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Building Multistory: A Case Study

September 1, 2002

15 Min Read
Building Multistory: A Case Study

There has been a tremendous increase in the number of multistory self-storage facilities. In the past, multistory facilities were generally conversions of existing buildings that were no longer being used for their original purpose. However, more and more multistory properties are being built for the express purpose of self-storage. Once rarely seen outside densely populated urban areas, they are now springing up throughout the suburbs where traditional one-story buildings were once the only type of self-storage available.

Multistory facilities are usually found in an urban setting where the surrounding area is fully developed. Vacant land in these locales is virtually nonexistent and, when available, is usually very expensive. This having been said, the best locations for a multistory facility have similar characteristics to those for a successful single-story store. These are some of the basics that make for a good self-storage location, whether it is a traditional single-story or multistory building or multibuilding facility:

  • Visibility--Frontage on a major surface street or freeway frontage with visible signage results in a quicker fill-in and higher ongoing occupancy.

  • Accessibility--Convenient access from a major roadway is a plus for any location. However, people need to be able to easily enter and leave the property.

  • Traffic count--People who drive by your facility can be a significant source of tenants, especially during lease-up. Typically, a good location is on a road with a minimum traffic count of 15,000 vehicles per day. Traffic count figures are available from your state's department of transportation or local road commission.

  • Market saturation--Many studies have shown between 40 percent and 50 percent of your tenants will come from within a 3-mile radius of your store, and 65 percent to 80 percent will be from within a 5-mile radius. Most areas can support between 3 and 5 square feet of storage per person. In more densely populated areas, the distance a prospective tenant will travel is shorter and the amount of square footage needed per person is greater.

  • Competition--Available land for new construction should be scarce, and existing facilities should be at or above 90 percent occupancy.

  • Population--A densely populated area with residential growth potential is ideal. Generally, a successful location will have 75,000 or more people in a 3-mile radius.

  • Potential tenant profile--An area with smaller homes, many apartment units and annual household incomes in the $45,000-to-$75,000 range can be a very promising location.

The Southfield Development

Some time ago, my company's research indicated one of Detroit's older suburbs was severely underserved by self-storage and was a prime development area. One particular area had less than one-half square foot of self-storage per person in the surrounding 3-mile radius. With the facilities we knew were under development, this would increase to a little over 1 square foot per person--well within the criteria for needed self-storage space.

The population in the area was more than 145,000, with an average household income of around $51,000. Sixty percent of the homes were built before 1970, and most were in the 1,000-to-1,500-square-foot range. In addition, census data indicated 37 percent of the residents were renters. The population demographics were almost perfect for self-storage development. There was only one problem: Could we find a large enough parcel of affordable land to build a traditional, multibuilding facility?

We looked for three years before we learned a piece of property had just become available. An out parcel of a new industrial development, it had 350 feet on Eight Mile Road, the border between Detroit and Southfield. This road has a traffic count of more than 65,000 vehicles a day. There were two existing curb cuts, and the property zoning allowed for self-storage. The site was perfect! But it was only 2.4 acres, less than half the amount of land we needed to make a single-story, multibuilding development financially viable, given the price of the land. The only alternatives were to build a multistory building or keep looking. The decision was to go multistory.

Southfield was going to be our first multistory project, so before we began designing the building, we did a great deal of research. We read everything we could find that had been written on the subject . We visited existing multistory sites, both conversions of existing buildings and projects that had been built expressly for self-storage. We spoke with the owners and site managers to learn what did and did not work. Most important, we got input from the managers of our existing facilities and our customers.

After completing the research phase, we decided on a design criteria based on what we knew of traditional facilities, what we had learned during research, and what would make financial sense. The main design criteria were to:

  • Maximize rentable square footage

  • Provide a high level of real and perceived security

  • Make the facility user-friendly

  • Have storage doors visible to passing traffic (one of the best ways to advertise a storage property to passers-by)

  • Provide some units with ground-floor exterior access

We also wanted the design to include:

  • A manager's residence

  • An office large enough to provide space for retail product displays and a display unit

  • Sufficient parking for prospects in front of the security gate and existing tenants behind the gate

  • A loading area that would allow more than one tenant to move in or out at the same time and accommodate a variety of vehicles

  • Visibility of the entry gate and loading area from the office

  • Visibility of the office interior from the street (for security reasons)

  • Easy entry and exit from the street

  • An architecturally interesting facade that projected an image of security and could be built at reasonable cost

We decided the best choice was a two-story building with both stories above ground and a total height of about 26 feet. The decision was based on construction costs, the amount of site coverage allowed by local building codes, the city's parking requirements and optimum traffic flow on the property.

The parcel of land was almost a perfect square (337 feet of street frontage and 315 feet deep). We were able to design a building footprint that was 254 feet long on the street side and 209 feet deep. This resulted in a building with approximately 103,500 gross square feet, with about 50,400 square feet on the first floor and 53,100 square feet on the second. We were able to achieve 51 percent site coverage with this design.

One of the major differences between traditional single-story and multistory self-storage is rentable square footage. With a single-story project, the gross and rentable square footage can be very close to the same amount. That is not true for a multistory building. The corridors needed to access the storage space take up a great deal of the gross square footage. Additional footage is lost to the office, manager's residence, elevators and elevator lobbies and equipment room, building entries, stairways, janitor closets, electrical-equipment rooms and restrooms. As a result, our 103,500 gross square feet of building yielded a little more than 75,500 rentable square feet (about 73 percent of the building was rentable).

One thing we have learned over the years is the "correct" unit mix varies from market to market. As a result, we always build out in phases so we can adjust the unit mix as we go along, based on what sizes have successfully rented. We built out the interior of the Southfield building in half-floor increments. The unit mix was adjusted somewhat from the original plans for each quadrant. The city provided a temporary certificate of occupancy for each area as it was completed so we were able to start renting (and generating revenue) before the entire building interior was finished.

The Southfield unit mix ended up to be around 20 percent 5-by-10s, 30 percent 10-by-10s and 10 percent 10-by-20s, with the remaining space a variety of larger and smaller sizes. The largest units are nearest the elevator lobbies with the smallest units are farthest away. There are also some spaces on the first floor that open directly onto the driveway so we can service the needs of certain commercial tenants or those who want to store a vehicle.

The demand for climate-controlled spaces in our area has been growing, so we always include it in our new projects. Typically, about 20 percent of the rentable spaces are climate-controlled. At Southfield, we wanted to further upgrade the climate-control area, so we put it on the second floor, selling it to customers as providing greater security. In addition, the climate-controlled corridors are carpeted.

Moving traffic around the building and providing parking on the site were major considerations. The solution was to make the driveways around the building one-way. This permitted the drives to be about half the width required by two-way traffic and allowed a larger building footprint. Since we wanted only authorized customers to access the property while providing potential tenants access the office, we used two computer-controlled keypad security gates, one for entry near the office and the other for exit on the opposite side of the building. Parking for the office is outside the entry gate. Two-way traffic is also allowed in this area. Once inside the entry gate, traffic is one-way around the building to the exit.

The facade of the building was designed to project a solid, secure image. The exterior is made of premanufactured concrete panels that were delivered to the site in sections and installed with a crane. Some of the panels were molded to looked like decorative block, while others were left smooth and stained white after installation. Moldings around the roof line of the building and above some of the windows are of stock EFIS material that were installed after the wall panels were in place.

Storage doors are one of the best advertisements for a self-storage facility. However, the building department would not allow them on the street side of the building. We solved this problem by installing windows along the second floor facade. Inside the building, "dummy" doors were mounted along the back walls of storage units so they could be seen through the windows. To make the doors appear more realistic, there is a 3-foot-wide, lit corridor between the windows and the dummy doors. The corridor also allows for easy cleaning of the window interiors.

The city code is very strict about the amount of signage we were able to install. However, the code does not restrict signs hung inside a building that are visible through the windows. As a result, we are able to use the dummy-door corridor for advertising signs without any kind of approval from the city.

The office is located in the front corner of the building with large windows on three sides. From the office, the manager can easily observe tenants entering the security gate, the main parking area and the loading area. In addition, the windows on the street side of the office provide sight lines into the office after dark. We keep some of the office lights on at night and the window blinds open. Since the traffic count on the road is very high, this serves as a deterrent to thieves (so far, it's worked).

The office is approximately 1,000 square feet. This provides a great deal of space for displays of sundry items such as boxes and packing supplies. The entry door is located so anyone entering the office must walk through the display area to reach the counter, which is more than 14 feet long. This allows room for several people at a time. The manager can help more than one person, having a new tenant fill out move-in paperwork, taking a payment and answering another person's question.

The office also contains a display unit. This is a complete 10-by-20 self-storage unit exactly like one a tenant would rent. On the floor, different color lines mark out the size of a 5-by-10, 10-by-10 and 10-by-15. There is also the same type of door and latch used throughout the building. The manager uses the display to help prospects decide on an appropriate size, explain how the door and latch work, demonstrate how to use the inset cylinder lock, show where the door-alarm sensor is located and so forth, without having to lock up and leave the office.

The loading area is directly behind the office and inset under the second floor. This provides tenants protection from the elements. Four vehicles up to a 24-foot truck can be accommodated at one time. There is also a raised truck dock outside and directly adjacent to the loading area for use by large moving vans and semi trucks.

A set of sliding-glass doors operated by a motion sensor allow access from the loading area to the first-floor elevator lobby. The lobby is about 500 square feet so tenants can use it as a staging area when moving in and out. Moving carts are provided free of charge, and a cart-storage area opens onto the lobby. A restroom is also in this area. The second-floor elevator lobby is about the same size. Two freight-sized elevators are available to access the second floor.

Industry studies indicate women generally make the decision about where to rent a storage space. Our female tenants repeatedly told us one of their greatest concerns was security. Like most modern self-storage facilities, access to and exit from the property is controlled by gates operated by a keypad access system. Tenants must also use a their gate code on keypads at every exterior door to the building. There are also keypad controlled doors leading from the elevator lobbies to the storage areas. Tenants are allowed access only to the area of the building where their unit is located.

Magnetic door holds controlled by timers are on each of these doors to prevent tenants from propping doors open and breaching security. The tenant turns a timer next to the door and a magnet is activated, which holds the door open for a maximum of 10 minutes.

Each storage space is alarmed. The alarm is deactivated when the tenant enters his access code to open the entry gate and reactivated when the code is entered into the exit-gate keypad. A monitor in the office displays the floorplan of the facility with changing colors on each space to indicate if the alarm has been deactivated, if the unit is vacant, if rent for a particular unit is past due and so forth. If a door to a storage space is opened without the door alarm being deactivated by the correct code, the unit flashes red on the floorplan display and a loud alarm sounds in the storage area and the office.

CCTV is an integral part of the security plan. Cameras are focused on all points of entry into the building, along the sides and back of the building, in the office and in both elevator lobbies. Two monitors are located in the office. On one, the picture rotates among all the cameras. On the other, the view from the office camera is always shown.

We believe the primary purpose of cameras is to act as a deterrent. Therefore, each camera has a yellow flashing strobe light on top to make it very clear the property has extensive camera coverage. In addition, a small monitor is located in the manager's residence so he can check the property after hours.

All corridors in the storage areas are straight and at right angles to each other so there are no nooks or crannies where someone could hide. The walls are white to reflect as much light as possible. The lighting in the corridors is near typical office levels. The fixtures are controlled by motion sensors. Wherever possible, windows were placed at the end of corridors to bring natural light into the building and open up the hallways.

In the corridors, there are clearly marked intercoms to the office located every 75 feet or so. It can be very spooky to be alone in a large silent building. To overcome this uncomfortable feeling, music is played throughout the building using the intercoms, and the system allows us to record our own "commercials" that play on a predetermined schedule. We have recorded announcements informing tenants that we sell boxes and other supplies, reminding them smoking is not allowed in the building, and so forth. There is also a clearly marked emergency intercom in the loading area that connects directly to the central security-monitoring station for the office burglar-alarm system.

What We Have Learned

We have learned many things in the time the Southfield facility has been open:

  • Operating costs for a multistory property are higher than for a traditional facility. This is primarily due to utility costs. For example, the electric bill is higher because the lights are on a great deal of time. There are also hidden costs, such as elevator repairs and maintenance agreements that are not incurred with a single-story property.

  • Keeping the premises clean is a major undertaking. While a rain storm can do a thorough job of cleaning dust off storage doors at a traditional site, at a multistory property, each door must be manually dusted periodically. Hallways also need to be swept and mopped, windows and window sills need to be washed, carpets need to be vacuumed, etc. This is in addition to the all the normal maintenance required at a traditional property.

  • If something can break or be broken by a tenant, assume it will happen. A multistory facility is a series of more complex, interlocking systems than a traditional one. For this reason, it is very important to understand and document how the mechanical systems operate and where all the controls are located.

  • Don't underestimate the potential real estate tax bill. A multistory building can set the tax assessor's heart racing in excitement much faster than a one-story property.

  • Expect new competition. Nothing breeds new competition like success.

There is no question multistory self-storage buildings have already become the next step in the progression of the industry and will be built at an accelerating pace. The Southfield project was the first of its kind in the Detroit area. There are now at least six other multistory facilities that are open or will be shortly.

Tom Berlin is vice president of operations for Farmington Hills, Mich.-based Pogoda Management Co., one of the largest owners and operators of self-storage facilities in the Midwest. For more information, call 248.855.9676.

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