I'm often amazed at the things self-storage owners or developers do when designing their self-storage projects. During a recent self-storage sale, a potential buyer thought he could achieve a particular upside since the facility was only operating at about 70 percent occupancy. The building was big—more than 100,000 square feet—on a terrific four-lane urban street with lots of traffic and high visibility. But upon closer inspection, we discovered the office was inside the gate, and there was no parking, not even a place to pull off of the road and into the property. The developer/owner had made a crucial mistake that might forever limit the asset's potential: terrible access.
In designing a self-storage project, an owner of developer can shoot himself in the foot by trying to maximize square footage or unit mix while forgetting that his intention is to maximize his investment. Whether you're building a self-storage facility from the ground up or looking to buy one, it's important to understand the market and create the right investment strategy.
The Market Drives Design
A greater number of units always makes a project look better on paper. Of course, on paper, we can be tempted to make big assumptions about demand, lease-up and future potential. However, bigger is not always better.
Developers often ask questions like, “How many units can I get on a three-acre site?” That’s a loaded question with no definitive answer. In a project's infancy, the temptation is to use a ballpark estimate for what can be built; if that looks satisfactory, maybe the developer proceeds. This is the wrong approach.
Facility size, development phasing and investment should be based on facts and data, not estimates and ambitions. Rules of thumb are almost always wrong. You might be able to get a 70,000-square-foot facility on a three-acre site, but it doesn’t matter if the market is only demanding 40,000 square feet. Even if the market demands a larger project, the key elements of access, visibility, convenience, security, parking and office space should not be overlooked in the design phase.
Some developers approach projects with a target square footage in mind. I often hear “80,000 square feet” stated as if that’s a reasonable target. Keep in mind as you design that not all markets will absorb that much store. A lot of newer, larger facilities fail to reach target occupancy because the project is just too big. If only 30,000 people live within five miles of your site, a 60,000-square-foot facility is probably pushing the envelope.
It always comes down to supply and demand. We need complete market analysis and reasonable investment modeling before we even begin to consider project size. The actual demands of the market should drive the key surface elements of facility design including size, unit mix, curb presentation, office, climate/non-climate, access and signage.