Inside Self-Storage

SEP 2018

Inside Self-Storage (ISS) is an information source for industry owners, managers, developers and investors covering news, trends, facility operation, finance, real estate, construction, development, marketing, technology, insurance and legality.

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2016 BOS BOS - eas y to assemble Quick Build containers offer versatility in setting up, or expanding self- stor age or portable stor age or portable stor age facilities age facilities . Product Information • Single or double door swing doors. • Height 83" (7ft). • Width 83" (7ft). • Width can be expanded up to 252" (21ft). • Length 43" to 240" (3ft – 20ft). • Length can be expanded up to 480" (40ft). • Wind and weather tight units with high snow-load capacity. • Numerous accessories available. Quick Build container is economical to transport, and the assembly is quick and easy with no tools required. Strong BOS units are made of galvanized steel, and come safety tested and rated by an external testing agency. For more Information, please visit our website www.boscontainer.com +1 (844) 267-3757 orders@boscontainer.com have entered the workforce, many markets are still struggling to find skilled craftsman. "The labor shortage and longer lead times have, in a way, helped throttle back the speed of development. If construction could keep up with the investors, the self-storage market might have imploded by now," says Steve Hajewski, marketing manager for Trachte Building Systems, which designs, manufactures and erects pre-engineered and customized steel self-storage systems. "The extended building cycle does have the advantage of restricting supply and keeping rental rates up, while at the same time giving future developers a better opportunity to identify other sites coming online and possibly changing plans to avoid overbuilding." Another influence that could hinder projects is the recent tariffs on imported steel and aluminum, which could lead to higher costs and even shortage. "I don't think any major manufacturer is using imported steel, but that reduced supply and speculation drove up prices overnight," Hajewski says. Thankfully, financing continues to flow in the storage industry for new projects backed by strong borrowers. Still, some lenders are beginning to add more borrower requirements, particularly in response to overbuilding buzz. "Banks have continued to lend to developers during this cycle, but such loans have had tighter loan-to-cost limits, more personal recourse and more covenants than may have been the case in past cycles," Perry says. "Because of that, fewer development deals make it to the finish line, and developers have lower house limits, thus suppressing to some degree how many development projects they can pursue at any given time." According to Yardi Matrix, a data-services platform from Yardi Systems Inc., self-storage construction loan originations have dropped significantly over the last 12 months, Perry says. "That supports our belief that the cycle is getting into its late stages, and development projects are becoming harder to justify economically." A final factor contributing to the threat of overbuilding is the sheer size of today's storage facilities. Many new projects are larger than in years past, with some comprising 125,000 to 150,000 square feet or more, which means more available units in a single market. Why are sites getting so much bigger? Building a larger site is often preferred by developers who've had to jump through several hoops to get approval from city officials. Another bonus is construction costs for items such as elevators, gates and office build-out can be spread over a larger pool of units. However, to fill all this space, operators will often use specials, which can have a negative impact. 22 ISS I September 2018 www.insideselfstorage.com

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