Start With the End in Mind
Who’s the natural buyer for this project if you sell? Have you designed with potential buyers in mind?Design decisions can have a much larger impact on a future sale than you think, from total net rentable square footage to roofing materials to door color. The desired sale outcome may be a driving factor even before the site is chosen.
The size of the parcel, location, barriers to entry and architectural treatments may affect your ultimate capitalization rate. These decisions play an important part in the predicted and actual return on investment, which may ultimately change your decision to move forward with the project.
Consider the percentage of climate-controlled space within the project, which may determine its ability to reach stabilized occupancy within the pro forma. Keep in mind every site, project, market and outcome is unique. What works on Main Street might not work on Second Street. Each and every site is as individual as the markets it serves.
It’s a good practice to conduct thorough research, document the process, create several “bailout” points and work toward the best project possible. Ultimately you want a self-storage project that will ensure best practices in operation by design, not default.
RK Kliebenstein is the vice president of business development at Metro Storage LLC, which owns, manages and develops self-storage properties throughout the United States with more than 6.5 million square feet of self-storage in 13 states and more than 100 projects under its management control. For more information, call 847.235.8965; e-mail firstname.lastname@example.org; visit www.metrostoragecorporate.com.
Determining the Best Average Unit Size
There are several considerations to make when it comes to determining your average unit size. Here are some of the demographic categories and how they may influence your unit-mix decisions:
Age. Younger populations such as college students tend to use smaller spaces (unless they store as groups and not individuals). The elderly, after the final home move, may also tend to use small spaces, where median-age families will use the most space.
Density. The more dense the population and housing, the smaller the average unit size. In most cases, dense urban storage is also more expensive per square foot, driving storage economy and unit downsizing.
Mobility/transience. The more you move, the less you move! The more times a family moves, the more it tends to scale down what it stores. So for the more transient populations, look for smaller average sizes.
Median-home value and size. Lower value, less stuff! This is more of an economic necessity, but lower home values typically mean less square footage and, thus, less stuff.
Median and average household and per capita income. This is the most economyinfluenced driver. Those with less income may accumulate fewer items to overflow the dwelling (garage, attic, basement, closets, etc.).
Family/household size. This is an interesting influence because the demographics have to be more closely matched to the actual geography. If households are combining, then larger average sizes may be used. If it’s strictly a matter of household size, economic pressure may dictate less spending for items that don’t fit in the swelling space.
Daytime population. Daytime population may indicate there’s heavy commuter traffic influencing the unit-mix decision. Commuters may be more likely to store larger quantities (use larger spaces) nearer their homes than their place of employment. A large daytime population may call for smaller sizes.
Number of business establishments. This is the Census tabulation of businesses. When the daytime population is divided by the number of establishments, it tells you the average size of the business. Very large commercial tenants may have their own warehouses and not as much need for self-storage. Contractors are the predominate user of commercially occupied large spaces in locations, with ambient drive-up space tending to increase average unit sizes.
Some of the decision is just common sense. If you have multi-level climate-controlled facility, you tend to offer a smaller average size. It’s more difficult for a customer to fill a 10-by-25 if everything he stores has to go on a cart, through a vestibule, into an elevator, down a hallway, into a space and off a cart.
Think about storing a fridge, washer/dryer and king-size mattress. Drive-up space seems to be much easier!