In a commercial that’s perfect for October, online self-storage marketplace SpareFoot uses some hocus-pocus to promote its brand in a fun way. The short video opens with a mini-magician who can make chairs disappear. On the receiving end of the magic trick are Marge and Bob. While they love the new additions, they’re also worried about where to store their newfound treasures.
The Argus Self Storage Sales Network, a national network of real estate brokers who specialize in self-storage, and CBRE Group Inc., a commercial real estate services and investment firm, have released separate reports examining the state of self-storage development and supply across the United States. The data from both publications is amassed from CBRE research, Argus accounts and several other sources, according to officials from both companies.
Though their statistics slightly differ, both reports conclude there’s been a large increase in new self-storage development this year. In its “Market Monitor” report, Argus estimates 750 storage facilities were built in the U.S. last year and expects 953 “new starts” in 2017. In its “Self Storage New Construction Report,” issued for the third quarter through its Valuation & Advisory Services Division, CBRE estimates 947 new projects are scheduled this year compared to about 600 last year. About one-third of planned projects come to fruition within a three- to seven-year development cycle, according to both reports.
Among all the projects either planned, under construction or in the initial lease-up phase within the 35 U.S. markets studied in the reports, the Dallas market has by far the most activity, with 164 new storage projects expected by the end of 2017. That figure represents 17 percent of all new starts among the markets. Dallas has 49 projects in the planning phase, 82 facilities under construction and 33 in lease-up. Those numbers were the highest in all three categories and represent more than 9 million square feet of new supply. The local market is already categorized as oversupplied, with an estimated 7.58 square feet of storage per person. The new product is expected to add another 1.24 square feet per capita, according to the reports.
Miami was second across the board, with 21 projects planned, 35 under construction and 14 in lease-up. The New York City metropolitan area was third with 16 planned, 27 under construction and 11 in lease-up. Miami’s 70 new projects are estimated to bring nearly 3.9 million square feet of new storage space into the market, a 20.1 percent jump in ratio of new supply to existing space, the highest leap in the reports. By comparison, the supply ratio in Dallas is expected to increase 16.3 percent. The big difference between the two markets is Miami is expected to remain an undersupplied metro area despite all the development activity.
Four markets—Atlanta; Austin, Texas; Denver; and Nashville, Tenn.—are expected to move from equilibrium to oversupplied this year, according to the reports. In addition, Sacramento, Calif., is tapped to move from undersupplied to equilibrium. Among those, Atlanta has the most new storage space coming online at nearly 2.7 million square feet.
Across all 35 markets studied, there are more than 280 projects in the planning phase, more than 470 under construction and about 190 in lease-up. “The start ratio of planned projects is the highest it has been in 10-plus years,” the Argus report states.
“Of the leading markets for new construction, Texas has been a state that has typically encouraged new development; New York has historically been underserved, while Miami has had pockets of significant demand, such as Coconut Grove,” said R. Christian Sonne, executive vice president of the CBRE Self-Storage Valuation Group. “We are also seeing increased demand in those markets impacted by the recent and historic hurricanes. Self-storage provides comfort for those who need to move belongings that could potentially be in harm’s way to a facility for safe keeping. In both Florida and Houston, this has meant increased demand at the same time supply has declined due to damage.”
Most new projects are being built in high-density Metropolitan Statistical Areas, with the overall size of storage facilities increasing. Neither report takes into account expansion of existing properties.
The six-page PDF publication from Argus is available for free download from the company website. The four-page PDF from CBRE is also available as a free download from the company’s Self Storage Valuation page.
Argus is a Denver-based network of real estate brokers who specialize in storage properties. Formed in 1994, the company has 36 broker affiliates covering nearly 40 markets.
The CBRE Valuation & Advisory Services Group provides appraisals, feasibility and market studies, underwriting due diligence, and other consulting services. It has a staff of more than 1,700 appraisers, architects, engineers and environmental scientists in more than 300 metropolitan areas around the world.
CBRE Group, a Fortune 500 and S&P 500 company headquartered in Los Angeles, employs approximately 75,000 employees, excluding affiliates, and serves real estate investors, occupiers and owners through more than 450 offices worldwide. CBRE offers strategic advice and execution for appraisal and valuation; corporate services; development services; investment management; mortgage banking; property, facilities and project management; property sales and leasing; and research and consulting.
Rick and Julie Strong, owners of Sunderland Self Storage in Sunderland, Mass., are building a second facility in the city. Sugarloaf Storage on Amherst Road will include six to nine buildings containing approximately 175 units on 4.5 acres, according to the source.
“I’ve been working on the project just over three years. We broke ground a few months ago, and we should be done by mid-November,” said Rick Strong, who first presented the project to the city zoning board of appeals in July 2014. A special permit was granted a year later and included nine stipulations covering site drainage, lighting and egress, and prohibiting outside storage. In addition, the buildings must feature muted colors to match the nearby Sunderland Elementary School, the source reported.
The Sugarloaf site is approximately one mile from the Strong’s original storage property at 5 Clark Mountain Road, which contains 190 units. The couple decided to open a second facility after turning away about 250 people seeking storage every spring. “When you tell that many people there’s no storage available, you’ve got to do something about it,” Rick Strong said.
The Strongs have opened other businesses in the area, including 10 Bridge Street Cafe and Restaurant and the former New 2 You Family Boutique thrift store. Julie Strong also owns Cocktails in Paradise Travel.
The Grove Mini Storage in Hattiesburg, Miss., hopes to inspire community members through motivational messages on its street-front signage each week. Self-storage owner Jerry Vines, 74, began posting the positive sayings at 2543 Oak Grove Road 15 years ago. His grandson and facility manager, 21-year-old Kyle Vines, has carried on the tradition for the past four years.
"[My grandfather's] always done motivational sayings," said Kyle Vines, a senior accounting major at the University of Southern Mississippi. "I enjoy looking for them and finding ones I think other people will enjoy."
Kyle Vines seeks quotes that are short and have a “nice ring to them," such as last week’s message: “Fear makes the wolf bigger than he is."
"I try to find ones that are easily relatable to a broad audience. I like the short ones that have a play on words, but you can still get something from them,” Kyle Vines said.
Jerry Vines began posting the inspirational sayings after seeing them on a friend’s business sign. Customers often tell him how much they appreciate the sayings. "[They say], 'It lifts me up,' 'I enjoy your sign,'" he said. "All positive sayings motivate you. All positive thoughts motivate you. Negative thoughts take you down.”
Kyle Vines hopes the messages will influence passers-by. "Honestly, I hope people will think about their meaning and it will impact their day in a positive way, no matter how small," he said.
The Grove offers climate-controlled and drive-up units, and uses video cameras as part of its security protocol.
Sell House Fast, a U.K.-based company that specializes in buying residential properties, has released data on the size of the U.K. self-storage market relative to the rest of Europe and identified the factors driving the consumer market. The island nation contains 1,432 operating storage facilities, which represents 47 percent of the entire European supply, according to a press release. The number of locations is expected to grow due to inefficient storage space in homes.
The number of U.K. self-storage facilities is more than the next three European countries combined: France (340), Spain (305) and the Netherlands (284). The consumer market is likely to continue to grow because the nation’s newest homes average just 76 square meters, the smallest by floor area in Europe, according to a study from Cambridge University. Though the British government has indicated it will review the current space standards for homes, 55 percent of residences in the U.K. “fall short of the accepted internal space standard,” the release stated.
“Though just 1 percent of the U.K. population currently makes use of self-storage, it is apparent by the sheer number of the facilities already existing—and continuing to arise—that there is a space concern in 2017,” said Robby Du Toit, managing director of Sell House Fast.
In the company’s survey of self-storage consumers, 40 percent indicated they are renting a unit because they don’t have enough room to store items at home. The second most popular answer was the need for storage while moving or in between properties at 21 percent. The third reason U.K. consumers are using self-storage is to create more room within their living space (11 percent).
“The fact that the U.K. stands at the forefront of self-storage [in Europe], with a massive 1,432 facilities at hand, also echoes sentiments of the housing crisis here in the U.K,” Du Toit said. “The houses built are not big enough. They are often not accessible to the majority, and even when they are, they are not fit for purpose. More needs to be done to police this issue, as we all know; but at least there are alternative options available to us should we need the service.”
Sell House Fast specializes in buying residences in the U.K., offering up to 90 percent of the property value, according to its website. The company pays for all legal fees and valuations and doesn’t charge any real estate brokerage fees.
Update 10/3/17 – Amy’s Attic is hosting its annual craft festival on Oct. 14 at its Harker Heights property. This year, the company is collaborating with the Central Texas Special Forces Association (CTSFA), Chapter 77, to raise $2,000 for Habitat for Humanity, according to the source. The free event, 10 a.m. to 2 p.m., will feature food, crafts, children’s activities and a costume contest, and raffles for gift baskets.
CTSFA is a nonprofit veteran-service organization with more than 9,000 active members belonging to 85 chapters in the United States as well as eight other countries around the world. The Texas chapter sponsors an annual fundraising raffle, donating 100 percent of the money raised to local service charities. Habitat for Humanity was chosen as this year’s recipient after CTSFA was granted 8 acres of land in Nolanville, Texas, on which it plans to build housing for disabled veterans in need.
“Not only were we looking for a credible, community-oriented association like CTSFA to team up with, we also wanted to find a receiving organization that has excelled in giving back to our community, and Habitat for Humanity is just that,” said Chandra Howard, Amy’s Attic senior manager and event chairwoman.
The free event, 11 a.m. to 3 p.m., at 800 Prospector Trail will feature more than 55 artists and vendors as well as food. Freddy’s Frozen Custard & Steakburgers will provide free frozen custard.
Children’s activities will include inflatables and a costume contest in which prizes will be given for best costume. Attendees can also purchase raffle tickets to win one of several prizes such as a recliner from Ashley, a grill or a $50 Visa gift card.
“We see this crafts festival as one more way to draw attention and much needed resources to benefit the kids,” said Ronnie Skinner, who owns Ashley HomeStores of Killeen-Fort Hood with wife, Sandra. The couple are also board members of the Boys & Girls Club of Central Texas. “We have personally witnessed Amy’s Attic’s drive and energy to support local programs, and [we’re] excited to team up with this group of professionals.”
“It’s an honor to team up with Ashley and the Skinner family,” said Bob Vamvas, director of operations for Amy’s Attic. “With our digital-marketing campaign, strategically located stores, involvement in local chambers, and now with Ashley HomeStore, we know this will be a successful campaign benefitting a great organization!”
In addition to craft sales, the event included food, free demonstrations, and raffles from vendors who sold baked goods, candles, clothing and jewelry. Children’s activities included a bounce house and the opportunity to take a free photo with a “Minion” cartoon character from the “Despicable Me” movie series.
About 400 people were expected to attend the event, which the storage operator hosts each spring and fall. A different nonprofit is chosen as the proceeds recipient of each event, and the emphasis is placed on a charity that provides most of its contributions to those in need, said Bethany Burkholder, event coordinator and marketing manager of Amy’s Attic.
“Amy’s Attic is wonderful to do this for us, and the money we make today will help pay for some of our operating expenses,” said Woody Hall, executive director for Furniture for Families.
Founded in 2004, Amy’s Attic operates facilities in Belton, Copperas Cove, Harker Heights, Killeen and Temple, Texas. It supports several organizations including the local chapter of the Boy Scouts of America, the Rainbow Room, an emergency-resource center, and Operation Phantom Support, which provides assistance to military families.
Founded in 2011, Furniture for Families collects gently used furniture and provides it free of charge to families, veterans and victims of natural disasters.
Many things can go wrong during the development and construction of a self-storage facility. Following are some of the key difficulties that are often unpredicted by builders and owners. These can lead to significant cost overruns, delays and even project shutdowns.
The most overlooked mishaps relate to environmental issues, permits/approvals, state department of transportation (DOT) requirements, cost estimating and bid specifics. All can be avoided with the proper research, planning and design.
With any self-storage project, there are three environmental issues that can spell disaster: wetlands, endangered species and soil contamination. Typically, you can’t disturb wetlands, ponds or water courses without significant risk of denial from the municipality, longer design and review periods, and additional expense. Often, there are wetland setback areas you can’t build in without commission approval.
Walk the site and obtain any existing wetland mapping on the property before you make an offer. Since wetlands aren’t always obvious to the untrained eye, have them delineated in the field as soon as your offer is made so you have a good understanding of their impact before the due-diligence period is over. If unknown wetlands are found on the site, the purchase price is typically lowered due to the loss of usable land.
An early check of the state’s endangered-species maps by your engineer will determine if your site is in a known area of conflict for wildlife. If it is, you’ll need an expert to conduct an onsite study to determine the potential impact of developing the site. If endangered species are involved, approval can take considerable work and time.
Typically, your lender is going to require a phase-one environmental study to ensure there’s no pollution or soil contamination on the property. The lender will order the study, and you’ll reimburse the company for the cost, which is about $2,000. It might even require you to employ one of its preferred vendors. In any case, I highly recommended doing the study before spending $50,000 to $175,000 on engineering and architectural designs. Contamination is more likely if the land or abutting properties have previously been developed or farmed.
There are many approvals and permits required for any development, on a local, regional, state and federal level, and from a wide range of agencies such planning and zoning, the architectural review board, utilities commissions, and others. Create your permitting list early with the help of your civil engineer, architect and attorney.
The cost for each permit and the time to obtain it should be determined and planned for ahead of time. Even one forgotten permit can cause a redesign, cost tens of thousands of dollars or delay a project for months.
Many commissions and boards require preliminary applications, which can add 30 to 45 days to the approval timeframe. Your applications will typically require a public hearing; however, the city first needs time to review the plans and publish a hearing notice. This means the hearing could be scheduled 45 to 60 days after you submit the plans. That initial meeting is generally followed by a second when votes are cast, typically a month later. Once a project is approved, the city must publish a notice in the local paper, which sometimes followed by a 15- to 30-day appeal period.
The point is, even a six-month purchase option might not give you enough time to design and obtain all the approvals you need. If you must pay for additional months, it’s best they be included in your option to buy.
If your driveway is on a state road, you’re required to get a permit from the DOT. The agency can restrict where your driveway is located and even limit the access (right in/left out) based on required sight lines, traffic counts and other items. It can even command expensive onsite and offsite enhancements to improve sight lines. For high-volume roads, the DOT may even require dedicated turn lanes.
Your engineer should review the sight lines and requirements as part of the initial project layout. Submit those plans to the DOT as soon as they’re complete. Don’t wait until the city has approved your plans or just before construction begins to get this agency’s input, as this can lead to delays and extra expenses.
Soft costs for self-storage development and construction are often significantly underestimated. The site and architectural design itself can run from $100,000 to $200,000 or more. In addition to listing the services they’ll provide, your engineer and architect should itemize any supplementary services required, including ones that must be provided by others. Here are examples of items that can fall between the cracks, creating additional costs and delays:
You also need to consider additional costs including the following, which can run another $300,000 to $400,000 or more:
Construction bids should include a specific list and description of the work to be done. However, site plans don’t always detail everything required to open the doors for business, and so items get excluded from bids, or they’re left unspecified. Consider the following examples:
If specifics for these items aren’t included in the plans, the contractor may exclude them from the bid or insert costs for inferior-quality products. You should provide as much detail in your plans as possible, even specific brands and product names whenever possible.
Because contractors only bid on what’s clear and specified on your plans (and often less), a 15 percent contingency fund is common and highly recommended. It’s critical that you and your designers review your plans to ensure they’re detailed and specific, and that any bids you receive are comprehensive.
Lack of research and planning on the above areas can lead to lost time and money, not to mention unrealistic financial projections. Pay careful attention to these items during the development phase to avoid costs and delays during the construction phase.
Marc Goodin is president of Storage Authority Franchising and the owner of three self-storage facilities that he personally designed, built and manages. He’s been helping others in the industry for more than 25 years. To reach him, call 860.830.6764 or e-mail [email protected]. You can also purchase his books on facility development and marketing in the Inside Self-Storage Store.
This case study by Janus International Group showcases the development of Tri-Village Self Storage in Columbus, Ohio, a six-story facility featuring wine storage as well as a wine-tasting room. Read how the owners overcame obstacles including a small land parcel, inclement weather and the permit-approval process to become a unique facility in a busy market.
Janus International Group is a global manufacturer and supplier of roll-up and swing doors, hallway systems, and relocatable storage units for the self-storage industry. Headquartered in Temple, Ga., the company has six U.S. offices as well as three locations in Europe and one in South Africa. It also has a joint venture in Mexico. Janus is owned by New-York-based Saw Mill Capital. For more information, visit www.janusintl.com.
Update 10/2/17 – Downing was cited by Montana Fish, Wildlife and Parks officials in July for seven misdemeanors related to hunting and fishing licenses he obtained even though he didn’t meet the state’s residency requirements, according to the source. The self-storage operator pleaded not guilty in August.
Downing allegedly made illegal purchases of resident hunting and/or fishing licenses five times between 2011 and 2016. He’s also accused of loaning an elk license to another hunter and helping his son obtain a resident license in 2015.
Non-resident licenses are more expensive than those issued to Montana residents, the source reported. A person must live in the state for 180 days to meet the residency requirement. A previous report indicated Downing had been a full-time Montana resident for several years.
"He is confident that these issues are nothing more than administrative oversights that will be resolved in his favor once he's had an opportunity to make his case," Downing's attorney, Christopher Williams, told the source.
5/18/17 – Troy Downing, CEO of real estate investment firm AC Self Storage Solutions LLC, has filed paperwork in Montana to run for the U.S. Senate in 2018 against two-term incumbent Democrat Jon Tester. Downing, 50, filed with the Federal Election Commission on May 8 and joins state senator Al Olszewski as Republicans vying for the midterm seat, according to the source.
"I want to be part of the solution preserving the Last Best Place," Downing told The Associated Press, referring to Montana's unofficial motto. "I'm tired of the dysfunction and the anger that we're seeing, and I think I have some interesting perspectives."
Though AC Self Storage is based in California and Downing has homes in both states, the entrepreneur has been a full-time Montana resident for several years, the source reported. He met with Republicans in Washington, D.C., when considering his candidacy and intends to reach out to Montana central-committee members now that his campaign is official. “I’m going to start going through the GOP list and introducing myself,” Downing said.
Downing posted Tweets in the last year that were critical of President Donald Trump, but he told the source he supports the Trump Administration and believes the president is on track to improve the nation’s economy and security.
Downing’s career includes a stint as a researcher and teacher of Internet technologies at New York University. An airplane and helicopter pilot, he’s an Air Force veteran who joined the military after 9-11.
Since 2014, he’s been a board member for Charity Storage, a nonprofit foundation that raises money for charitable causes. Downing has been a long-time supporter, funder, adviser and volunteer for many philanthropic organizations that support U.S. veterans, education and medical research, according to a previous AC Self Storage press release. He’s also a volunteer and supporter of the Warriors & Quiet Waters Foundation, a Montana-based charity that offers therapeutic recreational programs for injured U.S. veterans.
AC Self Storage Solutions has offices in Carlsbad and Newport Beach, Calif., and operates 12 facilities in California, Colorado, Nevada, Tennessee and Texas.The Self Storage Association of the United Kingdom (SSA-UK) announced the winners of its annual awards during a Sept. 21 dinner at the Hotel Du Vin in Birmingham, England. Apex Self Storage, Shurgard Self-Storage and Store & Secure all received top honors. The awards were presented by actor and media personality Shaun Williamson as well as sponsors, according to the SSA-UK website.
Tom Cowan, manager of the Apex facility in Glossop, England, received the “Extraordinary Achievement Award” for his dedication to property maintenance and exceptional customer service. Alistair Johnson accepted the accolade on Cowan’s behalf. The award was sponsored by Kuboid International, which specializes in the design, manufacture and construction of self-storage facilities in Europe.
Shurgard Self-Storage of Gypsy Corner in London received the “Facility of the Year Award” for large operators. The property recently added 300 units, according to its website. Duncan Bell, vice president of operations, and Jamie Taylor, district manager, accepted the award, which was sponsored by Rooks Rider Solicitors, a London-based boutique legal firm.
Store & Secure of Bournemouth, England, won the “Facility of The Year Award” for independent operators for the second time in three years. The company won the category in 2014 and was nominated in 2015 and 2016. Facility managers Lucy and Sophie Maidman, who are sisters, accepted the award, which was sponsored by PTI Security Systems, a provider of self-storage security products. Due to the high level of entries in the category, Storage Vault in Paisley, Scotland, was named the second-place winner. The company’s managing director, Anthony McAteer, was there to accept.
“This year’s awards saw a record number of entries from facilities [from] the length and breadth of the U.K.,” said SSA-UK Chief Executive Rennie Schafer. “It is a real privilege to celebrate the industry’s vision and commitment in such a high profile way. With the caliber of award winners this year, we are very hopeful of our chances in Berlin next month.”
The winners of the SSA-UK awards will now compete for additional honors to be announced during the annual meeting of the Federation of European Self Storage Associations, to be held Oct. 17-18 in Berlin.
The SSA-UK is the trade association for the self-storage industry in the United Kingdom. Its mission is to support member operators and vendors, promote best business practices, and raise public awareness.
Apex operates seven facilities in Ardwick, Cheadle, Congleton, Eastlands, Glossop, Radcliffe and Warrington, England. An eighth facility is under development in Hulme, England.
Shurgard operates more than 200 self-storage facilities in seven European markets. It’s owned by U.S. real estate investment trust Public Storage Inc.
Store & Secure opened its Bournemouth facility more than seven years ago. A second site in Basingstoke, England, was added this year.
