Keep Your Next Self-Storage Project on Track! Managing Your Construction Timeline

Building a self-storage facility is a complex endeavor that requires careful planning and execution. Effectively managing the construction timeline is critical to financial success. The goal is to stay within budget and complete the facility on time, or you risk the trajectory of the investment. Let’s delve into the schedule, including what it typically looks like and strategies to keep it on track.

The Phases of Construction

New construction can be broken down into the following phases:

Pre-construction (one to four months). This involves initial planning, site selection, permits, financing, and hiring of architects, engineers and contractors. As the economy has slowed, there have been fewer construction projects. As a result, municipalities have a lighter project load to review, and this phase has shortened.

Site preparation (one to three months). This phase begins once permits are obtained. It includes clearing the land, grading, balancing the site and installing utilities.

Foundation and building (two to four months). At this phase, we pour the foundation, erect the building frame, and install roofing and exterior walls. We might install the driveways and bollard posts at the same time as the foundation or after the buildings go in, depending on preference.

Interior work (two to four months). This is when we focus on electrical, plumbing, HVAC, insulation, drywall, video surveillance and other finishing touches. Often, we wait to put up doors and springs until after the electrical, plumbing and HVAC installation to give these contractors easier access. Many of these details need to be handled with certain structural components in place; however, because self-storage builds can consist of multiple structures, contractors can often start work right after the buildings and units begin to go up.

Gating and fencing (one to two weeks). Depending on your site, this may be planned at any other stage. For very large facilities with lots of construction material, theft could be a concern. Gates and fences might be installed earlier rather than later.

Finishing touches and final inspections (one to six months). The final phase includes painting, landscaping and signage followed by final inspections to ensure compliance with building codes and regulations. This can be the most frustrating phase, as your facility can be 99% complete, but approval from the municipality can be delayed due to its own timeline. Some jurisdictions may allow pre-inspections or assistance with a pre-inspection punch list, while others will require a formal process that can delay your self-storage project for months. Additionally, after the inspections, it can be difficult to get contractors back on the job for small details, or you may be hit with delivery delays on materials that weren’t preordered.

Addressing Delays

While the typical timeline for a self-storage facility can vary significantly based on the skill of the general contractor, I typically expect an eight- to 10-month build process for non-climate-controlled storage and 12 to 14 months for climate-controlled. While it’s certainly possible to manage your timeline better, the tighter it is, the less margin for error.

Construction delays can happen for many reasons. For example, if you aren’t ready for a contractor when you originally believe you will be, rescheduling isn’t always simple, as they have other large jobs with strict timelines.

I once received an extremely competitive price from an out-of-town concrete contractor, but it was based on us meeting an aggressive timeline, so the contractor could pour our site right after another local job. When the time came, we weren’t ready. Not only did we have to wait almost a month for them to complete the work, but because they had to come back later, we paid a fuel surcharge. If we had scheduled our contractors with a two-week cushion, we would’ve had less of a delay and been more likely to stay on schedule.

The earlier you encounter delays in your self-storage build, the more you must scramble to manage every contractor down the line that has been affected by your changing timeline. For this reason, I recommend sourcing contractors locally, especially your excavator and concrete contractor, as it makes coming back to the site easier and allows more flexibility.

Creating too much of a cushion can also present problems because your site may not be ready due to weather conditions. I’ve faced multiple situations in which harsh weather prevented our concrete contractors from pouring, which led to delays and additional costs.

If you don’t have the time to be onsite frequently or someone you trust to manage the construction schedule, you should hire a general contractor. While you might pay a premium, it may not be as high as you think because they have contractors who offer preferred pricing. Plus, they understand the importance of delivering a quality job to maintain their business.

The Impact of Delay on Cost

When considering self-storage construction expenses, people often focus solely on hard costs, treating the project as a snapshot in time. What’s often overlooked is that while you may be able to build at a set price per square foot, the holding costs can represent 10% to 20% of the total.

Let’s say I can build a 50,000-square-foot storage facility at $90 per square foot including the cost of the land. This would be $4.5 million. Assuming we can secure a fixed-rate construction loan at 7.75% and complete 80% of the construction with a loan balance of $3.6 million, that would mean that each month we’re spending $23,250 in interest, if there’s no additional progress. This doesn’t even include taxes and insurance, which could add another $4,000 to $9,000 per month. In addition, we haven’t even discussed the cost of utilities, grounds maintenance, refuse and portable toilets, all of which can accumulate.

In a scenario like this, finishing the construction ahead of schedule could easily save you $60,000 to $70,000 a month. This is money a bank may not lend you to lower your out-of-pocket costs. The hold costs of self-storage construction should be one of the first things you account for when planning your timeline. Don’t overlook this line item on your pro forma.

Strategies to Stay on Target

To keep your self-storage construction plan on track, you must have clear and consistent communication with your contractors. Always talk after a site visit to address concerns. Don’t just ask, “How are things going?” through text messages or emails. A better approach is to be specific. For example, you might say, “I’m on site now. I see that two buildings have been completed, but there are two left, and there are no contractors here. My electrical contractors will be here next week, so if you aren’t on schedule, they may get in your way.”

Here's the rub: You don’t want to be too frequent with communication, as you don’t want to seem like you’re nagging.

Also, ensure your contractors understand their hierarchy and the level of authority you want each of them to have. In most cases, my most trusted contractors are my excavators. They often notice issues in others’ work, as they’re frequently on site for cleanup and landscaping. I often defer to them and encourage them to keep track of other contractors if they notice anything that can be improved.

Here's an example: An excavator once suggested that we ask our concrete contractor for a quote for concrete for all the driveways, as he knew about the rising price of petroleum-based products including asphalt. Historically, the cost wasn’t even close; however, in this case, because concrete requires less aggregate base, the cost ended up being less than $0.20 a square foot more for a superior product. This wouldn’t have happened if we hadn’t encouraged our contractors to speak up!

Finally, consider your contractors' timelines as well as your own. It's essential to communicate and negotiate flexibility when possible. I once had a contractor who had a free week that fit perfectly into our timeline, but when we needed flexibility due to delays in material delivery, he was unable to accommodate us. However, he offered another two-week time slot in which he had availability for smaller jobs. We took that, and it ultimately benefited us, as we were hit with another delivery delay.

If most of the material in this article makes sense to you, you’re likely ready to take on a new construction project of some scope. However, if you feel like you’ve just learned quite a bit, I recommend continuing to build your baseline of knowledge or seek other professionals to help along the way, including a general contractor. There are many ways for you to add value to your self-storage facility beyond the construction phase, including operations, marketing and securing more favorable financing.

Charlie Kao is the principal of Twin Oaks Capital, a Michigan-based commercial real estate company specializing in self-storage and multi-family assets. Services include real estate brokerage, asset management, feasibility studies, consulting and construction management. The company and its affiliates have owned, operated or planned more than 1 million square feet of self-storage. Charlie also owns House of Kaos Real Estate School, which provides continuing education credits for licensed realtors. He can be reached at [email protected].