In this economic climate, many self-storage owners are looking to increase income by maximizing available space, often adding new buildings to existing facilities. As with most projects, it’s not always as easy as it appears. One of my favorite, worn out, “old guy” construction axioms is, “Building is the easy part; it’s getting to that point that can be rough.”
Just because you’ve already built and established a self-storage facility, don’t make the mistake of thinking there may not be some due diligence to be done before you add on. There are also some proverbial speed bumps to cross whenever you start new construction at a location where business has to go on as usual.
Let’s take a look at a few of the bad and good side effects of adding to an existing site and, hopefully, help you avoid some of the “gotchas.”
The Bad (It Could Happen)
Verify whether any of the original zoning ordinances, development agreements, codes or covenants indicate a maximum land use or maximum total building area allowed on the site. In some jurisdictions, you may not only have to build your new buildings to current codes and requirements, you may also have to update your existing structures to meet them.
If you’re considering the addition of boat and RV storage, some jurisdictions may consider this to be a different building use or occupancy, apart from the storage of household goods. If your local zoning ordinances or building code is interpreted as such, rezoning or special-use permits may be required.
Also, confirm that the existing electrical service to the site is large enough to handle the power requirements for the new buildings. Water-service size and water pressure may need to be considered if additional fire-sprinkler protection will be required. Waste-line sizes may be affected if rest rooms are added.
If possible, find an alternate route for construction and delivery vehicles to access the site so they aren’t driving through the existing facility. You’re opening yourself up to a lot of liability when you expose current customers and their belongings to the possibility of “construction-related” damages.
Fence the outside perimeter of the construction site, and cut off access between the current facility and new construction area. Post the appropriate warnings and signage where they are visible to current customers.
Another consideration: Where are the new construction materials going to be stored? Is there adequate room for a secured “stack lot” of contractors’ and subcontractors’ trailers and materials? If not, the general contractor will need to carefully phase the delivery of materials based on available space. It’s often prudent to negotiate a deal with an adjoining property owner to use part of an empty lot or parking area during construction. However, in doing so, you’re adding them, their building, its contents and their customers to your list of liabilities.
Like a good neighbor, somebody is going to get upset. You may hear: “Your paint overspray got on my car,” “Your dust ruined my air-conditioning unit,” “The vibration from your equipment cracked my driveway,” “The noise is causing my dog, Fluffy, to have anxiety attacks,” and my all-time favorite, “You caused my roof to leak.” These may look like amusing little anecdotes but, believe it or not, these are actual complaints from neighbors of new construction sites. You can’t make everybody happy; do what you can to head it off, but just be ready.
The Good (It Could Also Happen)
In a perfect world, the developer, architect or engineer who originally submitted your project for approval also proposed a “master plan” indicating buildings that might be added in future phases. If so—and if the plan was approved at that time—you’re way ahead of the curve. If the future buildings were also considered when the power and utility services were designed, find these people and buy them a really big steak. Unfortunately, however, on Planet Construction, the world is usually not that perfect.
With the land already paid for and, hopefully, at least partially cleared and graded, your development and construction costs are going to look really good. Combined, this should make your pro forma very appealing to a financer.
It shouldn’t take much research to determine a unit mix for the new buildings. If your occupancy is to the point where you need more units, you should also be at a place where it’s pretty clear what sizes work in that particular market—and which ones to avoid.
All things considered, this is a really good time to build. Material prices are as low they’ve been in several years, and material supplies are abundant. Contractors and subs are not very busy and are looking for work that is ready to start. Most architects’ and engineers’ schedules and workloads are fairly light; no more waiting several months to be accommodated.
Money for new construction is definitely out there. If you’re unable to find it, call me. We’ve found resources putting together very agreeable deals for some of our more savvy developers.
Since you’ll already have experienced subs and installers on your site, this is a good time to talk to them about “those few repairs” on your existing buildings, the ones that have been nagging at you for some time. Remember, when prospective customers come to look at a new unit, the appearance and condition of the existing facility is going to affect their decision as well. Take this time and opportunity to make as many improvements to your existing facility as your budget will allow.
At the End of the Day—It Gets Dark?
In her novel Atlas Shrugged, author and philosopher Ayn Rand wrote, “By the essence and nature of existence, contradictions cannot exist. If you find one, check your premises, and you will find that one of them is wrong.” As I listen to “those who are supposed to know” tell me what I’m supposed to think about our economy, and then see how people are actually responding, there’s an obvious contradiction.
Wise developers, entrepreneurs and investors realize this is a great time to build. They’re finding new and creative ways to put deals together, and moving forward in spite of the downturn. The economy always has been and always will be cyclical, and they’re willing to risk that "We shall overcome," as has happened in history time and again.
It’s not going to be “those who are supposed to know” who bring us out of this financial crisis. It’s going to be the hard-working, clear-thinking, risk-taking, like-minded entrepreneurs who fight their way through this and win. I don’t agree the time of prosperity is over and things will never be like they were before. That is entirely up to us. Personally, I refuse to be a victim. How about you? Isn’t this a really great time to build?
L. Bruce McCardle is vice president of eastern division operations for Mako Steel Inc. Based in Carlsbad, Calif., Mako designs, supplies and installs steel buildings for the self-storage industry, including boat/RV storage, multi-story and custom buildings. For more information, call 800.383.4932; visit www.makosteel.com.
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