“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us...”
~From A Tale of Two Cities, Charles Dickens
If you’ve read A Tale of Two Cities and know the history of its author, Charles Dickens, you know he was about possibility, rebirth and transformation, the kind of visionary we desperately need in the boat/RV-storage building market right now.
If you’re interested in developing a facility, your rate of success will depend heavily on which “city” you choose: the real one, which involves risk but offers future rewards, or the misguided one in which development is being touted as unfeasible. The following discussion should guide you in your choice, dispelling common myths and highlighting some positive trends.
The Epoch of Incredulity
Let’s take a look at some misconceptions many self-storage investors and developers may have about boat and RV storage:
- Because the buildings are larger than typical storage with wider drive isles, they yield less square feet of building coverage per acre of land.
- The potential market for boat/RV storage is smaller than that of the storage for household and commercial goods.
- The rate per square foot of rent is less for boat/RV storage.
As a result of the amount of land required for a boat/RV facility, along with the difference in the return on investment, many developers choose to build traditional self-storage, leaving a great demand for boat/RV storage in most regions. However, the facts show customers who own luxurious RVs and large boats are not as affected by the economy, still have disposable income, and are looking for a safe, secure, convenient place to get their toys out of the weather.
In addition, construction material and labor costs are lower now than they were even two to three years ago, and much more so than four years ago. Some great sites are becoming available at more reasonable prices all the time. Developers and investors wary of jumping into the boat- and RV-storage market should steer clear of mistaken beliefs and focus on the facts.
The Epoch of Belief
Bottom line, there are still many lucrative markets out there, and this is a really good time to build. The self-storage market is finally seeing money loosen up a bit, with equity requirements that are improving all the time. It comes down to having the nerve to move forward in this economic environment.
Keep in mind that in most parts of the country, any project you’re just starting will most likely not even be out of the ground for at least six months, maybe eight to 12 months in some areas. What will the economy be like in a year? It’s a great question, but hasn’t that really always been the question?
We recently heard an industry “leader” say, “You would have to be a fool to get in this business right now.” Who’s the fool? The one who starts something in this kind of economic environment and patiently waits to reap the rewards when things turn around, or the one who looks back with the all-too-familiar regret, “I wish I had...”?
Everything Before Us—Within Our Budget
Yes, building now is indeed a risk, so building smarter is crucial. Obviously the numbers have to be just right to make a project work. But you can’t lose site of your goal, which is to build a quality facility, within a set budget, that will someday pay for itself and have adequate cash flow. Sound simple? Well, we see a lot of people lose site of this goal and build monuments instead of functional and profitable facilities.
Before you invest money into all the bells and whistles, ask yourself, “If I spend additional money on X, will I get it back by Y?” If it adds value to your project, marketability to potential customers, and saves money over the life of the project, then spend the money. The most important factor is to put your money where the rent is. Will a customer pay more for a unit than for one down the street because of some service or amenity?
Ted Dietz, developer of Eucalyptus at Beaumont, an upscale boat/RV-storage facility in California, discovered through research and online polling that having a dump station at a boat/RV-storage facility is low on the list of priorities for most vehicle owners. The majority of them don’t want to make the return trip home with the additional weight—or with the mess and smell—so they dump waste before they leave, lock the door and stay out of the bathroom.
Dietz’s research also found the first priority for the majority of boat and RV owners is to have wider drive isles. A wash bay is also considered an added amenity they like. Other profitable add-ons include an onsite mechanic and well-stocked retail area to supply boat/RV essentials. But before adding too many amenities or services, you must first consider the costs and whether these will benefit your proposed project.
The Season of Light
Just as with any other successful business, you have to be creative and work hard to win customers. The days of whatever you build immediately renting to capacity and spitting out cash are gone for now. Storage is still a low-maintenance and low-overhead business, but nonetheless takes savvy and effort to make it a profitable investment. When you run the numbers and see the returns, you’ll find it’s still a wise investment.
Recalled to Life
So get off of the farm and pick the real of the two cities. It would appear most developers are willing to hide in the suburbs until someone else takes the risk and starts the ball rolling. Entrepreneurs don’t wait for things to turn around, they turn things around. They don’t stand around waiting for someone to bail them out; they bail themselves out, time and again. They take the big risks, but also get the big rewards. What are you waiting for?
L. Bruce McCardle is vice president of eastern division operations for Mako Steel Inc. Caesar Wright is president. Based in Carlsbad, Calif., Mako designs, supplies and installs steel buildings for the self-storage industry, including boat/RV storage, multi-story and custom buildings. For more information, call 800.383.4932; visit www.makosteel.com.