If Forrest Gump was in the self-storage business, he would say site design and unit mix are like peas and carrots—They always go together. this is very true if you think about how many seminars and roundtable discussions at self-storage conventions combine these two into a single topic. Even though i find myself writing about them together here, they are separate processes you must go through to design a successful storage property. But one gets quite a bit more attention than the other.
The Two Become One
Victor Lopez is president of NDS Construction, a design/build firm in Bulverde, Texas. NDS specializes in selfstorage, office facilities and commercial construction projects. For more information, call 888.980.8250; e-mail firstname.lastname@example.org;
Far more people ask what percentage of climate control to include at their facilities or how many 10-by-10s they need as opposed to where to place a fire hydrant. While site design deals more directly with initial construction costs, unit mix affects the ongoing financial performance of the store because it is tied directly to monthly rents. Unit mix is a living, breathing facet of your business. If done correctly, it offers flexibility and is the cornerstone to the financial success of your store. Nevertheless, site design is equally important. If a site is built incorrectly, in most cases, it is unchangeable.
Site design is the first of the two steps. Also called site layout, it involves arranging your office, buildings, drives and infrastructure on your property. The objective is to get as much coverage (net rentable space) as possible while ensuring the ease of use for the facility and keeping costs down. Control of costs is achieved by making the best use of your site and the existing utilities. This is where you find out just how much your land costs will be as they relate to the bottom line. The true cost for your site equals the purchase price plus the cost of improvements required to make your site usable for self-storage.
There are two quick measuring sticks to evaluate how your site is shaping up. When working with site coverage, examine the ratio of gross building area to total site area. For example, 68,000 square feet of building area on a 4-acre site will give you a coverage ratio of 39 percent. When working with the cost of site improvements, look at the ratio of costs to total coverage. For example, if you spend $408,000 on water, sewer, storm drainage, excavation, retaining walls and pavement for the same 68,000-square-foot facility, your ratio of site improvement costs will be $6 per square foot.
Before you start designing your site, you will need a handful of tools from your development due diligence. First, you’ll need the recorded plat and/or legal description showing boundaries of the site, including easements and setbacks. If the site is not platted, you will need a boundary survey and have to gather the information on easements and setbacks from the city and county. You will also need a topographic survey, tree survey, geotechnical report and environmental report for the site. Your objective is to take your total site, determine the useable area and identify any significant issues that present a design challenge and/or significant site-improvement cost. Think of this process as defining your three-dimensional playing field.
This process is multidimensional because you not only need to know how much of your total site you can use, but what is on the surface and what lies beneath. Your plat will give the total area of the site, as well as the setbacks and easements determining where the sidelines are. What is usable area is in bounds, while the setbacks and easements are out of bounds.
Your topographic survey will show you the lay of the land and help you determine how to align the buildings and streets. The information on the tree survey is obvious, but not to be taken for granted. Placing a zigzag on your playing field to save some large trees can potentially save you considerable landscaping costs and win favor with the city. The environmental report can alert you to any costly clean-up requirements on—and possibly below—the surface. The geotechnical report, sometimes called the soils report, will show the characteristics of the soils, rock and water conditions below the surface. This information is crucial as it will give you an indication on what to expect for excavation costs.
Now that you have the tools required to plan your site, you need to hire an experienced self-storage designer. This can be a general contractor, architect or civil engineer. Chances are you have already used a civil engineer to produce some of the reports and surveys you gathered during due diligence.
A local civil engineer who knows the current zoning regulations and other jurisdictional approval requirements can save you time in getting your site plan approved. However, if the engineer you choose does not have the experience of more than a few self-storage projects, you will need to hire an architect or general contractor with self-storage planning experience. This design team will be able to maximize the coverage on your site while minimizing the costs for site improvements and be able to guide you through the approval process.
With your preliminary site plan completed, you can now start filling in the blank building footprints with the different sizes of units you wish to rent. The objective is to design a unit mix that will maximize income and lease up quickly.
Be careful balancing these two parts of your goal. A common mistake is to load your unit mix with too many larger units because they tend to lease faster than smaller ones. This is true if you consider it takes one customer to rent a 10-by-30 unit and six to rent an equal amount in 5-by-10s. While it takes longer to rent the six smaller units, your income on the same 300 square feet is more than double than on the single large one. You can keep tabs on unit mix vs. income by comparing the average unit size of your project to the average rent per square foot. As the average unit size increases, the average rent per square foot will decrease.
As with the site-design process, you will need some of the tools you gathered during development due diligence. For unit-mix design, you will need a market study, competition information and demographics. A market study will provide information about traffic counts, major employers, what causes people to drive by your location, and levels of commercial and industrial activity.
Competitor information should include the number of competitors, facility sizes, numbers and types of units, percentages of climate control vs. regular storage, occupancy levels, unit prices, overall appearance/ condition of the facilities, and comments about the managers and employees of the stores. Demographic information should include population make-up, income levels, and the ratios of renter- vs. owner-occupied housing.
These tools are used to build a unit mix tailored for your specific market. Again, this is where you want to have an experienced selfstorage operator, property manager or consultant who has managed facilities in different types of markets. Someone who has collected data about their customers and leasing activity for stores in a variety of markets can establish a baseline unit mix for a certain market. This mix can then be adjusted according to the differences in your market.
For example, if your site is located in an area with high humidity, you would adjust the baseline mix by adding climate-controlled units. If your target market included a large college, you adjust the baseline by adding smaller units. Making these comparisons and the necessary adjustments for each category will result in a mix designed for your market.
The Two Become One
At this point, your unit mix is nearly complete and ready to be applied to the preliminary site plan. Until this point, neither should be finalized. As you begin filling each building footprint with the unit sizes and quantities to match your unit mix, you will find you may have to adjust the building shapes to get the best fit. Likewise, you may have to adjust your unit mix to accommodate the buildings on the site plan.
Further adjustments to the plan will probably come as you go through the approval process with local jurisdiction. Throughout this process, monitor how the changes affect ratios for coverage and site-improvement costs, as well as the averages for unit size and rental income. The end result will be an approved site plan with unit mix that will maximize your return on investment. You have designed your facility with the most economical site-improvement costs and the best potential income stream.
Victor Lopez is president of NDS Construction, a design/build firm in Bulverde, Texas. NDS specializes in selfstorage, office facilities and commercial construction projects. For more information, call 888.980.8250; e-mail email@example.com;visit www.ndsinc.com.