By Jamie Lindau

The biggest concern self-storage operators have when adding boat and RV storage to their existing site is whether it will make money. In many cases, they've already received calls from customers requesting boat/RV storage, so they know they can probably rent units. The real question is, do they have the space necessary to accommodate the units, and if they do, will they be profitable?

Rental rates are a major factor in determining whether a boat/RV-storage project will make economic sense. The rent per square foot will be less than what you would charge on a traditional 10-by-20 unit, so you wont be making as much money. So why build it then? The answer is typically that your customers want it!

In communities where local ordinances prohibit outdoor boat and RV storage in residential areas, demand is higher. If you have a site with a lot of extra land, it may make sense to add these units, especially if you dont feel you could fill the entire site with traditional self-storage. Before you move forward, however, consider the types of storage you can build, the space required, and the design options available.

Types of Storage Structures

First, lets take a look at the different types of boat and RV storage. Typically, there are four, and each has advantages and disadvantages for the self-storage operator and his tenants. The more substantial the structure, the more expensive it will be to build, and the more protection and security it will provide to stored vehicles.

• A fully enclosed unit with a door. This is basically a large garage that is secure and may be accessed only by the renter. The unit is typically 15 feet wide by 45 to 50 feet deep, each with a 12-by-14-foot door. The door must be this size to accommodate the largest RV on the road. The cost to build this type of structure is more expensive per square foot than traditional self-storage because the buildings require more structure to support the large door. Additionally, the doors are more expensive. A power operator is also commonly used, further increasing costs.
• A three-sided canopy. This unit has one sidewall open, but the building is enclosed on the other three sides. The units are mostly protected from the environment but are not individually separated from other units. These are often used in areas prone to snow, as they provide more protection than open canopies.
• A standard canopy. With only a roof, this structure will protect the vehicles from the sun, but it may not protect them from rain, snow or wind.
• An outside parking stall. This is just an outdoor parking space. The only security for the client is the initial gate access onto the property.

Layout and Design

The layout of your boat/RV storage project is critical to ensuring future success. If your site is difficult to navigate with a large vehicle, customers may decline to rent, or worse, they could damage your buildings or their vehicle. As anyone who has provided this type of storage will confirm, the general public isnt very good at driving in any direction other than forward.

Make sure you provide plenty of access space to the boat/RV units, but without wasting too much land in the process. Youll need to make sure theres a nice flow to the property, where the RVs can easily get in and out without ever having to back up. This may require a second exit gate if there isnt adequate turning distance around the buildings.

Driveways should accommodate larger, heavier vehicles. In front of your large units, allow at least 50 to 60 feet to allow for the large turning radius needed to maneuver an RV. To minimize the necessary driveway, you can put the units on a 60-degree angle. This specialized design is normally used with canopies. If you use this approach, the driveway could be as small as 40 feet.

Return on Investment

The rental rates for canopies are typically much lower than for fully enclosed units, but the construction cost is also lower, consuming fewer materials and labor. The decision between canopies and enclosed units should come down to which will provide a better return on investment.

The fully enclosed building is typically the design of choice, as the additional cost to build is offset by higher income. Another benefit is you might attract other types of renters who desire large spaces. In many situations, when you build large units for boats and RVs, as many as 70 percent of the units will be rented by customers requiring bulk storage for other items.

Outside parking is the least expensive storage alternative since all thats needed is parking area. The only requirement is to ensure you have good access to the spaces. The area can be finished with concrete or blacktop drives, or just gravel in some rural situations.

If you plan to add parking spaces to your site, check to see if city zoning will allow the use. In many municipalities, outside boat/RV storage is prohibited because it is viewed as undesirable. In many instances, theyll want parking areas located at the back of the facility so vehicles are not seen from the road.

The return on outside parking is fairly small, but the infrastructure outlay is fairly minimal, so there is profit to be made. Most facility owners will use their land in this fashion until they know they have enough demand for more expensive units. Then they'll convert the space.

The biggest concern many owners have when adding canopies or outside parking are the prospects of vandalism and theft. Its imperative to increase the security of the site by adding cameras and other measures. Your rental agreement for boat/RV-storage tenants will also be different, just in case the customer goes into default and youre forced into a lien sale.

If you have available land, there is money to be made in adding boat and RV storage to your existing site. Just choose your storage type and style wisely, taking into consideration cost, customer requirements and potential return.

Jamie Lindau is a self-storage owner and the director of marketing and product development at Sun Prairie, Wis.-based Trachte Buildings Systems, which designs, manufactures and erects a full line of pre-engineered and customized steel self-storage systems, including single- and multi-story, portable storage, interior partition and corridor, and canopy boat/RV. For more information, call 800.356.5824; visit www.trachte.com.

Extra Space Storage Inc., a self-storage real estate investment trust (REIT), has completed its deal with Prudential Real Estate Investors (PREI) to acquire PREIs 94.9 percent interest in the companies joint venture, ESS PRISA III LLC. The deal, worth approximately $298 million, includes 36 self-storage properties in 18 states. Extra Space had previously owned just 5.1 percent of the joint venture.

All 36 properties had been operating under the Extra Space brand prior to the sale. They contain about 2.5 million square feet of net rentable space in about 23,400 units, serving an estimated 20,000 tenants. As of March 31, the properties' collective occupancy was approximately 87.8 percent.

Six of the self-storage facilities are in New York, five are in California and three in Tennessee. States with two sites include Florida, Maryland, Massachusetts, New Jersey, Ohio, Texas and Virginia. States with single facilities include Alabama, Arizona, Connecticut, Illinois, Michigan, New Mexico, Oregon and Washington.

The $298 million acquisition cost consists of approximately $160 million of cash consideration to PREI and the assumption of an existing $145 million loan, of which $138 million relates to PREI's self-storage equity. The loan bears interest at a fixed rate of 4.97 percent per year and matures in August. Extra Space intends to pay it off using available cash flow and proceeds from new loans expected to close  in the next 30 days.

Headquartered in Salt Lake City, Extra Space owns or operates 882 self-storage properties in 34 states and Washington, D.C. The company's properties comprise approximately 585,000 units and approximately 64 million square feet of rentable space, including boat storage, RV storage and business storage.

Marcus & Millichap Real Estate Investment Services, a commercial property investment services firm prominent in the self-storage industry, has promoted Jason Smith to senior associate in its Salt Lake City office. Smith had been a Marcus & Millichap associate since November 2006.

As a senior associate, Smith will continue to focus on the disposition of self-storage facilities. He is a member of the firms National Self-Storage Group. In the past five years, Smith has arranged the sale of more than $100 million in self-storage properties.

Jason is one of the leading self-storage investment professionals on the West Coast, said Richard Bird, regional manager. He has been the leading Utah self-storage agent since 2009 and we look forward to his continued success.

Smith is a member of the Utah Self-Storage Association and has other self-storage affiliations nationwide.

Marcus & Millichap has more than 1,000 investment professionals in offices nationwide and closed more than 5,000 transactions last year.

U.K. self-storage operator Big Yellow Group PLC has explored taking legal action against a proposed sales tax that would be imposed this fall on self-storage customers. Any appeal against the tax, however, would not take place until after Oct. 1, when the value-added tax (VAT) is set to be introduced.

"There may be grounds to challenge the decision, and we are currently considering our legal options," company officials said in a statement.

British Finance Minister George Osborne proposed in March to eliminate the United Kingdoms self-storage market exemption from charging customers sales tax. The move could mean thinner profit margins for U.K. self-storage operators and higher prices for rental customers. Currently, self-storage unit rentals are treated the same as renting commercial property.

Big Yellow and Safestore Holdings PLC, two of Britains largest self-storage operators, both have spoken publicly against the VAT, warning that it could hurt the U.K.s entire self-storage market. Big Yellow has said the impact of the tax would be absorbed largely by its business customers.

The threat of the impending sales tax has not significantly dampened Big Yellows quarterly performance numbers. The company reported total store revenue from its wholly owned storage sites grew 10 percent in the first quarter (year over year) to about $26.23 million. The companys fiscal quarter ended June 30. Although the governments proposal was made toward the end of the previous quarter, revenue during the first quarter increased 5 percent.

Big Yellow Self Storage has 54 wholly owned and 66 total facilities in the United Kingdom, with most concentrated in Greater London.

Despite the high auction money totals often bandied about on reality TV shows like Storage Wars, self-storage operators typically recoup much less then what they are owed on delinquent accounts, according to a recent survey conducted by the national Self-Storage Association (SSA). Overall, 47 percent of respondents indicated they are fortunate to get back 25 cents on the dollar for what is owed on unpaid rent and costs associated with processing a lien.

Regionally, self-storage operators in the Northeast recoup the least amount of auction-related revenue, with 31 percent garnering less than a dime for every dollar owed. Throughout the rest of the nation, the number of operators who recoup 10 cents or less on the dollar is about 20 percent.

The polling sample included responses from 400 self-storage operators across the nation. The survey carried a margin of error of +/- 5 percent.

Its a deal-killer. Even if it's the perfect location. You can prove the market demands more self-storage, present pretty pictures, line up your funding, design the next award-winning site, and have the perfect business plan. But if you dont have the proper zoning, your perfect deal is dead.

Finding good locations for self-storage is not that hard. Any rookie or would-be developer can almost intuitively walk into any market and identify the best location for a new storage business. It doesnt require years of experience in real estate to understand the basic characteristics of a quality site.

But it isnt just the price of that prime lot that may challenge the self-storage developer. Our target isnt just the quality location at the right price. We need the proper zoning or entitlements to build our desired use, or the best deal might never see the first tenant.

Sometimes, navigation of the zoning bureaucracy is necessary, even when self-storage is an allowed use. Older self-storage properties with rickety, rusty gates, fences and doors; poor managers; ugly curb appeal; and complacent owners have moved some zoning authorities to force self-storage businesses to conform with substantial restrictions, even where the use is allowed by right.

When a developer calls me with a zoning issue, Ill admit, I cringe a little. During my self-storage career, Ive seen "perfect" deals that never work out. Ive seen developers take all the correct steps to rezone a property and have wonderful success. Conversely, Ive worked with developers whove spent tens of thousands of dollars on a rezoning applicationfor terrific projectsto ultimately realize failure.
Attacking a rezoning application is never simple. But if youre considering a rezoning for self-storage, here are a few tips that might streamline your process.

Rezoning Guideline 1: Be a Pro

Throughout the course of launching any new business, the best strategy you can take is to be professional. In the case of applying for a rezoning, its likely youll be piecing together a tremendous amount of information, and navigating particular channels that may be unfamiliar. Developing a sound strategy and reasonable timeline for presenting a rezoning application is crucial to success. You should plan your rezoning activities just like you would any other piece of the deal-making processacquisition, design, funding, constructionwith contingencies.

A rezoning undertaking can be very risky. It can also be very expensive and ultimately fail. The reward of success might be substantial if the rezoning climate creates a barrier to entry. Or your rezoning case might set the standard for future cases, opening up opportunities for other developers. Identify and plan to mitigate the risks! Writing purchase contracts contingent upon rezoning can be a reasonable strategy to ensure you dont live with a deal that wont work.

When facing a zoning challenge, one of your first steps is to understand the rezoning process. A necessary rezoning that suits the overall comprehensive plan of your community could be an easy administrative process that requires a simple application and a couple of hearings. More complex cases, however, may be layered with public hearings, expensive submittals and never-ending bureaucracy.

Gather knowledge from the beginning. Visit your local planning office and understand the entire process. Read and understand the zoning youre trying to change, and the zoning youre requesting. Review the local community plans and comprehensive future plans. Research recent rezoning requests and applications that were approved and denied. Understand the process!

Make solid submittals. Being professional throughout the process requires you provide all the necessary data, then maybe some additional supporting documents. Feasibility studies, traffic-impact studies, artistic renderings, preliminary site plans, stormwater-detention plans, landscaping and green-space plans, pictures of similar projects, examples of similar rezonings, and all required documentation should be prepared and packaged professionally to ensure your application is easily understood. Anticipate the questions and prepare the best answers.

Rezoning Guideline 2: Gather Support

For a rezoning case thats not administrative, you need all the support you can gather, on the front side of your application. Before meeting with persons of influence about your project, develop your concepts to the point where they can be easily understood. This includes renderings and conceptual site plans. Sometimes a rezoning can be more easily changed by the existing owner of a property than by a new owner. Consider this part of your acquisition strategy.

Meeting with adjacent landowners is a also good first step after youve developed your concepts. Again, you must be prepared and understand how your new business might impact adjacent landowners and their individual interests. If it might be an eyesore, highlight and display the landscaping, lighting or architectural features you intend to include to diminish expected concerns. Its a fine line to walk when you begin showing concepts to neighbors and taking suggestions. But when gathering support, youll have to at least consider others ideas within reason. A little extra buffer, a privacy fence, alternative lighting plans or some landscaping might go a long way.

Zoning cases are often political. I dont like it, and maybe you wont, but its a reality. If you have friends who are influential, solicit their help. The more support you can gain, the better.

Be able to present your concepts as benefits to the community. Although some older self-storage properties are ugly, theyre pretty quiet neighbors. Self-storage can provide a nice transition between residential and commercial or other uses. It meets a regular demand. Modern facilities are professional, clean and attractive. As owners, we want to run good operations that serve a need in the community. Neighbors and residents want to hear your values. Its never too early to begin promoting your new business.

Rezoning Guideline 3: Build the Best Team

Spending a year or more in a zoning case can expend a lot of resources. Dont waste time wading into waters that are unfamiliar. Entitlement is a project cost, and if successful, will add a lot of value to your property. To do things right the first time usually requires expert guidance. Like any other segment of the development process, the deal-makers most valuable skill is in managing the team toward the end goal and ensuring quality.

Use professionals to put together your rezoning applications. Engineers, architects, market consultants and attorneys should be part of your rezoning team. The design professionals should understand the rezoning process and what it requires in terms of conceptual design and development strategy. Market consultants can strengthen your rezoning application if market data shows demand for additional storage, and attorneys can navigate the legal aspects of your unique application.

Engaging the right team and being certain they can work efficiently to move your interests forward can improve your rezoning application and add value to your property. You want professionals on your team that have synergy, experience and success on similar projects. Interview your prospective team members and be sure you measure their success not by effort, but by results.

Be Realistic

Know the rules and the alternatives before taking on a rezoning application. Are there other sites that can be immediately developed but yield similar returns? Will a mixed-use or out of the box application aid in allowing self-storage? Is there a higher and better use for the subject property?
Self-storage isnt always the best use for a particular site. If your rezoning case is an uphill battle, know the risks and quantify the losses you can withstand. Plan your rezoning with a solid strategy that identifies the determining factors on when to move forward and when to cut your losses.

Benjamin Burkhart is owner of BKB Properties and StorageStudy.com. He works closely with self-storage owners and real estate developers on site selection, acquisition due-diligence, market and feasibility analysis, and operations training. He can be reached at 804.598.8742; e-mail [email protected].

A Guardian Self-Storage facility in Pittsburgh is co-hosting an expansive art exhibit with the Andy Warhol Museum that celebrates the citys ingenuity and industrial roots. Factory Direct: Pittsburgh features works by 14 contemporary artists who conducted residencies at several Pittsburgh-based factories to produce art based on their residence factorys history, technologies, materials or processes.

Factory residencies ranged from two weeks to two months and were held at several sites, including ALCOA, Bayer, Heinz and the Robotics Institute at Carnegie Mellon University.

Although a self-storage facility may seem an odd space to showcase the works of contemporary artists, the 120,000-square-foot Guardian building sits at the eastern gateway to the citys historical Strip District. The area is noted for transforming from a retail/wholesale district by day to trendy clubs and restaurants at night. More than 100 years old, the Guardian building was previously home to a candy factory and multi-tenant housing, among other uses. When Guardian Storage Solutions owner Steven Cohen converted the building to house self-storage, the structure had been vacant for 20 years.

When planning the self-storage project, Cohen explored the idea of having murals painted on four large doors on the east side of the structure that would depict the buildings history, from horse-drawn deliveries to self-storage. He also saved many of the buildings original windows with the idea of having them painted and displayed along the facilitys interior walls, according to a press release on Guardians website.

The artwork created for Factory Direct: Pittsburgh can be viewed by the public at both Guardian Self-Storage and the Andy Warhol Museum through Sept. 9. The exhibit is open Tuesday through Sunday, from 10 a.m. to 4 p.m. Artwork at the Guardian facility can be accessed through the entrance marked Storage. Donations are welcome.

Guardian Storage Solutions operates 10 facilities in the Pittsburgh area and two in Colorado.

A developer unveiled his plans for a self-storage facility to the village council in Washingtonville, Ohio, last week.

Bryce Gillam told the council hes in the preliminary stages of the development, and asked the council if there were any requirements he in which he should be made aware.

The proposed site is a half-acre of vacant land on Boston Street near Cherry Street. Gillam said his preliminary plans for the self-storage facility is to model them after units on State Route 7, south of State Route 14.

Mayor Will Jones said he was certain there are no wetland restrictions at the proposed site, but encouraged Gillam to conduct research through the Ohio Department of Natural Resources. The village currently doesnt have zoning in place for the proposed site.