more often a factor of the market. "Florida is really a prime candidate for climate control, but we are also retrofitting some of our buildings in San Bernardino, Calif.," he points out, adding that only about 5 percent of the building will have climate control.
"Temperature is not really a problem out in Southern California for the people's goods," says Amsdell. "You can get some extreme heat, but the buildings are pretty well ventilated and they have a different way of attacking that problem. So, it's more of a comfort and a perceived value."
Some developers are building facilities with phased climate control in mind. In addition to having moveable partitions to stay flexible in terms of unit mix, Amsdell says they are now including other features in their new construction that will enable them to go to climate control more easily in the future: insulated doors, more interior hallways, doors with better seals and roofs that will accommodate the physical unit outside with a higher pitch to accommodate the ductwork inside.
"There are little things you can do in the beginning that make it a lot easier," says Amsdell.
Cost has to be one of the biggest deterrents to retrofitting. But what Amsdell and other developers are doing prepares the building and lowers the cost of construction--in the case of conversion. At some point, there are diminishing returns to converting a large space, explains Amsdell.
"You don't want to build a 100,000-square-foot facility and put 10,000 square feet of climate control and then have all 90,000 square feet ready to roll to be converted to climate control some day, because it is going to be too costly to carry that extra weight in the future," he says. "You might build a 100,000-squarefoot storage center and initially put up 20,000 and allow for an additional 10,000 at a later date. And I think that would be reasonable."
Payback of Climate Control
The revenue raised by climate control must justify the cost of installing it or retrofitting. Just how much of an increase in rent can a developer or operator expect from climate control? Some estimate that rents can withstand up to a 15 percent increase, but the answer is much more complex that a simple figure.
When the amenity is already established in a particular market, then the facility is simply offering what everyone else already has, Amsdell points out. Bringing climate control into a market where it hasn't been offered usually means being able to ask higher rents.
"If you are moving into a market that doesn't have climate control, you might have a better chance of having a better ratio," after educating the customer, he adds.
"It is the same thing we experienced when we brought the self-storage product to the market and taught people about all the different ways they could use it."
Adding the amenity enables developers and facility operators to charge a premium for their units. "We have always perceived ourselves as industry leaders by bringing things like high-tech security, customer service and climate control into the market to be the leader in the market," explains Amsdell. "And with those things, it also means we can be the price leader. We feel that way we attract the best clients."
"You are able to attract a whole different kind of tenant that wouldn't rent from you under any circumstances until you have climate control," he says.
Climate control has become so much a part of the self-storage that one builder recently created its own customized HVAC system. Trachte Building Systems and Trane, a national manufacturer of HVAC systems, recently announced plans to sell and install Climate One.
"We felt that there was a need for an industry standard for climate control," says Jenkins. "In terms of being an industry standard--whether it is a clear-cut or directional--it was so easy to plan and implement that people could feel secure that it would operate and accomplish its objective and be profitable."
Climate One's target temperature range is between 50 degrees and 78 degrees Fahrenheit, according to Jenkins, with 78 degrees being the optimal point for most customers. "That will cover the vast majority of situations," he points out. "We don't want it to get too warm."
Climate One is still relatively new and while Trachte has received commitments for the system, it hadn't been installed at the time of this interview. Jenkins says one of the appeals of the system is the fact that it is designed with long hallways and lots of small units in mind. The mechanical part of the HVAC system will be compact and basically out of sight. Ductwork will go into the ceiling, rather than the hallways, allowing the hallways to be standard height. "We have been able to keep standard heights, which also keeps your building cost down," Jenkins says.
Another attraction Trachte offers developers is a cost analysis to figure out what their operating costs are and which energy source will provide the most financially feasible option. "They do a cost analysis of the three energy sources--electric, gas and heat pump," says Jenkins. "Heat pumps work well in more moderate climates."
Working with Trane offers other advantages to developers, including a five-year warranty on parts, compared with one-to-three-year warranties elsewhere, says Jenkins.
When all is said and done, whether facilities are located in Alaska or Florida, they are new or old, multistory or single story, it is likely that the future will bring climate control to their doors.