By Timarie Kilsheimer Thompson
Delaware Beach Storage Center opened in Lewes, Del., in June 2016. The author has chronicled the project’s journey, from research to groundbreaking to opening day, in several articles published on insideselfstorage.com. This is the final chapter.
Capturing lessons learned is an integral part of every self-storage project and serves numerous purposes. Principally, a learning summary will enable you to identify and design best practices for upcoming projects. Even more important, documenting aspects of the project where you could’ve done better will serve as a valuable tool and enable you to avoid similar problems in the future. It will also allow you to leverage your successes.
Building a new facility and getting your business off the ground will never be easy or flawless. If it were, everyone would do it. But learning from your achievements and disappointments will enable your next project to go more smoothly.
Go Big or Go Home
When my husband, Blair, and I conceptualized this project back in 2014, we knew we’d found the highest and best use for our visible tract of land. We surmised there was a strong and unsatisfied demand for quality climate-controlled storage in our area, and the explosive growth in our market would support the project’s feasibility.
Being new to this industry, we didn’t know what we didn’t know. By tapping a network of experts, reaching out to other self-storage owners—small “mom and pops” as well as owners of multiple facilities—and conducting large amounts of research, we were better prepared to embark on the project. We also leveraged the expertise of our general contractor (GC), who has completed many storage facilities over the last 30 years. With a 106,000-square-foot, three-story, 680-unit facility on the line as our first project, we indeed went big, as they say.
Permitting, Feasibility and Financing
Establishing a solid foundation was essential to launching the project. There was no particular sequence to create this foundation; indeed, it was a multi-tasking adventure. While I attended the 2016 Inside Self-Storage World Expo in Las Vegas and selected an industry veteran to perform our feasibility report, Blair worked with the civil engineers and architect/GC on the site work and building design. Concurrent to this, we started shopping the project with local banks.
The process had a steep learning curve. Some of the lessons we learned were:
- Local municipality approvals will always take longer than normal. Stay on top of the process, be professional and be prepared to make concessions. This will, most of the time, get your further, faster.
- Don’t underestimate the importance of a professionally done feasibility study, completed by an independent expert with many years of industry experience. Even if you’ve done similar studies in the past, if you don’t have a track record in this industry, the credibility of the report could be compromised and may not hold water with financial institutions.
- Be prepared to explain every number in your budget, every assumption and every projection to bank officials. Without solid explanations spoken with confidence, the validity of the data could be mitigated, which may cause delays or even rejections.
One of our primary layout goals was to maximize net rentable square footage. The unit-mix recommendation from an industry expert certainly plays into this, but that doesn’t always mesh with what the architect designs, or the aesthetics of the building. We had to weigh each and ended up changing several components of the project design to maximize our revenue potential. By doing this and incorporating some value-engineering features, we could achieve 76 percent net rentable while maintaining the look and feel we were trying to achieve.
Customer logistics are another important consideration. What may look like a good floor plan on paper may not translate into an optimal layout for users. In our case, we have two elevator banks, one at the front of the facility and one at the back. The bank in front was intended to bring customers to the second and third floors, with no direct access to the ground floor. While we have three other loading doors accessing the first floor, not having access through this front door is confusing and inconvenient for customers. While not a deal-breaker, it’s something we would do differently.
Always try to find a balance between aesthetics, unit mix and rentable footage, knowing something may have to give. Think through your layout from the eyes of your customers. Pretend like you’re moving in. Is access easy? Are carts accessible? Often, theory and practice don’t meet.
You’ll likely even rethink your design. For example, we decided to transform some of our drive-up 10-by-20 units to climate-controlled because of the abundance of outlet retailers down the road and our ability to charge a premium for these units.
Finally, don’t underestimate the importance of your office design. While ours may be slightly larger than necessary and we opted to have a fit and finish that exceeds most facilities, we get many positive comments from our customers. The office is their first impression. If your sell strategy is new, clean, secure and user-friendly, your office should be, too.
In construction, things will inevitably go wrong and will most likely be delayed. They won’t always work out the way the architect intended (theory vs. practice). Subcontractors will fall out or underperform, and communications among them will probably not be optimal. You need to be amenable to change.
With that said, as the developer/owner, you still need to make your voice heard and not always be conciliatory. It’s essential to stay on top of your GC and his contractors, ensuring everyone understands the scope of the project. Do your best to facilitate communication between all parties. Moderate daily construction meetings to avoid misunderstandings, mistakes and delays. Many of the problems we had were due to non-communication, but the majority were fixable.
Regarding subcontractors, it’s imperative that you be integrally involved in the selection process. We were contractually afforded that right, however, we didn’t sufficiently leverage it. Play a prominent role in selecting your subs. Consider their experience, current workload, location and, of course, their bid. Also, don’t omit national contractors from the running.
It’s also imperative to factor in weather. Most construction timelines build in weather delays. Just make sure it’s realistic. In our case, during a “noreaster,” we had wind gusts of 70-plus mph coupled with snow in late January. Our roofing had been rolled and secured but not installed, and with those gusts, some of the roofing material was blown off and damaged many of the metal panels on the side of the building. Thankfully, no one was hurt. But between filing an insurance claim and the time it took for contractors to repair the damage, it cost us nearly two months.
Be mentally prepared for constant construction issues. Be flexible when you can, but stand your ground when necessary.
You’re probably going to be sitting around and eating bonbons during construction, right? Not quite. It’s extremely important to get on top of all operation-related tasks as soon as possible. Time won’t be your friend, especially if you have other responsibilities during this period (i.e., a job).
Do your research and make your vendor selections early. Think through items including your management software, merchant services, security products, retail items, tenant insurance, truck rental, legal services, human resources, payroll and others.
No matter which vendors you choose, you’ll still have a lot of work to do once the contracts are signed. For instance, it took me more than a week to input all our settings and storage units into our management software, not because of complexity, but because of pure volume. Even when everything is set up and the data entered, you’ll need to train yourself and your employees. Most of it is intuitive, but it’ll be new to you. You’ll need to be hands-on to learn it all, which takes time.
Legal complexities within the self-storage industry shouldn’t be underestimated. Establishing a solid legal base (leases, addendum, waivers, etc.) for your new business is critical. Working with an attorney with industry experience was non-negotiable for us. Thankfully, he addressed all our questions and helped us navigate this new landscape.
Human resources and payroll are other operational components that should be addressed with plenty of notice. Hiring the right employees isn’t something you should rush. They’ll be the first face prospective customers see. Even with just a few staffers, we decided to outsource our payroll to avoid any unintended mistakes that could cause problems down the road.
Finally, consider customer amenities and office setup. Several conveniences I thought would be a great benefit to our customers (pay at the gate, for example) ended up not being a good fit for our demographic. Simple offerings such as moving carts and bins, on the other hand, proved to be crucial for a positive customer experience.
Walk in your customers’ shoes through the moving experience. Beautiful, extra-long moving carts may not be a practical choice. Ours are too long, especially around corners, and we have some paint scuffs and a few minor dents on our new white metal corridors to show for it. And we have six of these carts! That was an expensive lesson, as they’re now out of service.
Also, leasing some office equipment seemed logical and even cost-effective, but I overdid it. Now I have a copier with all the bells and whistles, but we’re moving toward electronic signatures. To summarize:
- Start early on vendor selection and data input, otherwise you may be behind the eight ball when you’re hurrying to open.
- Don’t underestimate the importance of the legal components of your business.
- Take time to find the right employees. They’re on the front line and will be your prospective customer’s first impression.
- Think through the amenities that will best fit with your demographic.
- Don’t buy metal carts that are too long or you’ll need to invest in a lot of Mr. Clean “Magic Erasers.”
- Be realistic when selecting your office equipment.
As someone once told me, never build something that won’t work. To that end, we’ve done our due diligence, talked to industry experts and learned the fundamentals of this industry. But that doesn’t mean we haven’t made (or won’t make) mistakes. When we develop our next project, we’ll do some things differently.
Overall, our first major project went off without any serious hitches and came in at 15 percent below budget. When we opened in June, we were well-received by the community and hit the ground running. At our six-month mark, we had reached 33 percent economic occupancy—well ahead of our projected target, which we believe is solid validation. Of course, that doesn’t mean we’re going to stop learning or forging ahead.
Timarie K. Thompson and her husband, James Blair Thompson, are the owners of Delaware Beach Storage Center in Lewes, Del., which opened in June 2016. Timarie has been involved in the marketing and strategic-planning fields for more than 20 years. She lives in Rehoboth Beach, Del., with Blair and their son. For more information, e-mail email@example.com; visit www.debeachstorage.com.