Self-storage services are slowly expanding in Puerto Rico, 1,000 miles southeast of Miami. The Caribbean island, just three times the size of Rhode Island, has fewer than a dozen facilities serving 4 million residents. John Wilson, of Texas-based Construction Processes International Inc., has been involved in the construction of 700 facilities in 46 states. He talks with Inside Self-Storage about his experiences as a self-storage contractor in the commonwealth.
Q: How did you get started in Puerto Rico?
A:We built the first facility in Puerto Rico (just outside of San Juan by the airport) in the early ’90s. I met a developer interested in Puerto Rico at a Las Vegas tradeshow, and that’s how we got involved with our first project there. Now we are building our fifth project, a four-story, 108,000-square-foot facility in the city of Carolina.
Q: What’s the self-storage landscape like?
A:It’s an interesting situation. There are 4 million people and only eight or 10 storage facilities. Compare that to Houston, which has the same population and about 800 facilities. I believe Puerto Rico will one day support 25 to 40 storage sites. The ones there now are doing well, getting good rents and are fairly full. It’s similar to where the U.S. market was 20 or 25 years ago. Facilities tend to be bigger and fewer.
Q: Describe the real estate situation.
A:Land is very expensive and has gone up a lot since we built our first facility, a multistory. All the facilities in Puerto Rico are multistory—I don’t think they would be financially feasible otherwise. It’s not unusual for land to sell for $20 to $40 per square foot.
Q: Who is the average self-storage customer?
A:There are a lot more commercial users and people running businesses from their units. As a result, the facilities get far more visits and activity than in the U.S.
Q: Have you noticed Puerto Rican owners following the U.S. business-services trend in self-storage, offering fax services, Internet access and meeting spaces?
A:No, they haven’t done much with office-type amenities. It’s not as sophisticated as in the United States yet.
Q: How important are security features?
A:They do tend to have state-of-the-art security. There are cameras on site, and alarms on every unit. The crime situation is similar to that of Miami. Surveillance is important because most of the facilities don’t have onsite managers. In fact, I don’t know any that do.
Q: How does the average unit size compare to that of the United States?
A:Units tend to be a larger because so many tenants are commercial users.
Q: What about aesthetics? Is it important to communities that facilities look attractive?
A:It’s more industrial. You don’t see the lavish finishes or landscaping you see here, and cities don’t require them.
Q: Is it difficult to find the supplies and workforce you need?
A:There are Home Depots and Wal-Marts, and all kinds of supply stores. It’s not like working in Somalia. But it’s an island, so everything has to be shipped in and that’s expensive. Workers are plentiful.
Q: What is it like dealing with the regulations and building codes?
A: They really aren’t any more difficult than in the United States. The unusual thing is Puerto Rico is vulnerable to hurricanes and other weather risks, so you have a seismic-3 earthquake load and South Florida winds conditions. Structures need to be heavier. Most of the building code is UBC 97, same as the States. All of the projects now have sprinkler systems because one facility had a fire and the whole island knows about it.
Q: Who are the major players?
A:Triple A, led by an American, has four facilities. Universal Storage is another developer—we’re now building its second site. Commercial Centers Management has two facilities and is working on a third. Commercial opened the island’s first facility, which is 300,000 square feet and has more than 2,000 units. We have done many additions, including a 150,000-square-foot, four-story building for the latter.
Q: Do sites tend to be in high-profile areas?
A:Yes, you want your building to be very visible because most people aren’t familiar with what self-storage is. One company is advertising on TV, so people are starting to get the idea.
Q: What are special challenges of the locale?
A: It rains a lot, and you can count on many rain delays in construction. There are also a lot of holidays—28 a year. It tends to take a few months longer to build over there.
Q: What team members do you bring with you from home?
A: We bring the typical people: building erectors and door/partition installers. Then we hire local electricians and site and plumbing contractors.