“Sites are becoming very hard to find,” says Rick Dodge, vice president of sales and operations for Rib Roof Metals Inc., which provides metal buildings to the self-storage industry in Europe and the United States. “Not only are the big developers like Public Storage, Shurgard and Storage USA fighting for quality sites in the major markets, the same thing is happening in smaller, secondary markets.”
As storage sites become high-profile and facilities offer extra amenities, projects become more complex. This can increase the cost of developing a project. Planning boards are becoming ever more stringent when assessing a project, and what the developer wants to add or give up will ultimately affect the costs, Dodge says.
Many permitting departments are unfamiliar with light-gauge steel construction and unaware structures can be built with lighter materials. This ignorance can result in lengthier permitting processes, especially in the major markets, Dodge notes. Although zoning authorities are more knowledgeable about self-storage today than they were 10 years ago, industry professionals must be committed to educating building officials and engineering firms.
“Building codes are ludicrous at times,” Dodge says. For example, many codes require an abundance of fire-separation walls in buildings, including storage. But compare the stringent fire codes applied to a storage facility to those required for a Wal-Mart or Target store, which is basically a huge storage warehouse with 20 times more people in the building plus inventory—these facilities have no firewalls dividing any of the building.
The U.S. storage industry needs to develop a strong group to lobby for good, sound codes for this industry and educate those responsible for the inspections of these building types, says Dodge. “Our associations and industry groups have failed at dealing with these issues, which add considerably to project costs.”
The impact of fire codes is of considerable concern to Harold Leslie, president of Leslie Industries Inc., which offers design-build, general contracting and construction management. “As all of us experienced in selfstorage know, fire codes have been extremely unfair to the industry despite its remarkably safe record regarding fires,” he says.
“We have no objection to requiring sprinkler systems in any self-storage building with two levels or more,” Leslie adds. “But regulations requiring fire-rated assemblies and fire doors every 3,000 square feet in addition to sprinklers are not only unfair, they pose a hazard. People having to pass through a series of doors to escape during a fire could be injured or killed,” he concludes. (For more information, see the accompanying sidebar.)
With many facility components being constructed of steel, a chief concern is the recent increase in its price. Several factors are impacting steel costs, Dodge says. These include:
- The value of the U.S. dollar vs. the euro, British pound and major Asian currencies has fallen far below the value of the tariffs. When foreign steel producers sell steel in the United States, they lose money on the currency conversion. Steel is being sold instead to Europe or Asia. This also means U.S. producers have a strong economic incentive to export their steel.
- China is consuming, by some estimates, more than 20 percent of the world’s steel supply, driving global steel prices upward.
- A coke shortage is impacting domestic mills’ ability to produce at current levels. Consequently, some are citing force majeure on part of their order books and curtailing some production.
- Steel production is an energy-intensive industry, and the cost of energy has gone up significantly.
- Fueled by strong housing demand, appliance producers are consuming large quantities of steel gauges similar to those used in the construction industry.
- Automotive demand, which requires steel, still remains quite strong in the United States.
“The bottom line on site selection is location, location, location,” says Andrew Donaldson, founder and chief executive of Active Supply & Design (CMD) Ltd., a U.K. fit-out company specializing in self-storage. The ideal site is situated on a busy main road with excellent prominence, good curb appeal and surrounded by a built-up conurbation, or “chimney pots” as the English say. Being close to a city center full of retailers and offices is a further bonus. In a nutshell, the denser an area’s surrounding population, the more demand there is for the self-storage offering.
Zoning and planning are interesting challenges in Europe, as there is no specific selfstorage use or category, Donaldson says. However, a good proportion of sites or conversions can open under the building’s existing planning consents of warehousing and distribution. For a new build or change-of-use, things are more challenging, as the local planning officer is rarely familiar with the concept of self-storage.
“Ten years ago, self-storage worked anywhere, regardless of the position or quality of the facility,” says Philip Kirk, proprietor of Steelclad Systems, a builder of self-storage in the United Kingdom and Europe. “Now, through increased competition among operators, location has—as predicted by the U.S. experience—become the most important factor when selecting a site.”
Fast fill-up rates are more or less guaranteed for facilities close to shopping areas where drive-by traffic is high and there is plenty of opportunity for signage, Kirk says. Ideally, facilities should be established on the edge of industrial estates, either opposite retail areas or on busy roads, to take advantage of lower rents or purchase costs but still be at a prominent marketing location. Zoning does not generally present a problem because the majority of facilities are in converted buildings that are already zoned for storage, he concludes.
Conversions vs. Purpose-Built Facilities
The majority of U.K. and European selfstorage facilities are conversions of existing buildings, whether they be warehouses, distribution sheds or older multistory buildings that have limited alternative uses, Donaldson says. The European definition of “purposebuilt” is somewhat different than in the States. The high cost of suitable European and U.K. real estate combined with the immaturity of self-storage financing limits the opportunities for purpose-built development.
Generally, a purpose-built building in Europe is a tall, portal-framed warehouse building fitted out internally with free-standing mezzanine floors. This design allows a future alternative use for the developer if the self-storage operator fails. Modified single-or two-story, garage-style developments are almost unheard of due to high land values. However, some of these independent storage units are built on the existing yard of some conversions where space allows, Donaldson says.
Because of difficulty in obtaining planning permission/zoning for new builds, the majority of European storage facilities are conversions of existing buildings, Kirk says. This is not just a problem for self-storage but for any type of development. The United Kingdom is small and planning policy now makes it nearly impossible to build anything on greenfield sites. Vacant sites that have previously been built on (brownfield) are prohibitively expensive for self-storage, he says.
Donaldson describes a warehouse conversion as generally involving the addition of single-or multi-tier mezzanine floors to double or triple the available floor space. In most cases, this is necessary, otherwise the financials of the project just don’t work, he says. The mezzanines are fire-protected and fitted out with demountable partition systems, with or without mesh roofs. Drive-up units are few and far between, and generally only appear around the ground-floor perimeter of the building, where roller-shutter doors are punched through the external building cladding. A custom-made reception/counter area is created with a full electrical fit-out, including CCTV and access control and a 2,000-kilogram goods/passenger lift.
According to Kirk, new builds are constructed mainly from steel and some masonry and concrete. Construction and materials tend to be more robust than in the United States because facility traffic—moveins/ move-outs and the number of customer visits per stay—is much higher in the United Kingdom. Knocks and general wear and tear are greater.
“Every European country has completely different employment legislation. So beware—this aspect is a minefield and specialist, local advice should be sought,” Donaldson says.
“The biggest problem is getting enough trained people to work for you,” says Kirk. Apprentice schemes stopped many years ago, and the whole of the U.K. construction industry relies heavily on self-employed subcontractors. There is always a problem of getting different trades to a site when required to meet a construction schedule. Employment laws and the uncertainty of forward orders make it too expensive to employ trades people directly.
In Europe, Rib Roof encountered labor difficulties on some of its projects. “Labor was difficult for us because of the various labor laws and the variations between countries,” Dodge says. “There are very specific hours to work, more holidays and no weekend work. Also, there was the challenge of different languages. Of course, in the United Kingdom, this was not a big problem.”
“We are following the United States by becoming an ever more litigious society,” Kirk notes. Public and employer liability insurance has become a big problem for contractors. Employer liability insurance is required by law in the United Kingdom, but premiums have increased by four or five times during the last three years. Stories are common of European and U.K. contractors trading illegally without insurance or just shutting up shop because they cannot afford the premiums.
Insurance, however, can be profitable for facility owners. “Insurance sales for customer’s goods are a great earner for the European marketplace,” Donaldson says. For example, a facility can buy a £1 million blanket cover policy, then sell segments of it to individual customers at a huge premium of three or four times the cost. Aggressive sale of insurance, coupled with the sale of boxes, locks and tape, can account for more than a 10 percent turnover, he concludes.
Although the markets may seem inherently different, the construction of self-storage in Europe, the United Kingdom and the United States involves similar challenges. Shared knowledge and information on finding sites, dealing with municipalities, construction processes, labor, insurance concerns and materials can result in a stronger, more vital industry on both sides of the Atlantic.
Fire Codes Unfair to Storage
By Harold C. Leslie
The impact of fire codes on the storage industry is of considerable concern to facility developers and owners. Codes developed for storage sites seem far more stringent and costly than those applied to huge, retail facilities that are visited by hundreds of people daily.
There are numerous communities around the country that have designated themselves as special fire districts, which means they make their own fire rules regardless of national regulations. A trend has developed in these districts in which fire-code writers decided self-storage no longer comprises buildings that are “nontenant occupied.” The change in status means, depending on the location, storage facilities have had to put in one-hour fire assemblies for every 3,000 square feet of building space. A fire-rated door is also required for each 3,000 square feet of area, at each fire wall that has a corridor.
Recently, my company was involved in the construction of storage in a two-level building. The local fire marshal wanted each 3,000-square-foot area to be divided by one-hour fire-rated assemblies. However, the building inspector mandated the assemblies had to be in place for every 1,500 square feet of area above and below, since it was a two level building.
Now imagine being a person in a selfstorage building on the second or third level when a fire breaks out. The corridors are filling with smoke, and the person may have to pass through as many as four closed fire doors (they are required by law to be closed at all times) to get out of the building. This seems to be against the sprit of the intent of the fire codes or lifesafety laws.
Recently, I visited several large facilities in Tallahassee, Fla., including a Super Wal-Mart, Lowe’s home-improvement store, Home Depot, and a large shopping mall, each of which probably have in excess of 100,000 square feet. The aisles in the home-improvement store are probably 6-feet wide, but are constricted to 3 feet of access due to merchandise stacked on the floor. Some of the merchandise consists of hazardous, combustible materials. What was even more surprising was there were no one-hour fire assemblies anywhere to be found. Florida’s reason for this is the buildings have sprinkler systems. The shopping mall has some assemblies, but they certainly were dividing areas larger than 3,000 square feet.
I have brought the storage industry’s dilemma to the attention of the International Code Council in Birmingham, Ala., but the agency feels the requirements are fair. In light of these discoveries, it is apparent the self-storage industry is being singled out for grossly unfair discrimination.
It’s worthy to mention that self-storage has a remarkably safe record regarding fires. For many years, facilities have been built of masonry and steel, which are noncombustible. Only facilities constructed of wood should have one-hour fire assemblies. Fire-safety codes should be changed for buildings constructed of noncombustible material.
We have no objection to requiring sprinkler systems in any self-storage building with two levels or more. What we do object to is that fire marshals are requiring the installation of fire-rated assemblies and doors every 3,000 square feet in addition to sprinklers. We feel this is a hazard and would cause possible confusion, injury or death to persons having to pass through a series of doors to escape.
For more information, visit the International Code Council at www.sbcci.org.
Harold Leslie has been involved in the selfstorage industry for more than 28 years. He currently serves as president of Leslie Industries Inc., a design and engineering firm that has completed more than 50 million square feet of self-storage projects to date. Leslie Industries’ European affiliate has completed more than 5 million square feet of building conversions to self-storage in the United Kingdom and continental Europe. Mr. Leslie is also is the owner of five self-storage facilities in the United States. For more information, call 850.422.0099, or visit www.leslieindustries.com.