When it comes to buying land for self-storage use, developers want to get the most bang for their buck. Many try to cover every square inch of land with rentable space. Though that approach may work in some cases, it can also result in a lower overall return on investment. Let’s examine factors to consider when developing land for a self-storage project and ways to make the most of the parcel.
Visualize the Sketch
Once you’ve identified a self-storage development opportunity and chosen a specific land parcel, you need to visualize how the buildings will fit on the site. Assuming proper zoning, access to utilities, soil conditions and other factors, I normally look at the shape and topography of the land, along with local market factors and the level of competition, to determine the type of structures to build.
To decide between single-story, bi-level or multi-story, consider how the buildings might sketch out in a site plan prior to meeting with any engineering, construction, architectural and land-planning professionals. A small or particularly expensive site might require a multi-story structure. The topography could allow for a bi-level building, or perhaps the site is large and affordable enough to go with a conventional single-story.
Visualization, combined with a rough site sketch, will save time and money in yielding the final facility design. The self-storage landscape is dotted with enough examples of poor gate access, cramped drive aisles and other issues created by engineers and architects who try to put more rentable square footage on a property than is practical. Poorly designed facilities that sacrifice ease of use for more square footage tend to push prospective customers to competitors. Imagining and drawing the design upfront will help you maximize land use and the long-term value of your project.
Be Mindful of Municipal Requirements
After you’ve sketched out your initial design, you’ll need to consider other factors, some of which will be outside your control. To make the most of your parcel, pay attention to:
Easements. If an easement runs through or alongside your site, it may prevent some development. You can sometimes eliminate the easement by acquisition, or you might be able to use it in some manner, such as for a drive aisle or outside parking. In general, though, easements are a hinderance to any self-storage project. Unless there’s an obvious workaround, avoid developing on a site that’s been significantly impacted. When you discover an easement-related issue during due diligence, such as a power line running through or over a site, it’s sometimes best to pass on the parcel.
Zoning. This is another area that can negatively impact your project. Required setbacks, buffer yards and landscaping can eat up valuable acreage and greatly reduce the footprint to accommodate buildings. There are sometimes extraordinary landscape requirements for self-storage, such as planting additional trees and shrubs, which take up valuable land. Planning-and-zoning codes may also alter the type, height and shape of buildings you’re allowed to construct. It’s important to understand local rules with the aid of a competent engineer and land planner to help bring your initial vision into focus.
Stormwater rules. These can burden a self-storage site to the point that development isn’t feasible. Requirements for a storm pond to control water runoff and additional measures to clean the runoff entail substantial amounts of land. Impervious-area limitations are likewise burdensome. I’ve had to eliminate several sites because stormwater rules rendered them unworkable. Be aware of these rules and make sure you, your engineer and land planner can develop a site as envisioned.
Fire codes. Fire-code requirements can change the shape of your buildings by mandating maximum square footage or adding hydrants with fire-apparatus access to your property. Think about non-rentable areas, such as additional drive aisles, extra-wide drive aisles or turnouts. The site plan you intended may need to be reworked so all buildings have fire-control systems. This is another area to address when finalizing plans with your engineer and architect.
Keep an Eye Toward the Future
It’s common for self-storage developers to reserve land for future expansion. Whether you plan to bring in portable units or construct an entire new building or series of structures as a second or third phase, look carefully at the original site plan for modifications. Most additions are well-thought-out, but sometimes an extra building or portable-unit grouping, though it technically fits, can make access and mobility much more difficult for tenants. An expansion might result in a short-term revenue bump, but in the long-term, it could lead to an overall decline in revenue if customers choose to go elsewhere. Land for future development is always a good idea; just make sure you design it as carefully as your initial build.
In the end, your self-storage project will be much more successful if you plan it properly with attention to customer convenience, municipal requirements and future business needs. You won’t win any awards for building the most net rentable square feet possible. Focusing on tenant experience, including ease of unit access, is one of the keys to maximizing your site value. The saying “less is more” certainly applies here.
Jeffrey B. Turnbull is president of Kodiak Mini Storage II LLC. He’s been involved in the self-storage business as a developer, operator and owner for more than 25 years, and recently developed a new store in Charlotte, N.C. He’s a licensed attorney in North Carolina, a licensed real estate broker in North and South Carolina, and a past president of the North Carolina Self Storage Association. He’s a regular contributor to “Inside Self-Storage,” and a speaker at various industry events. To reach him, e-mail [email protected].