In life, we don’t always get a second chance to correct our mistakes. If we get it wrong the first time, we suffer the consequences. That may be true of flying a fighter jet, which allows for no mistakes at all, but it does not apply to building self-storage; that is, if the project is built using the phasing method.
If the wrong unit mix is selected during the first building phase, the second phase is a chance to install the type of unit mix needed. But that is only one advantage of using phasing in self-storage construction. Here are some other reasons to phase a self-storage project:
- Discourages new competition
- Minimizes initial investment
- Makes financing and payments easier
- First phase helps finance additional phases
- Land use is more efficient and can change
It is during the early stages of planning that phasing should be considered. Generally, phasing delays the final decisions of unit mix and construction. Decisions are delayed, allowing them to be based on actual events and not estimates, even if they are educated estimates.
A Case Study for Phasing
One conversion project in a small town in Louisiana featured in a 2003 case study had a gross size of nearly 100,000 square feet. The owner was afraid the area was overbuilt; however, two years later, the project was more than 90 percent occupied and several sizes had been depleted. The rent was raised, which might have discouraged some tenants, but even so, the occupancies stayed high or even higher. This project was part of a nearly vacant shopping center.
The owner was able to use an adjacent vacant grocery store, converting it to additional storage. This second phase added another 57,000 gross square feet to an already large property, which now has a total of 120,000 square feet of storage and is more than 90 percent occupied.
Originally, the owner, who also owned the shopping center, had tried to rent the grocery store. Luckily it failed to attract a renter, which made it available for additional self-storage. The storage brought in more revenue than the rent would have been had he found a renter.