By Danny Clemons
Putting together the construction budget for a new self-storage facility is easy. Well, that may be true if you’ve done it a few dozen times like the large developers in our industry. If it’s your first development, you may find it somewhat more difficult, and then you’ll find sticking to that budget even harder.
The first and most important step toward putting together a solid budget is to have a concrete plan for what you’re going to build. Work out all of the details on paper before you start, and be absolutely sure of your goals. This means penciling out your proposed square footage, how many units the facility will have, whether it will have one or more floors, if you’ll include units for storing boats or RVs, and other features you hope to include.
If you’re planning to build a large facility, engaging an architect who has a lot of experience in the design of self-storage projects can be a true asset. Not only can he help with the initial scope of the project, he can aid in setting and keeping the concept.
Even if you’re planning to build a small facility, you should still develop a solid plan and concept up front, and then don’t change it. Changes to the concept are the downfall of all construction budgets. Spend the time and money in the beginning of the project to clearly outline your goals and objectives, and it will save you big time throughout the development.
Most items in a construction budget are somewhat constant. The electrical, plumbing, foundation, building, driveways, etc., can be easily priced once you have good drawings. However, there’s one item that can throw a curve ball—the dirt work. This is an area some developers take too lightly, and I’ve seen it completely destroy more than one developer’s budget.
The solution? Get a soil test! Sounds simple, right? You’d be surprised how many facilities are built without one and how much that little mistake costs. I found out how expensive it could be when developing a facility in a Dallas suburb. Luckily, we did do a soil test, but we were still surprised at the findings by the engineering firm we hired. Preparing the soil for our development was very costly—a $280,000 sticker shock that could kill almost any financial plan. Fortunately, we discovered the information early on and were able to fold the cost into our budget.
The bottom line is we knew it was coming before we started. Had we not done a soil test, the cost could have been many times more due to cracked slabs and drives.
The next step when creating your self-storage construction budget is to seek advice from others in the industry. When I first got started in self-storage 1979, there wasn’t much experience to draw from, but it’s quite a different story today. Most of the people in our industry are eager to help. Industry magazines, tradeshows and consultants are great sources of information. Take the time to read, attend events and talk to people who’ve been there and done that. There’s a lot of help out there, so take advantage of it. A lot of mistakes have been made by other developers, and those are the guys you need to talk to the most.