Sales-Centric Self-Storage Design: Taking Advantage of Development Trends to Increase Rental Opportunities

As the self-storage industry matures, building types, components and design continue to change. Developers should be aware of trends and limitations in building and construction, and know how to adjust their investment strategy accordingly.

As the self-storage industry matures, building types, components and design continue to change. The developers who are building the right way are not imitating the facilities of the past. Self-storage developers should be aware of trends and limitations in building and construction, and know how to adjust their investment strategy accordingly.

Our tenants demand high quality, and through every step of our development process, so should we. Facilities that look secure and clean attract tenants who are value-conscious. That’s what we want! Developers who design site plans and curb appeal that satisfies local ordinances and requirements can simultaneously position the asset to be a market leader. It’s difficult to overcome a first impression, and that usually begins on the street level, not your side of the entry gate.

Multi-Story and Conversions

Good self-storage sites are difficult to find. In today’s market, a 1-acre lot zoned for a 30,000-square-foot footprint and multi-story construction can be of equal quality to the “typical” 3- to 5-acre site, so long as the market is demanding additional storage. Sometimes, the larger lot is just not available, making multi-story or conversion projects the only way to compete.

“We are definitely seeing more multi-story projects on smaller parcels, less cookie-cutter buildings, and more conversion projects,” says Terry Campbell, executive vice president of operations and vice president of sales and marketing for BETCO Inc., a manufacturer of self-storage buildings in Statesville, N.C.

Multi-story construction, with more structural building components, unique demands like sprinklers and elevators, and designated loading/unloading areas, cost more on a per-square-foot basis than single-story construction. Those increased costs are often partially offset by lower site-work costs.

Conversion projects often require less structural modification, but the overall goal is similar to multi-story: provide convenient access and movement through the building without negatively impacting overall security.

Key Components

Steel companies can tell you all about the pros and cons of certain components. Good steel companies, with salespeople knowledgeable about their products and markets, can give you terrific information on standing-seam roofs, gutters and downspouts, doors that are easy to operate and adjust, latches, and other steel-centric options. I’m not a steel expert, but I know all buildings are not created equal. Spend time with your building supplier, getting to know the details of different options and what they mean to your development costs and overall project strength. One of Thomas Jefferson’s famous rules applies here: “Never buy what you don’t want because it is cheap.”

Overall building design really can elevate your competitive standing. Each component you include or subtract from your design can impact your investment by affecting achievable rental rates, adding to the overall project cost and enhancing or detracting from your curb appeal. We want efficient construction, but we also want features we can use to beat our competition.

In some markets, taller ceiling heights demand a premium in rent. That’s not the case in all areas, so check yours before deciding to raise your eave height. On wider climate-controlled buildings, a slightly higher eave height might be necessary for hiding supply leads or in-ceiling air-handlers.

You can definitely blow the budget on security features, so know what’s important in your market. Lighting profile, access points, intercoms and parking layout are immediately recognized by your tenants. Indirect lighting, especially with changing colors, for example, attracts the eye of passers-by, where simple signage might blend into an otherwise bland landscape. What the customer sees, like landscaping and big-screen monitors in your office, are as important as what they don’t see or recognize, such as the number of cameras around your site.

Your office is where your customer hands you his money and signs your contract. You want it to be as comfortable as possible. Nice bathrooms, warm colors and a professional area to sign paperwork and complete transactions is important. Carefully consider the tenant interface during your design process.

Bright-white hallways reflect light but also look cleaner and larger than darker corridors. Drop ceilings look better and more finished than open or steel ceilings. Finished hallways with an epoxy paint, carpet or even a stained concrete will give your manager an advantage in his sales routine.

Keep your managers’ best interests in mind as you select building components and consider design. You want them to have convenient access to the controls of your store. Gate control, camera control, the digital video recorder, intercom, lighting, timers, battery backup and thermostats should be centrally located where staff can easily make adjustments, diagnose problems or monitor the overall integrity of the site. What you design and build ultimately leads to what your managers will sell to customers, directly or indirectly.

On the Horizon

It’s not just building-design trends and components that are changing or improving. States and municipalities using the updated 2012 International Building Code may require new self-storage construction to include increased fire-protection components.                                   

It used to be that as long as you installed fire separations under 12,000 feet, sprinklers would not likely be required. The 2012 IBC changed the rules so fire separations have to be every 2,500 square feet. Local building departments may require any building more than 2,500 square feet to have automatic sprinklers for “a Group S-1 occupancy used for the storage of upholstered furniture or mattresses.” This has the potential to add significant cost to a project.

Additionally, energy-calculation requirements impact storage developers. “2012 IECC [International Energy Conservation Code] requirements are requiring different insulation protocols that increase the costs to develop self-storage,” says Jamie Lindau, sales manager of Sun Prairie, Wis.-based Trachte Building Systems, a manufacturer and supplier of self-storage buildings. “But when we insulate buildings to be more energy-efficient, operating costs go down in the long run.”

Not all municipalities use the same building code or even have the same interpretation of codes. But as the developer and investor, you must know exactly what will be required as you plan your budget.

Whatever you build—or whatever you’re required to build—use it to your advantage in the sales process. In many cases, if you’re better than your competition, you can achieve a higher rent. Our tenants demand value. Is your new facility required to have more insulation and a sprinkler system, even though the guy down the street who built two years ago didn’t have to include those features in his store? Sounds like a premium feature, demanding a premium rent to me!

Benjamin K. Burkhart owns BKB Properties and StorageStudy.com. As a consultant to self-storage owners and developers, he specializes in feasibility studies, operations, management protocol and profit-strengthening strategies. To reach him, call 804.598.8742; e-mail [email protected].

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