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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Page 36 of 63

are in high demand, a multi-story building combining smaller units with larger, single-story, drive-up units can push net rentable square feet and income higher without overbuilding. Keep in mind, too, that multi-story facilities aren't just for small urban or suburban sites. A 4-acre site, for example, might hold a total buildable footprint of 80,000 square feet; but a three-story, 50,000-square-foot building in addition to 50,000 square feet of drive-up storage space yields more rentable square footage. The gem of this approach is the ability to add larger spaces to the overall unit mix, while competitors are stuck adding smaller units like 5-by-10s and 10-by-10s. For developers willing to push the envelope in terms of rentable square footage, larger units might make it easier to attract more long-term tenants. Buildings with more than three stories require fire rating on structural elements, which adds considerable cost (as much as $10 per square foot) to the overall budget. Investment analysis almost always compares the lower cost and fewer units of three-story construction against the added building cost per square foot and subsequent higher revenue of adding rentable space with additional levels. Project Challenges Developers considering ground-up multi-story projects should understand that vertical construction, while generally efficient as an investment, presents unique challenges. First, staging is often an issue. Small sites don't have a lot of space for materials. Traffic control can be necessary to get materials and workers into and out of a tight site; however, experienced general contractors understand and plan for these demands. The liquidated-damages sections of your contract should specify reasonable timelines that require the contractor to plan for weather, transportation and general construction delays. Placing the roof on a multi-story building is a key milestone for the builder. Once most of the structure is protected A four-story Extra Space Storage facility in Midlothian, Va., owned by the author September 2018 I ISS 35

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