One of the biggest decisions an owner faces when building a new site is whether to include an on-site managers’ apartment. Most experienced managers in the industry are used to working and living at their storage facilities. This arrangement affords them the convenience of housing and utilities and is generally included as part of their compensation. An owner gets the benefit of having someone residing at the facility in case of an emergency or other situation that requires after-hours attention. The site’s tenants get a feeling of security when they know someone is living on site.
In recent years, there have been some changes to this situation. Some owners are electing not to build on-site managers’ quarters for one reason or another. There are pros and cons when considering building an apartment for your site manager.
Zoning and Cost
Zoning is probably the No. 1 reason an owner can’t build an on-site apartment. Many urban area’s zoning and code restrictions will not allow such an apartment due to water restrictions, lack of residential zoning, lack of space, etc.
Obviously, there will be an increase in construction costs when adding an apartment. These could outweigh the value of having an apartment in your area. In some locations, it is more cost-effective to purchase an existing single-family home or condominium rather than building an apartment onto your facility.
Also remember, when adding an apartment, you are not just dealing with the steel manufacturer or crew that erects the buildings, you are dealing with other trades people: plumbers, electricians, carpenters, cabinet workers, carpet installers, etc. These people have different crews and completion times, so coordination in dealing with them is a must.
If you can build an on-site apartment, size will play an important role. I always ask an owner a couple of questions. First, would he live in the apartment he is proposing? Second, would his family be happy to reside there? If the answer to these questions is “no,” he needs to re-think the project.
The apartment should contain at least two good-sized bedrooms, preferably two bathrooms, and a nice kitchen with plenty of counter and cabinet space. If you have a second-story apartment, consider adding a balcony where the manager can sit outside and barbecue or sip his morning coffee. In a lower-level apartment, add a patio area for the same reasons.
I have seen apartments with a center island, tile countertop and window garden in the kitchen; a fireplace in the living room; and a sunken Jacuzzi tub in the master bath. If you are considering a top-of-the-line facility, why scrimp on the managers’ apartment? After all, the managers will run your multimillion- dollar investment. Don’t you want to attract the best quality people you can?
When considering whether to build an apartment, think about who will manage your facility. Most experienced managers live on site and prefer it that way. If you do not have an apartment, you will likely have to hire people from outside the industry and train them in the management of self-storage. These people should be local, have their own housing, and have a strong background in sales, marketing and management. You will have to pay a higher wage and probably hire several individuals.
Turnover could also be higher with off-site employees. Management of your site is just a job to these people, and if they get a better offer somewhere else, they will probably leave. With an on-site apartment, there appears to be more of pride of ownership. Not only do the managers work in the neighborhood, they live there, too. If they have children, you will most likely have a five- to seven-year commitment from them while their kids are in school. As parents, they will be more likely to get involved in the local community. Their wages could also be lower because you are providing housing.
Keep in mind, if you provide an on-site apartment, you should have a written lease agreement with your managers stating housing is provided and outlining the terms and conditions. Who pays for utilities? What can the manager use the apartment for? Who can reside in the apartment? What pets can they have? What happens once employment ends? How long do they have to vacate?
If zoning restrictions or construction costs prohibit you from building an on-site apartment, what alternatives do you have? Some owners might elect to purchase a single family home or condo in the area. Others rent a “corporate apartment” in a local complex and sublet it to the managers. The managers live there rent-free as long as they are employed by the company; once employment ends, they can elect to stay in the apartment and pay the current rental rate. The owner usually has the tax advantage of writing off the cost of the apartment, and neither the owner nor manager have to pay higher taxes in wages.
An owner might elect not to provide managers’ quarters at all. That owner must consider the cost of a higher turnover rate, training new staff, higher compensation packages, and possible marketing shortcomings at his sites. As with anything in life, there are advantages and disadvantages to each situation. Only you can decide which best suits your needs.
Pamela Alton is the owner of Mini-Management®, a nationwide manager-placement service. Mini-Management also offers full-service and "operations only" facility management, training manuals, inspections and audits, feasibility studies, consulting and training seminars. For more information, call 800.646.4648.