If an investor can’t come up with 100 percent of the down payment necessary for a construction loan, there are others in similar circumstances who are perfectly willing to step up and participate in a limited-partnership arrangement. And there are those in the business—manufacturers, consultants and commercial real estate brokers—who are in a position to help locate suitable partners.
Design considerations. Before construction can proceed, buildings must be designed. During prosperous times, a good design team may be hard to find—and expensive. In contrast, tough times usually finds designers more available, which means they are probably less expensive and may require less time to turn plans around.
The same is true of manufacturers; a weak economy will likely present opportunities to save on manufacturing-production time because fewer jobs will be in the pipeline, which will translate to faster scheduling.
Permitting and zoning. Once plans are complete, they must be submitted to the proper city and county authorities to obtain the necessary permits. Once again, time and expense come into play in this process. When times are good and there is a lot of construction going on, self-storage projects can expect higher costs and increased time in obtaining zoning and permits. That’s because there are so many projects in progress that permitting, which may normally take a month or so, can be protracted into many months. It’s also because city and county officials are overworked, which could extend approvals even longer.
But in a difficult economy, the process is sped up. Why? Due to limited submittals, there are fewer competitors taking up city and county staff time. This could result in approval times being cut considerably.
Construction During Economic Downturn
Poor economic times can actually create advantages for the construction process. During good times, if construction superintendents or contractors want quality, they should anticipate higher costs and increased production time because everyone is busy and can charge more for their services. The reverse is true in down times. If you want quality, you can realize lower costs (more qualified workers available) and shorter production time (better workers means faster building erections).
Finally, an owner or prospective owner should not be discouraged just because the economy goes south. Traditionally, the very nature of the self-storage business means owners take fewer risks than most real estate developers, so a declining economy is no reason to stand on the sidelines and wait to see what’s going to happen. There are plenty of reasons to be proactive and make things happen on your own terms.
Terry Campbell is the vice-president of sales and marketing for BETCO Inc., a single-source manufacturer of self-storage metal buildings. For more information, call 800.654.7813, visit www.betcoinc.com.