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Insights From a First-Time Self-Storage Developer: A Case Study of Delaware Beach Storage Center

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By Timarie Kilsheimer Thompson

New construction, regardless of the industry, can be daunting. In late fall 2014, when my husband, Blair, and I were thinking about ways to use a parcel of land we own in Lewes, Del., we had many questions: What was the best use of this highly visible property? What can the market support? What would the county approve? What would the bank allow?

Blair grew up near Lewes, in the coastal town of Rehoboth Beach, Del. Rehoboth used to be a sleepy beach town that shut down from October through April. Over the past 10 years, it’s become a major attraction for people of all ages due to its proximity to the coast, a high standard of living, no sales tax and low property taxes. It’s now popular with tourists, welcoming more than 6 million visitors annually.

A pilot by training, Blair has some property-development experience from his family’s drugstore and real estate business. He has no experience in the self-storage industry.

I grew up outside of Washington, D.C., with a background in finance, marketing and strategy in the commercial real estate and technology sectors. Like Blair, I have no self-storage experience. Lack of industry-specific knowledge aside, we knew that with the explosion of growth in our area, we wanted to be smart—and strike while the iron was hot.

Making Opportunity

Our 5-acre, commercially zoned parcel of land had been in Blair’s family for more than 60 years. Before he bought it in the early 50s, Blair’s father worked at the grain mill that sat on the property. It had sentimental value.

It also had financial value. It was a large, empty lot, ripe for development. From a visibility perspective, you won’t find much better. The land abuts the highly travelled Coastal Highway, which sees an average of 45,000 cars per day. However, access could be an issue for any high-traffic project due to ingress/egress challenges.

While we were considering ideas for the parcel (hotel? convenience complex? big-box store?), we learned the county was contemplating a height restriction on new commercial buildings, limiting our project’s potential. To avert this constraint, Blair, with the assistance of a local civil-engineering firm, petitioned and won approval for a four-story building, which was no small feat.

The ‘A-Ha!’ Moment

In January 2014, some friends of ours were downsizing and moving to Rehoboth. They told us about the lack of quality, climate-controlled storage units in our area. There were plenty of standard drive-up facilities, but the existing climate-controlled facilities were completely leased. That’s when we had our “A-ha!” moment.

Our land is both an opportunity (visibility) and a challenge (access). However, we decided the access issue wouldn’t be a problem for a storage facility after learning of the low number of trips per year customers make to their units. (Research by the national Self Storage Association shows 71 percent of renters visit their unit once per month or less.)

Our idea to build a climate-controlled self-storage facility was further predicated on the changing nature of our town’s market and the explosive growth. More than 900 single-family homes are being built within a 2-mile radius, most with no basements and smaller than normal garages. With increasing numbers of people moving to the region from larger cities, there would be different product expectations in terms of service, technology and security. There was no existing Project timeline for Delaware Beach Storage Center***product to meet these needs.

You Don’t Know What You Don’t Know

Given what we were learning, we thought building a storage facility was a no-brainer. However, with a project this big, we couldn’t just go on our gut. We needed expert advice. In April 2014, I attended Inside Self-Storage World Expo in Las Vegas. I participated the Developers Workshop and numerous other classes. Aside from feeling like I’d been drinking out of a firehose, I learned we didn’t know what we didn’t know, and to be successful on this project, we needed to build a team of industry experts that could teach us and help us avoid costly pitfalls.

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