As the self-storage industry matures, building types, components and design continue to change. The developers who are building the right way are not imitating the facilities of the past. Self-storage developers should be aware of trends and limitations in building and construction, and know how to adjust their investment strategy accordingly.

Our tenants demand high quality, and through every step of our development process, so should we. Facilities that look secure and clean attract tenants who are value-conscious. That’s what we want! Developers who design site plans and curb appeal that satisfies local ordinances and requirements can simultaneously position the asset to be a market leader. It’s difficult to overcome a first impression, and that usually begins on the street level, not your side of the entry gate.

Multi-Story and Conversions

Good self-storage sites are difficult to find. In today’s market, a 1-acre lot zoned for a 30,000-square-foot footprint and multi-story construction can be of equal quality to the “typical” 3- to 5-acre site, so long as the market is demanding additional storage. Sometimes, the larger lot is just not available, making multi-story or conversion projects the only way to compete.

“We are definitely seeing more multi-story projects on smaller parcels, less cookie-cutter buildings, and more conversion projects,” says Terry Campbell, executive vice president of operations and vice president of sales and marketing for BETCO Inc., a manufacturer of self-storage buildings in Statesville, N.C.

Multi-story construction, with more structural building components, unique demands like sprinklers and elevators, and designated loading/unloading areas, cost more on a per-square-foot basis than single-story construction. Those increased costs are often partially offset by lower site-work costs.

Conversion projects often require less structural modification, but the overall goal is similar to multi-story: provide convenient access and movement through the building without negatively impacting overall security.

Key Components

Steel companies can tell you all about the pros and cons of certain components. Good steel companies, with salespeople knowledgeable about their products and markets, can give you terrific information on standing-seam roofs, gutters and downspouts, doors that are easy to operate and adjust, latches, and other steel-centric options. I’m not a steel expert, but I know all buildings are not created equal. Spend time with your building supplier, getting to know the details of different options and what they mean to your development costs and overall project strength. One of Thomas Jefferson’s famous rules applies here: “Never buy what you don’t want because it is cheap.”

Overall building design really can elevate your competitive standing. Each component you include or subtract from your design can impact your investment by affecting achievable rental rates, adding to the overall project cost and enhancing or detracting from your curb appeal. We want efficient construction, but we also want features we can use to beat our competition.

In some markets, taller ceiling heights demand a premium in rent. That’s not the case in all areas, so check yours before deciding to raise your eave height. On wider climate-controlled buildings, a slightly higher eave height might be necessary for hiding supply leads or in-ceiling air-handlers.

You can definitely blow the budget on security features, so know what’s important in your market. Lighting profile, access points, intercoms and parking layout are immediately recognized by your tenants. Indirect lighting, especially with changing colors, for example, attracts the eye of passers-by, where simple signage might blend into an otherwise bland landscape. What the customer sees, like landscaping and big-screen monitors in your office, are as important as what they don’t see or recognize, such as the number of cameras around your site.

Your office is where your customer hands you his money and signs your contract. You want it to be as comfortable as possible. Nice bathrooms, warm colors and a professional area to sign paperwork and complete transactions is important. Carefully consider the tenant interface during your design process.

Bright-white hallways reflect light but also look cleaner and larger than darker corridors. Drop ceilings look better and more finished than open or steel ceilings. Finished hallways with an epoxy paint, carpet or even a stained concrete will give your manager an advantage in his sales routine.

Keep your managers’ best interests in mind as you select building components and consider design. You want them to have convenient access to the controls of your store. Gate control, camera control, the digital video recorder, intercom, lighting, timers, battery backup and thermostats should be centrally located where staff can easily make adjustments, diagnose problems or monitor the overall integrity of the site. What you design and build ultimately leads to what your managers will sell to customers, directly or indirectly.

On the Horizon

It’s not just building-design trends and components that are changing or improving. States and municipalities using the updated 2012 International Building Code may require new self-storage construction to include increased fire-protection components.                                   

It used to be that as long as you installed fire separations under 12,000 feet, sprinklers would not likely be required. The 2012 IBC changed the rules so fire separations have to be every 2,500 square feet. Local building departments may require any building more than 2,500 square feet to have automatic sprinklers for “a Group S-1 occupancy used for the storage of upholstered furniture or mattresses.” This has the potential to add significant cost to a project.

Additionally, energy-calculation requirements impact storage developers. “2012 IECC [International Energy Conservation Code] requirements are requiring different insulation protocols that increase the costs to develop self-storage,” says Jamie Lindau, sales manager of Sun Prairie, Wis.-based Trachte Building Systems, a manufacturer and supplier of self-storage buildings. “But when we insulate buildings to be more energy-efficient, operating costs go down in the long run.”

Not all municipalities use the same building code or even have the same interpretation of codes. But as the developer and investor, you must know exactly what will be required as you plan your budget.

Whatever you build—or whatever you’re required to build—use it to your advantage in the sales process. In many cases, if you’re better than your competition, you can achieve a higher rent. Our tenants demand value. Is your new facility required to have more insulation and a sprinkler system, even though the guy down the street who built two years ago didn’t have to include those features in his store? Sounds like a premium feature, demanding a premium rent to me!

Benjamin K. Burkhart owns BKB Properties and StorageStudy.com. As a consultant to self-storage owners and developers, he specializes in feasibility studies, operations, management protocol and profit-strengthening strategies. To reach him, call 804.598.8742; e-mail [email protected].

Texas-based Advantage Self Storage has closed on a property in the Lake Highlands area of Dallas. The planned storage development is expected to comprise 65,900 square feet in 557 units and feature a mid-century modern design, company officials said in a press release.

This is the company’s third property closing in the last nine months. The company has acquired more than $20 million of self-storage in the last year, officials said. The latest transaction is part of a joint venture with Harrison Street Real Estate Capital LLC (HSRE). The two companies partnered last year to acquire and develop storage assets.

“Advantage Self Storage is very excited about closing on another joint venture with Harrison Street Real Estate,” said Rick Jones, CEO of Advantage. “This infill urban storage development will be an incredible addition to the Advantage and Harrison Street portfolios.”

The Lake Highlands site has high visibility in an area with high median household income, according to the release.

Based primarily in the Dallas/Fort Worth market, Advantage currently operates more than 25 storage facilities in Oklahoma and Texas, including some locations where it provides property-management services.

Founded in 2005, HSRE is a real estate private-equity firm with more than $6 billion in assets under management through commingled funds and public securities products. The commingled funds focus exclusively on the education, health-care and self-storage segments of the U.S. real estate market. The firm owns approximately $5.4 billion in real estate assets, including more than 33,000 self-storage units.

Update 6/16/14 – MiniCo Insurance Agency LLC has released the second video in its series on safety, loss control and other resources for self-storage facility operators. This new installment, “Preventing Slips, Trips and Falls,” is available at minico.com/safetyvideos and youtube.com/minicoinsurance.

The video addresses a number of risk factors that may be present at a self-storage facility and provides guidance to help owners, operators and managers minimize the risk of slips, trips and falls among customers and employees. Topics include property inspections, uneven surfaces and obstacles, wet and icy surfaces, and proper lighting for hallways and outdoor areas.

The U.S. Bureau of Labor Statistics estimates that slips, trips and falls account for 25 percent of all nonfatal and 15 percent of all fatal workplace injuries, MiniCo officials said in a press release.

“For business owners, slip-and-fall injuries can be one of the most costly types of claims,” said Mike Schofield, MiniCo President and CEO. “MiniCo’s goal in creating this video is to help self-storage facility operators and managers better understand the risk and provide information and tools to assist in identifying and mitigating hazards before an incident occurs.”

The first video in the series was released in March and provided a tenant-safety checklist for self-storage managers.

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3/27/14 – MiniCo Insurance Agency LLC, a provider of insurance products for the self-storage industry, is creating a series of safety and loss-control videos and other resources for self-storage facility operators. The company launched the initiative with its “MiniCo Safety Shorts” video series. The first installment, “Tenant-Safety Checklist,” is viewable on Self-Storage TV as well as at minico.com/safetyvideos and youtube.com/minicoinsurance.

“One of MiniCo’s key objectives is to create a valued on-demand learning platform in which owners and operators may direct employees for safety and loss-control training on a regular basis to enhance safety awareness and understanding,” said President and CEO Mike Schofield. “Our overall goal will be to create a destination for owners and operators to utilize when seeking loss control and safety resources.”

Future videos will address slip-and-fall prevention, proper lifting techniques, ladder safety, lock-cutting safety, and the safe use of equipment and machinery. Each video will include a link to a quiz designed to reinforce the viewer’s retention of the subject matter.

Phoenix-based MiniCo has provided self-storage insurance programs since 1974. The company offers multiple specialty property and casualty insurance products for a variety of unique industries and exposures and carries an A.M. Best rating of “A.” MiniCo is a member of the Aran Insurance Services Group of Rockville Centre, N.Y.

BRB Development LLC, which operates under The Lock Up Self Storage brand, received zoning approval last week to build a 90,000-square-foot self-storage facility in Woodridge, Ill. The two-story building near the 7900 block of Lemont Road will also include 16 parking spaces.

The Village of Woodridge Board of Trustees agreed to amend the zoning ordinance to allow the development. Architectural drawings handed out during the meeting show the facility will consist of a precast concrete and glass structure and will include climate-controlled units. Tenants will access the units through an enclosed, glass loading bay.

Rick Hielscher, a BRB Development owner, told the board most of the facility’s customers would live within five miles of the property. He also said construction would commence as soon as BRB receives permits from the board.

BRB operates 30 self-storage facilities in eight states, including 13 in Illinois.

 

Self-storage developer Kendall Breunig is seeking approval from the Greenfield, Wis., planning commission to turn a vacant warehouse in Milwaukee into an EZ Self-Storage facility. The property at 3645 W. Loomis Road formerly operated as Chocolate House Inc., a candy-making plant that closed in 2012.

Breunig’s plan includes renovating the existing 29,000-square-foot warehouse and adding a 12,000-square-foot second floor inside the west end. It also includes constructing two new buildings encompassing 7,500 square feet of storage space.

In 2013, apartment developer Metropolitan Associates proposed tearing down the warehouse and building two 30-unit apartment buildings, but later withdrew the plan, according to Chuck Erickson, Greenfield’s community-development manager.

Erickson said the planning commission reviewed the storage proposal last week and members were generally supportive. Breunig will share more details about the development at the next planning board meeting in July, according to the source.

EZ Self-Storage operates seven facilities in Milwaukee. The company offers residential, commercial and vehicle storage.

By Chester A. Gilliam

As we approach summer, self-storage operators should address all the security-maintenance tasks they didn’t get to before that first winter cold snap and added to their “I’m going to fix that as soon as the weather warms up” list. That list may grow as they take a closer look at their property and see all the additional problems that have been caused by snow and ice, snow plows, and tenants over the past few months.

There are many preventive measures you can take to ensure your facility’s security system operates seamlessly. Here’s how to keep your gates and gate operators, cameras, and additional security components in top condition.

Component Checks

All security systems need some type of maintenance. This might be simply cleaning, adjusting and lubricating, or more pressing issues such as broken hinges or worn and loose parts.

First, let’s talk about your access-control system, including gates and fencing. There are three areas to examine: chains or hinges, safety devices, and anchoring devices. Then we’ll look at cameras, and conduits and wires.

Chains or Hinges

• Lubricate gate chains and hinges once per month, and replace the chain on chain-drive systems every three years.
• Tighten the chain to the manufacturer’s specifications. If you don’t know the specs, a good rule of thumb is to have no more than 2 inches of drop on a gate with an opening of 18 feet.
• Inspect hinges for wear and replace them if you detect any damage. This is not only an operational problem but a potential safety issue.

Safety Devices

• Regularly test all safety devices, recording when they were tested and keeping a record of maintenance completed.
• If your gate has a safety-edge system, regularly replace the battery in the transmitting unit.
• Inspect safety loops to ensure they’re sealed and working properly.
• Inspect the area of your drive where the loops are installed and reseal them if they show any signs of wear or cracking. Sealing them will keep water and foreign objects from getting into the loop wires and causing problems with your gate operation.

Anchoring Devices

• Check all gate posts, fence posts and gate-operator stands to ensure they’re still safely in place. Winter freezing, thawing and refreezing can damage the concrete that holds them steady, so it may be necessary to reset them.
• Check ornamental fence panels at their attachment points as well. As snow is pushed against panels, it can cause them to come unattached, which can be a safety issue.
• As with the concrete and anchor bolts, posts can be damaged by chemicals and salt compounds used to melt ice and snow.
• This is also a good time repaint post and fence lines that are showing signs of rust or wear.
• Replace keypad stands that are leaning or bent. Inspect and correct the concrete and anchor bolts.

Cameras

• Check camera-view angles, as these can be moved due to snow sliding off roofs, wind and even severe rain.
• Clean the camera lens and glass, but take care to only use a mild cleaner. Never spray any cleaner directly on the camera or glass. Apply the cleaner to a soft cloth first, then gently clean the camera.
• This is also be a good time to check your digital video recording system. Review footage to ensure cameras are still recording and you have enough days of video storage.
• Review how to make a backup of recorded video and save it to another device. It’s better to review this now than discover you have a problem or cannot get video to save later when needed.

 Conduits and Wires

• Check for exposed wires and broken conduits. During the winter, metal conduits can separate, leaving wires exposed to the elements. PVC conduits will become brittle and can break or crack. If this has happened, water can get into the conduits, cause problems with your system and even create possible shock hazards.
• Schedule repairs with a qualified security specialist to ensure you’re meeting all city code requirements.

When Prevention Isn’t Enough

While these are just a few of the potential problems you might find during your maintenance check, all are fixable. If you don’t take care of these issues when they’re minor problems, they have the potential to become bigger headaches later. Preventive maintenance is better than emergency repairs any day.

If your security system is more than five years old, it’s time to upgrade. This includes not only cameras and keypads but gate operators. Just like everything else, these systems become obsolete and wear out. Parts become unavailable and repair costs add up. It’s better to be proactive than reactive.

You need to plan for these items in your site budget just like all other expenses. Having a security system that doesn’t work or is marginal at best is costly in time, money and tenant loss and can create liability for your business. Take pride in your site and show your customers you care by providing a quality, working security system.

Chester A. Gilliam is the owner of Wizard Works Security Systems Inc. in Castle Rock, Colo. He holds certifications in the design and installation of automated-gate systems as well as numerous certifications in video-system and access-control system design and installation. To reach him, call 303.798.5337; e-mail [email protected].

Australian self-storage operator National Storage REIT (NSR) is expanding its self-storage portfolio in Perth, Western Australia, through a recent acquisition, a new development and the expansion of an existing facility.

The company purchased a facility in Wangara, a suburb of Perth, for $10.9 million. The property includes 5,300 square meters of storage space with 579 units. The passing income yield projected for the first year is 9 percent excluding transaction costs, according to the source.

NSR also acquired 5,700 square meters of land in Kardinya, another Perth suburb, for $8 million with the intent to build a new facility. It will construct a 4,400-square-meter storage center with 417 units. The projected passing income yield for the first year is 10 percent once the property stabilizes, the source reported.

An expansion of an NSR-operated leasehold site in Cockburn is also underway. The development’s costs will be covered by the property owner, with additional rent incurred by NSR as its existing lease is expanded to cover the new building.

NSR operates 65 self-storage centers in New South Wales, Northern Territory, Queensland, South Australia, Victoria and Western Australia. It is the first independent, internally managed and fully integrated owner and operator of self-storage centers to be listed on the Australian Securities Exchange.

Real estate investment trust Sovran Self Storage Inc. has acquired the seven-property Storage Banc portfolio in the suburbs of St. Louis, Mo. The portfolio encompasses 404,578 net rentable square feet of storage space on approximately 42.4 acres. It consists of 3,279 storage units and 224 outdoor-parking spaces. The properties will be rebranded as Uncle Bob’s Self Storage:  

• 3850 Vogel Road, Arnold, 55,167 square feet and 499 units
• 1036 Pershall Road, Florissant, 46,216 square feet and 355 units
• 8524 Manchester Road, Brentwood, 52,130 square feet and 449 units
• 1475 Dunn Road, Florissant, 66,463 square feet and 542 units
• 485 N. Highway Drive, Fenton, 64,385 square feet and 522 units
• 1600 Woodson Road, Overland, 79,276 square feet and 722 units
• 3939 Mexico Road, St. Peters, 40,941 square feet and 414 units 

Constructed between 1976 and 2000, the facilities are a mix of all-metal and masonry construction and offer climate-controlled and traditional drive-up units. Unit sizes range from five 5-by-5 feet to 20-by-40 feet. Facility amenities include an onsite management office, digital gate access, individual door alarms and video cameras.

The real estate transaction also included three billboards, a cell tower and approximately 110,000 gross square feet of climate-controlled warehouse space across five separate locations.

Investment specialists representing the seller, a private entity, included Sean M. Delaney, vice president of investments in the Chicago/Oak Brook office of Marcus & Millichap Real Estate Investment Services; Brett Hatcher, a senior associate in the firm’s Columbus, Ohio, office; Charles “Chico” LeClaire, senior vice president of investments from the Denver office; and Adam Schlosser, senior associate, also of the company’s Denver office. They were assisted in closing the transaction by William Holman, a senior associate in the St. Louis office.

“This wasn’t a run-of-the-mill self-storage transaction,” Schlosser said. “We positioned the assets to capture their untapped potential by reworking the use of the existing warehouses from a mobile-vault operation to multi-level, indoor climate-controlled units. There were numerous moving parts to manage and, in the end, both buyer and seller received solid value.”

“This is a stabilized portfolio with substantial upside potential,” Delaney added. “All of the properties have strong historic operations and are well-positioned in mature infill rental markets with healthy fundamentals.”

Marcus & Millichap has more than 1,300 investment professionals in offices throughout the United States and Canada. The company closed more than 6,600 transactions last year with a value of approximately $24 billion.

Sovran operates approximately 500 facilities in 25 states under the Uncle Bob's Self Storage brand name.