Inside Self-Storage

JUN 2019

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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isn't always better than standard drive-up units. It can make a lot of sense in urban areas, as it's typically the best way to maximize square footage on a small piece of land. In suburban and rural areas, it's added because operators can charge a 25 percent to 30 percent premium. As enticing as that might sound, I recommend you stay around 35 percent of your total square footage for temperature-controlled units. Some customers want the simplicity of drive-up access and don't want to pay that extra. Plus, if you can't fill those units, you end up renting them at a lower rate and your HVAC expenses eat up your profit. Any feasibility study you've completed for your site should include a unit-mix suggestion that addresses the demand in the market (if any) for temperature-controlled storage. Misconception 9: I Don't Need a Feasibility Study It can be tempting to bypass a feasibility study if you're developing a self-storage facility in your hometown, because you feel you know it better than anyone elseā€”the people who'll become your tenants, their price sensitivity and the general zoning laws in the market. However, developing without a study is risky. There can be any number of pitfalls you may not see. Calculating demand for a storage facility is difficult and best done by a consultant who has reviewed the lease-up results for many facilities and can evaluate your market dispassionately. Beyond the risk-mitigation element, a qualified consultant can recommend modifications to your site that may expedite lease-up, increase rates per square foot and lower costs. The small price you pay for a feasibility study will certainly outweigh the expense. While building self-storage might seem simple, it's actually complex. Before diving in, understand all facets of the development process so you're not caught unaware and unprepared. Kevin Bledsoe is vice president of brokerage for Investment Real Estate LLC (IRE), which brokers the sale of self-storage facilities in the Northeast and mid-Atlantic states. He's responsible for listings, sales, buyer representation, due diligence, financial analysis and feasibility studies in Delaware, New Jersey and Pennsylvania. To reach him, call 717.779.0804; e-mail kbledsoe@irellc.com. I already own the land, so that eliminates a lot of obstacles. The seller's real estate broker said it would be OK to build self-storage there, so I'm good to go. The land is zoned industrial so, of course, I can build self-storage. The banker will just be interested in my personal financial condition, not the deal itself. A 30-day due-diligence period in my purchase contract should be plenty. Self-storage is very simply constructed, so I don't have that many building standards to worry about. Source: insideselfstorage.com, "6 Common Myths About Self-Storage Development," by Jim Chiswell 28 ISS I June 2019 www.insideselfstorage.com

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