Its a deal-killer. Even if it's the perfect location. You can prove the market demands more self-storage, present pretty pictures, line up your funding, design the next award-winning site, and have the perfect business plan. But if you dont have the proper zoning, your perfect deal is dead.
Finding good locations for self-storage is not that hard. Any rookie or would-be developer can almost intuitively walk into any market and identify the best location for a new storage business. It doesnt require years of experience in real estate to understand the basic characteristics of a quality site.
But it isnt just the price of that prime lot that may challenge the self-storage developer. Our target isnt just the quality location at the right price. We need the proper zoning or entitlements to build our desired use, or the best deal might never see the first tenant.
Sometimes, navigation of the zoning bureaucracy is necessary, even when self-storage is an allowed use. Older self-storage properties with rickety, rusty gates, fences and doors; poor managers; ugly curb appeal; and complacent owners have moved some zoning authorities to force self-storage businesses to conform with substantial restrictions, even where the use is allowed by right.
When a developer calls me with a zoning issue, Ill admit, I cringe a little. During my self-storage career, Ive seen "perfect" deals that never work out. Ive seen developers take all the correct steps to rezone a property and have wonderful success. Conversely, Ive worked with developers whove spent tens of thousands of dollars on a rezoning applicationfor terrific projectsto ultimately realize failure.
Attacking a rezoning application is never simple. But if youre considering a rezoning for self-storage, here are a few tips that might streamline your process.
Rezoning Guideline 1: Be a Pro
Throughout the course of launching any new business, the best strategy you can take is to be professional. In the case of applying for a rezoning, its likely youll be piecing together a tremendous amount of information, and navigating particular channels that may be unfamiliar. Developing a sound strategy and reasonable timeline for presenting a rezoning application is crucial to success. You should plan your rezoning activities just like you would any other piece of the deal-making processacquisition, design, funding, constructionwith contingencies.
A rezoning undertaking can be very risky. It can also be very expensive and ultimately fail. The reward of success might be substantial if the rezoning climate creates a barrier to entry. Or your rezoning case might set the standard for future cases, opening up opportunities for other developers. Identify and plan to mitigate the risks! Writing purchase contracts contingent upon rezoning can be a reasonable strategy to ensure you dont live with a deal that wont work.
When facing a zoning challenge, one of your first steps is to understand the rezoning process. A necessary rezoning that suits the overall comprehensive plan of your community could be an easy administrative process that requires a simple application and a couple of hearings. More complex cases, however, may be layered with public hearings, expensive submittals and never-ending bureaucracy.
Gather knowledge from the beginning. Visit your local planning office and understand the entire process. Read and understand the zoning youre trying to change, and the zoning youre requesting. Review the local community plans and comprehensive future plans. Research recent rezoning requests and applications that were approved and denied. Understand the process!
Make solid submittals. Being professional throughout the process requires you provide all the necessary data, then maybe some additional supporting documents. Feasibility studies, traffic-impact studies, artistic renderings, preliminary site plans, stormwater-detention plans, landscaping and green-space plans, pictures of similar projects, examples of similar rezonings, and all required documentation should be prepared and packaged professionally to ensure your application is easily understood. Anticipate the questions and prepare the best answers.
Rezoning Guideline 2: Gather Support
For a rezoning case thats not administrative, you need all the support you can gather, on the front side of your application. Before meeting with persons of influence about your project, develop your concepts to the point where they can be easily understood. This includes renderings and conceptual site plans. Sometimes a rezoning can be more easily changed by the existing owner of a property than by a new owner. Consider this part of your acquisition strategy.
Meeting with adjacent landowners is a also good first step after youve developed your concepts. Again, you must be prepared and understand how your new business might impact adjacent landowners and their individual interests. If it might be an eyesore, highlight and display the landscaping, lighting or architectural features you intend to include to diminish expected concerns. Its a fine line to walk when you begin showing concepts to neighbors and taking suggestions. But when gathering support, youll have to at least consider others ideas within reason. A little extra buffer, a privacy fence, alternative lighting plans or some landscaping might go a long way.
Zoning cases are often political. I dont like it, and maybe you wont, but its a reality. If you have friends who are influential, solicit their help. The more support you can gain, the better.
Be able to present your concepts as benefits to the community. Although some older self-storage properties are ugly, theyre pretty quiet neighbors. Self-storage can provide a nice transition between residential and commercial or other uses. It meets a regular demand. Modern facilities are professional, clean and attractive. As owners, we want to run good operations that serve a need in the community. Neighbors and residents want to hear your values. Its never too early to begin promoting your new business.
Rezoning Guideline 3: Build the Best Team
Spending a year or more in a zoning case can expend a lot of resources. Dont waste time wading into waters that are unfamiliar. Entitlement is a project cost, and if successful, will add a lot of value to your property. To do things right the first time usually requires expert guidance. Like any other segment of the development process, the deal-makers most valuable skill is in managing the team toward the end goal and ensuring quality.
Use professionals to put together your rezoning applications. Engineers, architects, market consultants and attorneys should be part of your rezoning team. The design professionals should understand the rezoning process and what it requires in terms of conceptual design and development strategy. Market consultants can strengthen your rezoning application if market data shows demand for additional storage, and attorneys can navigate the legal aspects of your unique application.
Engaging the right team and being certain they can work efficiently to move your interests forward can improve your rezoning application and add value to your property. You want professionals on your team that have synergy, experience and success on similar projects. Interview your prospective team members and be sure you measure their success not by effort, but by results.
Know the rules and the alternatives before taking on a rezoning application. Are there other sites that can be immediately developed but yield similar returns? Will a mixed-use or out of the box application aid in allowing self-storage? Is there a higher and better use for the subject property?
Self-storage isnt always the best use for a particular site. If your rezoning case is an uphill battle, know the risks and quantify the losses you can withstand. Plan your rezoning with a solid strategy that identifies the determining factors on when to move forward and when to cut your losses.
Benjamin Burkhart is owner of BKB Properties and StorageStudy.com. He works closely with self-storage owners and real estate developers on site selection, acquisition due-diligence, market and feasibility analysis, and operations training. He can be reached at 804.598.8742; e-mail [email protected].