Three years ago, I predicted that multi-story construction would grow throughout Canada. I developed this forecast from simply observing the U.S. industry that began 15 years earlier than the one here. Today, a review of the Canadian industry supports my prediction.
It makes sense to build multiple stories when you consider cash flow. To maximize return on investment, a storage operation must have an abundance of rentable square footage in an area where space is in high demand. There is more potential for success in areas of dense population and higher income per capita.
We’re seeing multi-story self-storage development in every large city in Canada, from Victoria, British Columbia, to St John’s in Newfoundland. Developers are becoming creative when designing multi-level facilities consisting of two to five stories and even higher.
Storage With a Twist
In the Ottawa area, a relatively new player is on the rise. Dymon Self-Storage is constructing high-end, multi-story facilities with a unique twist, putting retail outlets on the main floor as a value-added feature to attract customers and maintain the upscale appearance. The storage office also has a retail appearance to remain consistent with its neighbors.
Keep in mind that retail is as good as self-storage when you compare income per square foot. Also, a large retail tenant generates great cash flow and reduces the demand on management services. A primary benefit is long-term cash stability provided by the terms of lease for retail customers, as they normally consist of a five-year minimum with an option to renew for another five.
The Value of Conversion
Existing industrial buildings with enough ceiling height can sometimes be converted to multi-story self-storage construction. Due to their advantages, internal, multi-story conversions have spurred self-storage development in many cities.
Existing buildings can often provide a great location with built-in traffic. Every day, we find available buildings in proximity to large shopping centers―ideal locations for self-storage development. In addition, it often takes less time to complete a conversion project. A multi-story conversion can often be done in half the time of a ground-up, high-rise build. Finally, because 90 percent of the work is done inside the existing building, weather does not interfere with installation schedules.
Our U.S. counterparts have gained a lot of knowledge as the self-storage industry has grown into the thriving entity it is today. Canadians have not overlooked the U.S. discovery that multi-story developments are often good investments. As result, we’re seeing facilities rise wherever the population density will support them and their massive margins.
Shawn Baker is the president of Ontario, Canada-based Canadian Metal Manufacturing Inc., which develops turnkey self-storage systems. Established in 1999 as a metal fabricator, the company has been in the self-storage industry since 2003. For more information, call 888.951.1762; visit www.canadianmetal.ca.