Your Self-Storage Construction Budget: Keeping Your Next Project on Track, Even When Things Go AwryYour Self-Storage Construction Budget: Keeping Your Next Project on Track, Even When Things Go Awry

While building a new self-storage facility can be exciting, the process can also be complex. One of the most critical steps is to create a comprehensive construction budget. This detailed financial plan will help you make informed decisions, so you can keep your project on track. Here’s an overview of what it should include, tips for staying on course and strategies for navigating development in today’s economic environment.

Construction-Budget Preliminaries

Before you set financial parameters for a self-storage project, you must first identify the type of facility that has the greatest chance of success. Decisions including building size and type (drive-up vs. climate-controlled), number of units, unit sizes, and amenities should be based on the market data collected via your feasibility study. Once you know precisely what you want to build, you can start determining the construction costs.

Establishing a preliminary budget early in the development process allows you to identify key expenses and determine how you’ll finance the project. Will you rely on personal funds, or will you need construction loans or investors?

Partnering with a general contractor provides critical insight to current market costs and allies you with someone who’s dedicated to completing your project. It’s in their best interest to develop a preliminary construction budget that aligns with your investment goals. They can assist you through the processes of value engineering, permitting and construction, all of which can help you manage costs.

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“Creating a baseline construction budget gives the owner a quick overview of potential costs for the project, highlighting key factors that are often overlooked, such as site soils, topography, and the specific infrastructure requirements set by local jurisdictions,” says Jeremy Maynard, the executive vice president for the West Coast at my company, where he’s responsible for project execution and supply chain. “These factors are critical to ensuring the site is viable for construction and helps outline the broad financial framework of the project.”

As your self-storage project progresses, your construction budget will evolve. At each phase, you can refine cost estimates to account for building efficiencies and changes, thereby improving accuracy. You can also anticipate and prepare for risks, as construction inevitably brings unforeseen challenges.

“While you progress through zoning and planning reviews, adjustments to your preliminary construction budget are often necessary to stay aligned with your overall financial plan,” Maynard says. “New requirements may arise, but by making strategic concessions—such as substituting materials or modifying construction methods—you can adapt without straying far from the initial budget.”

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These changes are common and can help you meet the project’s financial constraints and planning requirements while adhering to the budget approved for your self-storage pro forma. A flexible approach ensures the project remains viable without compromising key outcomes.

What Should a Construction Budget Include?

When setting your construction budget, it’s essential to be detailed. A comprehensive financial plan for a self-storage project might include:

Accounting for the Economy

Inflation presents a challenge for every construction project, as it can drive up the cost of materials and labor. However, taking proactive steps, such as discussing market trends with suppliers to lock in better pricing, can help mitigate the impact on the cost of your self-storage development.

“The key to minimizing the impact of future inflation is understanding the specific construction markets you’re working in,” Maynard says. “If you’re unfamiliar with a particular market, don’t hesitate to ask questions. We’ve found that asking about market stability is not only non-offensive but often appreciated. It shows you’re being proactive and mindful of potential future costs.”

You should also monitor the market for news and trends that can affect the price of materials. Being aware of shifts allows you to adjust your project timeline or scale based on current and projected costs. Try locking in prices for materials and labor when rates are favorable. While predicting the future isn’t easy, securing deals at the right time can protect you from potential hikes between the planning phase and the start of construction.

Work with your self-storage design and construction teams to implement value engineering, which helps you find cost-saving alternatives without sacrificing quality. For example, you might use more affordable materials, simplify the design or employ more efficient building methods. Adjusting the timeline for certain aspects of your project can also create savings. For example, starting one phase ahead of schedule may allow you to purchase materials before prices increase further.

Expecting the Unexpected

Even with the best planning, unforeseen issues are bound to occur in a self-storage construction project. However, a proactive approach can help you address potential challenges before they arise.

“I’ve seen cases where a pre-application meeting approves a specific design, only for it to be overridden later by design-review boards or neighboring community committees,” Maynard says. “To prepare for the unexpected, it’s crucial to do your homework. Visit surrounding communities and engage with as many local officials as possible about your project and design ideas. [Establishing relationships] can help mitigate the risk of being forced to overdesign or overbuild to meet unexpected demands.”

Here are some common obstacles self-storage developers come up against and how you can account for them in your budgeting process:

Weather delays. Inclement weather can significantly impact your schedule. Plan your project so construction occurs during more favorable times of the year. Research the local climate, especially if you’re building in an unfamiliar area. Also, include extra days in the timeline to account for potential disruptions.

Zoning or permit issues. Permits can be denied for many reasons, causing delays. Staying in close communication with local authorities and having a team familiar with the area can help mitigate these risks.

Supply-chain disruptions. Unexpected global events can make self-storage building materials more expensive or hard to procure. Always have a backup plan and consider ordering essential items earlier in the process if possible.

Final Advice

Creating a construction budget is the best way to ensure your self-storage project stays on track and within your financial means. A detailed and proactive approach helps you navigate building complexities, inflationary pressures and unforeseen issues with greater confidence.

Remember, having an experienced development team on your side can make all the difference. Don’t hesitate to rely on professionals who understand the nuances of self-storage construction to guide you through the process.

A budget is a financial blueprint for construction success, and it evolves as your self-storage project progresses. It’s more than just a number; it’s a dynamic guide that helps you make smart decisions throughout the stages of development, ensuring that you stay on track. Without a clear plan, costs can spiral out of control. The last thing you want is to overspend in areas that don’t add value or run out of funds before completing the project, as either will seriously harm your return on investment.

Andrew Thein is the marketing coordinator for MakoRabco, which specializes in self-storage and boat/RV-storage building design, supply and installation. Established in 1993, the company operates from offices in Carlsbad, California, and Winter Garden, Florida. To reach him, call 619.251.0430 or email [email protected].