Site Layout and Unit Mix

Site Layout and Unit Mix

Two great hits

By Victor Lopez

Y

ou have probably seen thoseinfomercials selling the best of the '70s and '80s music collection.If you pause to listen to some of the hits being advertised, its probablybecause you have a fond memory associated with one of the songs. The same kindof association occurs with the great self-storage hits of decades past. Therecan so many fond memories of hitting a homerun with a storage site, whetherbecause of how quickly it came together or how fast it filled up.

Compared to todays standards, many of those greatesthits of storage included every mistake in the book and still were a success. Memories indeed, as developing a storage facility now requiresmore effort and resources than ever before to get through the approval phases,battle the rising cost of construction, and navigate the flood of competition.Every step in the development process must be carefully planned and evaluated.This is certainly true when designing your site layout and assembling your unitmix.

Site Layout

This is the first step and requires a great deal ofinformation about zoning regulations, setbacks and other jurisdictionalrequirements. This is where you want to have an experienced design-builderor very good civil engineer with self-storage experience to get through theprocess. I always prefer to use a local engineer familiar with all the currentzoning regulations and all the routines and people in the planning department.This will save you weeks in getting your site plan approved.

While hacking out your plan, some of the most importantconsiderations are land cost, land coverage, site improvements and buildinglayout. The key is to understand these variables and what they cost to maximizethe coverage on your site.

Land cost and land coverage can go hand in hand. What you payfor the dirt and how much gross square footage of building you squeeze out of itaffect the overall financial performance of the facility. But it goes beyondjust how much you pay for the site, because you always need to consider what youwill be able to build and what it is going to take to get there.

The first hurdle in maximizing your coverage is determiningthe setbacks and required buffers for your site. Examining the plat andverifying additional requirements with the city easily determine these. It doesntstop there, however. More often, the fire marshal and arborist are stealingvaluable space and decreasing your coverage. Be sure to check what is requiredfor fire-lane widths and turning radius for your local fire department. Alsodetermine the required landscape areas and buffers. Sometimes these aredisguised by calling them pervious cover areas or green space.

Once you have determined the physical parameters of your site,consider what site improvements are obstacles to maximizing coverage. Earlier in your development process, you should havedetermined which utilities you have or, at least, how far you have to go to getthem. Dont cut yourself short by not using existing utility locations to yourbest advantage. Again, you will need to satisfy the fire marshal by installingthe required number of fire hydrants and associated fire lines. Find out theexact requirements for the line sizes, if a check valve is needed, and if the fire lines need to be looped or ifthey can be dead-end. Looping a fire line can double your cost!

Another site-improvement consideration is excavation andgrading. Will the site require a lot of dirt to be moved, or can you lay out thebuildings to follow the natural grade? You might consider using split-levelbuildings to take advantage of steep grades on the site. Retaining walls can also help capture more useable space on asite with steep grades, but use them as a last result due to the significantcost of some of them.

Finally, storm drainage is a significant factor. Use surface drainage as much as possible to keep costs down,and make sure your civil engineer has carefully determined the requirements forstorm-water detention and filtration. Detention ponds can take up valuable space and reduce yourcoverage. They can also add significant cost if you use concrete ponds orunderground detention. Water-quality or filtration ponds will also become costlyif not carefully placed and properly sized.

Now that you have figured out how much of the site you can usewhile making the fire marshal and the arborist happy and spending as little aspossible, you can start laying out the buildings. This is where the site planbegins to take shape and overlaps the unit-mix plan. This happens because you know certain width buildings willyield a certain combination of unit sizes. Dont make all your buildings thesame width just because a manufacture has a clearance sale on metal buildings.Likewise, dont get yourself in a jam by lining all the property lines withsingle-loading buildings of the same width. The objective is to maximize thefinancial performance of your facility and achieve the right unit mix.

Unit Mix

Designing a unit mix can be one of the most elusive tasks inthe development process, especially for the first-time developer. All too often, the newcomer to the industry is looking for theinstant unit-mix packagejust add buildings and doors and start leasing.Unfortunately, there is no quick answer for the eager entrepreneur, and someresort to buying up the standard building package with the unit mix that worksbest for the installer.

However, there is a methodical approach that makes use of allof the information gathered during a proper market study. Designing your unitmix is best accomplished by taking a baselinemix and tailoring it to fit your specific site according tomarket conditions and demographics.

There are few ways to determine a baseline unit mix. Any goodproperty-management company keeps a database of operating information from allof its stores and thoroughly analyzes it to arrive at a unit mix that works fora given set of market conditions. This is the baseline mix. Without the benefit of thesestatistics, however, a first-time developer can go to state or national industryassociations to see what information is available.

The data is usually compiled from many facilities throughout agiven region and, in some cases, it is difficult to integrate operatingstatistics with a specific set of market conditions. As a last resort, you can collect field information fromexisting facilities in similar markets and compile your own baseline mix. Theimportant thing is to have a starting point, relative to a certain market type,expressed in terms of average unit size. Understand, however, the vast majorityof units are smaller, not larger, than average size.

Making Adjustments

The next step is to examine your target market and build yourunit mix by adjusting the baseline according to existing competition and thedifferent elements in your trade area. For example, the ratio of commercial toresidential composition will affect your mix. A typical market will have 75percent residential tenants and 25 percent commercial.

If there is a larger commercial presence in your market,increase the average unit size. Keep in mind that more commercial activity doesnt increasethe net demand in your market; it just means you will need more large units. Similarly, ifyour market has a big medical- or professional-office presence, you will need toincrease the average unit size of your climate-controlled units. Doctors andlawyers rent these units to store records.

During your market study, you should have identified thelocation, size, rental rates, occupancy and other details of your competitors.Use this information to adjust the average unit size to account for shortfallsin your market. For example, if theres not a single available 10-by-20standard or 10-by-15 climate-controlled unit anywhere near your site, put thosein your mix. On the other hand, if no one across the market is renting a certainsize unit at all, stay away from it.

The Role of Demographics

Further adjustments to the average unit size will come fromyour demographic report. The most significant component of this report is ownervs. renter housing. People who own their own homes will rent larger units andusually keep them longer. Those renting apartments move around more often andhave less stuff; therefore, they will rent a smaller unit for a shorter time.Adjust your mix to include more of the smaller units if your market has a higherpercentage of renters than your baseline market. Conversely, if your market hasa higher percentage of homeowners, adjust your mix to include more of the largerunits.

Age, income and marital status of your tenants will affectyour unit mix as well. A single male between 18 and 25 will typically rent asmaller unit, while a married person with three kids will rent a larger one. Ifyour target market has a lot of young, single people, adjust your average unitsize accordinglyyou will need more small units. Those in higher incomebrackets will rent more climate-control units. Again, it is important to remember these demographic factorsdo not necessarily increase the net demand, but will affect the sizes of unitsthat are requested more frequently.

A final note: Just as there is no magic formula for unit mix,there is no way to design a guaranteed mix. The steps outlined above are derivedfrom years of trial and error as well as consistent information-gathering andanalysis. Just as you should involve a civil engineer or experiencedself-storage design-builder in the site-planning process, you will do well tohire a consultant or involve an experienced property manager to help design yourfirst unit mix.

A good way of having some insurance for your unit mix is tophase in your facility. Building in phases allows you to adjust your mix basedon the demand you experience during operation of the initial phase. Alsoremember to select a building design that allows flexibility in case you need tomove partition walls to adjust unit sizes.

The Whole Enchilada

Until this point, neither your site plan nor your unit mixshould be finalized, because as you begin filling each building footprint withthe sizes and quantities to match your unit mix, you will find you need toadjust the building shapes to get the best fit. Likewise, you may have to adjustyour unit mix to accommodate the buildings on the site plan. Further adjustments to the plan will probably come as you gothrough the approval process with your local jurisdiction.

As you roll with the punches throughout this process, makesure to monitor how changes affect ratios for coverage and site improvements aswell as the averages for unit size and rental income. Because you have designedyour facility with the most economical improvement costs and tailored your unitmix, the end result will be an approved site plan with the best potential incomestream that will maximize your return on investment. And thats a greatest hit!

Victor Lopez is president of NDS Construction, a design-buildcompany that has specialized in self-storage and metal-building systems for morethan 18 years. For more information, call 210.477.1227; e-mail[email protected]; visit www.ndsconstruction.cc.