When it comes to building self-storage, most owners tend to focus on the tasks they most enjoy, whether they relate to site selection, financing, design or operation. This is normal, but the construction phase of the project can’t be overlooked.
Hiring the right general contractor (GC) is an important step in the development process. There will always be issues that need to be resolved during construction, and the owner should be involved in the resolution of each. A qualified self-storage GC will help you avoid problems and enjoy financial success once the project is complete. Here’s how best to choose and collaborate with this key business partner.
Experience Is Key
The GC you hire must have experience in building self-storage. This is my No. 1 rule. You’ll allow this person to have substantial control over all aspects of your project, from start to finish. He’ll be responsible for the entire job, including the hire of all subcontractors and their ensuing levels of performance and quality.
Most GCs I’ve interviewed, whether for a small addition or a new build, claim they can handle a self-storage job because the buildings are lightly loaded and construction is relatively simple. However, a storage project is a slightly different animal. Our buildings have become more complex over the years. They contain unique elements that require specialization. A GC with little or no industry experience may be a good contractor, just not a good self-storage contractor.
The subcontractor tasks are generally simple to complete, but a GC who’s unfamiliar with self-storage may make too many assumptions about the use and, hence, underperform. In other words, he may not pay proper attention to the grading, soil compaction, concrete placement and strength, building materials and erection, paving quality, access-control installation and other ancillary work such as electric, HVAC, landscaping and lighting. This is why you should always hire a GC who has extensive industry experience.
Vetting Your Candidates
Once you’ve narrowed your choice to a small list of GCs with self-storage knowledge, you need to look at their licensing, financial stability and customer referrals. You need to know your GC is appropriately licensed to do business in the state where you’ll be building. You’ll normally be able to check this online with the state agency that oversees contractors. You may also check to see if any complaints or disputes have been filed against each candidate.
Ask every prospective GC for several financial references. These should include a primary bank as well as suppliers. Then follow up and verify.
A quick word here about bonding: I normally just check to see if the GC has the ability to be bonded by a reputable insurance company. Actual bonding is only occasionally necessary; however, it’s a major red flag if a contractor doesn’t have a solid financial track record or is unable to secure a bond.
The final vetting process involves customer referrals. Every candidate should provide several references from prior self-storage clients. Again, follow up and make sure the firm does quality work, on time and within budget.
Dealing With Conflicts
Once you’ve properly vetted and selected an experienced GC, you’ll sign a contract and related documents to help define and control the relationship between you. I’m normally comfortable using the American Institute of Architects contract and related forms because they’re detailed in scope and define the responsibilities of each party. Of course, you may opt to have your attorney draft a construction contract for you, depending on the project’s level of complexity.
As part of the contract, the GC should provide a project estimate, a detailed schedule of values for the work, and a Gantt chart showing when each task will be performed. Hopefully, the construction process flows smoothly from start to finish.
However, conflicts can arise. These can be due to something unexpected that necessitates a change order, such as poor soil conditions, or the perceived quality or timeliness of some aspect of the work. In my experience, the contract is important in working through these struggles, but the GC’s reputation for fairness and honesty is paramount. You should be able to discuss solutions with him for any issues that arise during construction. It’s important for both sides to be reasonable and have some room for give and take in any dispute.
If a direct discussion doesn’t resolve the issue, your contract should provide for arbitration or some other legal remedy. If the situation deteriorates to litigation, you and your GC will both lose. The legal system is simply too costly. The only parties in a construction lawsuit who win are, in fact, the attorneys. It’ll cost you many thousands of dollars before anything is resolved and your storage development is complete. No progress will be made on your project while litigation is ongoing! Try hard to resolve any disputes before you get to this point.
In summary, hire a general contractor who has experience in building self-storage facilities. Vet his licensing, financial ability and direct referrals. Use a trusted, legally binding contract that details the project costs, scope of work, schedule of values and timeline for completion. Finally and perhaps most important, hire someone who stands behind his work and has a reputation for fairness and honesty.
Following this advice will help you avoid expensive and perhaps unnecessary legal issues if a conflict arises during the construction process. It’ll also allow you to have a financially rewarding experience during development.
Jeffrey Turnbull is president of Kodiak Property Management Corp. He’s been involved in the self-storage business as a developer, operator and owner for more than 20 years. He owns three stores in Charlotte, N.C., and is currently developing a fourth in the city. He’s also 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. To reach him, e-mail [email protected].