City Storage intends to develop “penthouse apartments” above its self-storage facility at 500 Indiana St. in San Francisco. The facility is currently five stories, but the business owners want to supplement revenue by adding a sixth floor with 17 residences, according to the source. The storage-unit configuration would be unchanged.

The project would add one three-bedroom apartment, seven two-bedroom apartments, four one-bedroom residences and five studios, the source reported. The storage business would also add a new lobby and 17 bike spaces for residents.

City planners appear to support the project, the source reported.

The facility serves the areas of Dogpatch, Mission Bay and Potrero Hill, Calif. In addition to traditional storage units, it offers wine storage. It currently has 28 indoor parking spaces, four large-capacity freight elevators, and two loading bays that can accommodate up to four moving trucks, according to the City Storage website.

City Storage also operates a self-storage location in Emeryville, Calif.

A partially constructed rock wall on the property of a Franklin Self Storage facility in El Paso, Texas, is to blame for flooding and home damage, according to three homeowners whose residences were impacted by heavy rains last week. All three damaged homes are on Swede Johnson Drive, which borders the storage site at 6950 Helen of Troy Drive. During the storms, the wall diverted the water into nearby backyards, residents told the source.

Construction of the wall was started within the past year but never finished, according to residents, who also said they hadn’t experienced flooding prior to the wall’s presence. "It had never happened in all the seven years that I've lived here, and we've had some pretty bad rainstorms,” said Cindy Garibay, who told the source her house sustained thousands of dollars in damage. “We've never had any kind of flooding like this."

The water was two feet deep in Garibay’s backyard, causing furniture and large potted plants to float about her yard, she told the source.

"It was so terrible that I thought we were going to lose the house," added neighbor Margarita Mora. "I think it was bad planning. I don't know about the engineers or architects or who did it, but everybody went wrong who had something to do with this."

The self-storage facility manager didn’t comment when approached by the source.

"It's a monstrosity," Garibay said. "I call it the great wall of El Paso. If it was inspected, why was it approved if it’s incomplete? If you look at it, it’s not complete. This wall was built to keep the storage units from getting flooded, but now it’s our problem, I guess."

Building permits were issued to the storage business, according to an unidentified city official, who said the municipality is investigating the cause of the flooding.

Franklin Self Storage operates three facilities in El Paso.

Polleys Coaches, a charter- and public-transportation business, received city approval this week to develop a mixed-use center in Gympie, Queensland, Australia, that will include self-storage, a gas station and a transport depot. The project will be constructed on 12.9 hectares of vacant land near Chatsworth Road and Pinewood Avenue. It’ll replace a $90 million commercial development that was approved in 2007 but never launched, according to the source.

The site formerly housed Strakers Sawmill. The Polleys application considers the self-storage facility a separate development from the gas station and depot. The storage project will include 40 units and a covered area for vehicle storage built on an existing concrete slab left after the demolition of the sawmill, the source reported.

The storage units will be situated on the southern boundary of the parcel, close to residential properties. The covered structures for vehicle parking will be built on the east and west ends of the units. Access to the facility will be off of Chatsworth Road via an existing driveway between two houses.

The gas station will be unmanned and designed for refueling primarily large, diesel vehicles, according to the source.

Although some concerns were raised by residents about increased traffic and noise from large vehicles, the project was passed without issue by the Gympie Regional Council.

By Marc Goodin

While many self-storage developers and owners believe construction budgeting is a science, anyone who’s been through the process knows it’s actually a cross between science and art. Even how and when you request an estimate from a contractor can have a significant outcome on a project’s final cost. Preliminary budgets can easily be directed higher or lower on a quick change to the price per square foot.

For self-storage, we typically refine multiple budgets long before we have our final construction budget. If you’re planning a new facility, I recommend sketching out a simple concept budget before you even search for land. This takes about 15 minutes and is outlined below. It helps you understand the basics of what goes into the development of a project and the money required to build it. It’ll also let you know if you should be seeking land for a single-story or multi-story facility and how much you can afford to pay for it.

Once you have your concept budget, you can update it using site specifics and typical per-unit costs to create your preliminary construction budget. These revised numbers are then plugged into your business plan, which includes typical operational expenses and local rental rates, to confirm the project is feasible.

Lastly, once you have a detailed site plan and the building design, you need to develop a final construction budget based on actual bids for your bank loan—again, to confirm the project’s feasibility.

Self-storage budgets can and do change quickly depending on your experience, the land cost and features, the economy, and where you plan to build. The following figures are for illustration purposes only. You’ll want to engage an industry expert to assist as you refine these numbers for your actual project.

Concept Budget

By way of example, let’s create a concept budget for a 50,000-square-foot self-storage facility for which no land has yet been purchased. The typical land requirement will be 4 to 5 acres for a single-story facility and 2-plus acres for multi-story. Construction costs will run approximately $40 per square foot for single-story and $70 to $80 per square foot for multi-story.

When owners project a lower cost per square foot, they’re often assuming everything is perfect, which is rarely the case, or they fail to include soft costs such as banking and professional fees, design costs, and a franchise fee (if there is one). Also note that unusual construction requirements such as ledge, significant cuts or fills, retaining walls, special zoning requirements, off-site improvements, etc., aren’t included here and can significantly increase costs.

As you can see, multi-story facilities cost more and can’t be phased, so they require significantly more capitol and initial equity. This is why they’re typically built by more seasoned developers. Many multi-story sites will even have higher price tags to offset the land cost per unit and generate a better return.

A word of caution: Never use a parcel of land simply because you own it or the price is low. It must have significant drive-by traffic, and the area must have an unmet demand for self-storage. With the help of a good commercial real estate broker, you can quickly determine the land cost in various markets to help you update the concept budget and determine your options moving forward.

Now, based on your liquid assets, you can start to determine the best opportunities for your needs and investigate land, design, and regulatory and banking requirements in more detail. At this point, you’re either ready to charge ahead or realize you don’t have the necessary capital.

If you don’t have the capital, don’t give up. Finding a more aggressive lender or a partner with either the land or cash equity may be a great option. Working with an experienced development expert can also help to reduce the construction cost. You can look at building a smaller facility, but smaller sites tend to be significantly less profitable and more of a hobby than a business.

Preliminary Construction Budget

For our preliminary construction budget, let’s assume you’ve found a land parcel that meets your requirements. You can now update your concept budget based on your specific land cost, proposed square footage, and initial conversations with lenders, designers, contractors and other experts. The better the concept and the more detailed the investigation, the better the estimate will be. A good conceptual plan must take into consideration the land quality and topography as well as local planning and zoning requirements.

Now, with your preliminary budget in hand, you can once again look at the overall feasibility of the project, including specific design options or restrictions. Until you establish your own rental rates and operating costs, you can apply standard rates being used in the target market.

Final Construction Budget

The final construction budget is critical, as it’s used for financing. If it’s wrong, it can cause significant cash shortfall in the short and long term. In my experience, actual costs are typically higher than the final construction budget for three reasons:

• Poor or incomplete design plans and a lack of detailed specifications
• Failure to consider all the soft costs
• Unexpected land conditions below the ground surface

Let’s look at these in more detail, starting with design plans and specifications. You’re building a multi-million-dollar business, and scrimping on the planning and design phase is dangerous to your success. Typically, you want to get two or three construction bids. This helps ensure you’re getting good pricing. If there are large differences between bids, dig deeper to find out why.

Plans should never be a substitute for good, written specifications and a bid package. A construction bid should summarize and detail the work to be completed and is often 30 to 40 pages long. It will address payment schedule, delays, additional work, unit cost for unknowns, and a host of other things in addition to the actual building. Following is a very brief outline of categories to be detailed in the construction-bid specifications.

One of the most critical is “general conditions/miscellaneous,” which represents requirements for all other sections as well as any items that don’t have a dedicated place of their own. Don’t assume anything—have the contractor put it all in writing here.

This section is where you should include a note that no extras can be started or will be paid if they aren’t approved in advance and in writing by the owner. Also include the payment schedule. For example, you might state that payment will be made within 45 days after receiving an invoice for completed work. You might also stipulate that 15 percent will be held back from each payment and paid within 30 days after the final Certificate of Occupancy is received. Additional items to cover under this category are construction-permits fee, temporary power, trash, survey stakeout, inspections, testing, insurance, material and workmanship guarantees, contractors as-built, and any items that aren’t included in the price.

Once you’ve addressed the general conditions, here are some other primary categories to include in the construction bid:

• Erosion control: Including silt fence, construction entrance, inspections, sedimentation traps, etc.
• Site work: Including mass-earth work, rough grading, final grading, sub-base and base materials, compaction, quantities, depths, etc.
• Paving: Including two courses, thickness, type of paving material, etc.
• Drainage: Including piping, catch basins, stormwater-detention basin, end-of-job cleaning, etc.
• Landscaping: Including topsoil, lawn establishment, landscape plantings, watering, sprinkler system (if required), etc.
• Utilities: Including water, sanitary sewer, gas, propane, cable, Internet, electric, etc.
• Concrete foundation: Including full foundation vs. floating slab details and requirements, how the foundation will be formed and finished, concrete strength, saw cuts, curing spray, minimum thickness, rebar, testing, etc.
• Building materials: Including insulation, HVAC for climate control, site-specific siding materials, warranties, roof painting, etc.
• Building erection: Including unloading, site-preparation requirement prior to construction, ownership of scrap, leftover materials, start and finish dates, etc.
• Office buildout: Including special exterior features such split block, doors, windows, flooring, ceiling, HVAC, electrical, plumbing, bathroom and fixtures, trim and finishes, carpentry, desks and cabinets, wall product displays, utility room, etc.
• Lighting: Including site and building lighting, fixture types, wattage, light timers, etc.
• Security: Including camera location and types, screens, recording equipment, door security, fencing, access-control gates, software, etc.
• Site signage: Including property and building signage, front-door signage, office signage, lighted signs, etc.

A 15 percent contingency fee should be added to the contractor’s bottom line. Again, the more detailed the construction plans, specifications and bid, the less likely that you’ll have extras and overruns.

The second reason for overruns is failure to consider all the soft costs. To get a complete project total, you must include everything required to get the doors open. Here’s a typical list of soft costs to include in the final construction budget:

The third reason for cost overruns is unexpected land conditions below the ground surface. Poor soils, high ground water or clay material can have an impact on design and construction. For a single-story building, your civil engineer can coordinate a series of backhoe soil test pits to observe and report on subsurface conditions including ledge, water and soil types. This information will help the designer do a better job and the contractor to provide more accurate pricing. For multi-story facilities, borings are typically required.

Whatever budget phase you’re in—concept, preliminary or final—a good self-storage consultant can help. Not only can he save you money (often several times what you’ll pay for his fee), he can help shorten development and construction time and ensure the product meets your needs and those of your end users. Engage the right professionals to assist in your project, and your budgeting will be easier and more accurate.

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.

DTC Technologies Pvt. Ltd., a Mumbai, India-based company that operates the BoxMySpace (BmS) valet self-storage brand, recently raised approximately $300,000 from a group of angel investors. The funding round included a consortium led by Farooq Oomerbhoy, co-founder of the early stage fund Orios Venture Partners. Other investors were Ritesh Veera and Singapore Angel Networks, according to a source.

BmS intends to use the money to fund expansion outside of Mumbai to other Indian cities including Bengaluru, Delhi and Pune. It also plans to increase its marketing and widen its portfolio of services, with the intention of targeting online retailers and small to medium enterprises, a source reported.

Modeled largely after valet-style storage operations that have emerged in the United States, BmS launched last year and offers by-the-bin storage targeted at residents who live in dense urban areas and don’t have adequate home storage. The company uses an online platform that allows customers to schedule free item pickup, maintain an image catalog of stored bins and bulky items, and schedule delivery of items to their home or office.

Items are stored in a secure warehouse. Customers can store by the bin or rent a set amount of space, either 64 cubic feet or 216 cubic feet, according to the BmS website. Bins are given a unique code to help locate them for retrieval when customers request home delivery of belongings. Delivery time is 24 to 48 hours, according to the company website.

BmS is confident that rising urbanization in India will increase demand for valet-storage services. “BoxMySpace aims to address the space crunch issues in metros by offering simple on-demand storage solutions which are safe, hassle-free and affordable,” founder Pratyush Jalan told a source. “Given the vast potential and dearth of storage options, especially in metros, we were surprised that such a service was not currently available.”

StoreMore, another India-based valet-storage operator, has offered services in New Delhi since 2014. It also has service in Gurgaon and Noida, India, according to the company website.

“Shrinking living spaces, dynamic work patterns have resulted in people adopting a transient way of life, necessitating the need for storage solutions,” Oomerbhoy told a source. “We are working closely with BmS to introduce this solution to not only Indian consumers, but given the scalable nature of the business will be looking to expand in other parts of Asia very soon.”

Self-storage properties are constantly changed hands, and Inside Self-Storage is regularly notified of these market transactions. Many are covered in detail on the ISS website and available for viewing on the “Real Estate” topics page. Following are additional acquisitions and sales that weren’t covered independently due to missing information such as buyer, seller, sale price or other relevant details.

Day Heights Self Storage in Milford, Ohio, sold for $1.7 million to a local self-storage operator. The property at 1360 State Route 131 encompasses 64,896 square feet of storage space in 470 units. Brett Hatcher, an investment specialist in the Columbus, Ohio, office of Marcus & Millichap, represented the seller, a limited-liability company.

Emerald Hills Closet Self Storage in Hollywood, Fla., was sold for $18.8 million to Safe Guard Self Storage, which operates more than 60 facilities in six states. The property at 3090 Sheridan St. is comprised of 128,797 net rentable square feet of storage space in 1,970 units. Situated on just over 7 acres, it was constructed in 1991, expanded in 1998, and has additional land for further development.

“The sales price is the highest paid for a single self-storage property in Florida to date. The seller did a phenomenal job maintaining the facility, and it will make a tremendous addition to the buyer’s portfolio,” said Luke Elliot, an associate in the Marcus & Millichap Tampa, Fla., office. Elliot and Michael Mele, senior director of the firm’s National Self-Storage Group, represented the seller in the transaction.

Next Door Self Storage in Crystal Lake, Ill., was sold to a limited-liability company. The property at 7209 Teckler Blvd. is about half a mile south of U.S. Highway 14. It encompasses 58,100 square feet of storage space in 579 units. Constructed in 1977, expanded in 1985, and renovated in 2013 and 2014, the facility is on approximately 4.19 acres.

Mele and Sean M. Delaney, investment specialist in the Marcus & Millichap Chicago Oak Brook office, represented the buyer and the seller, a limited-liability company. “Even though this was an older facility on the fringe of the [metropolitan statistical area], this sale showcased the buyer’s appetite to expand [its] presence within a primary market. We expect this trend to continue as demand continues to outpace supply,” Delaney said.

Add More Storage in Sandusky, Ohio, sold for $1.2 million to a limited-liability company. The property at 2908 Venice Road is on 5.69 acres and includes 401 storage units. Hatcher and Joseph Holloway, investment specialists in the Marcus & Millichap Columbus, Ohio, office, represented the buyer and the seller, a limited-liability company.

All Star Self-Storage in Fort Worth, Texas, was sold to a private investor. The property at 7400 N. Blue Mound Road is on two parcels totaling 4.95 acres. Built in 2008, the facility consists of eight single-story buildings comprising 72,775 square feet of storage space, and a two-story management office and residence. It’s near a U.S. Postal Service Center and 217 residential lots under development on an adjacent property. Brandon Karr, vice president of investments in the Marcus & Millichap Fort Worth, Texas, office, represented the buyer and the seller, also a private investor.

U Store, a 45,285-square-foot self-storage facility in DeSoto, Texas, was sold to a California-based private investor. The property at 1209 E. Belt Line Road is on two adjacent parcels of land totaling 3.6 acres. The facility was built in stages in 1974, 1982, 1985 and 2001, and features 365 units, 51 of which are climate-controlled. Karr and Danny Cunningham, an associate in the Marcus & Millichap Fort Worth, Texas, office, represented the buyer and the seller, a private investor.

Jodeco Storage, an 81,025-square-foot facility in McDonough, Ga., was sold for $6.1 million. The property at 2140 Jodeco Road was built in 2008 and has 525 units. Hatcher represented the seller, a limited-liability company, and the buyer, also a limited-liability company. He was assisted by broker Michael Fasano.

VIP Self Storage, a two-property portfolio in Fort Worth, Texas, was sold. The facilities at 9220 Oak Grove Drive and 6129 Vega Drive total 37,305 square feet of storage space in 367 units and outdoor parking space. John Arnold, Bill Bellomy, Michael Johnson and John Owens of Bellomy & Co. represented the Austin, Texas-based seller.

B.A. Emmons Self Storage in Killeen, Texas, was sold. The property at 1300 W. Stan Schlueter Loop contains 50 buildings situated on 8.8 acres. It’s comprised of more 100,000 net rentable square feet of storage space in 755 units, vehicle parking and seven retail spaces. Arnold, Bellomy, Johnson and Owens represented the Killeen, Texas-based seller in the transaction.

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.

Bellomy & Co. is a commercial real estate brokerage company focusing on the sale of self-storage, industrial, office and retail properties nationwide. It has offices in Austin, Houston and Lubbock, Texas.

Marcus & Millichap is a commercial-property investment firm with more than 1,500 investment professionals in offices throughout the United States and Canada. The company closed more than 7,600 transactions in 2014 with a value of approximately $33.1 billion.

Based in Crest Hill, Ill., Next Door Self Storage is owned by the Murphy Family. The company operates 13 facilities in Illinois and developing a new storage site in Algonquin, Ill.

Headquartered in Atlanta, Safeguard Self Storage was founded in 1989 and operates facilities in Florida, Illinois, Louisiana, New Jersey, New York and Pennsylvania. The company is owned and operated by Morgan Stanley’s Prime Property Fund.

An affiliated company of the William Warren Group (WWG), a privately held real estate company that operates the StorQuest Self Storage brand, has acquired SoCal Self Storage in Loma Linda, Calif., for $2.55 million, according to a press release from Bancap Self Storage Group Inc., the commercial real estate firm that brokered the deal. The single-story property comprises more than 38,000 rentable square feet and is near a retail center on a major street.

The seller was a privately held limited liability company affiliated with Polo Properties and SoCal Self Storage in Newport Beach, Calif., Bancap officials said.

The facility also features a manager’s apartment, rental office, video cameras and visible signage. “This is a great smaller property located in a busy shopping center,” said Dean Keller, president of Bancap, who was the sole broker in the transaction. “Now is a good time for both self-storage buyers and sellers, as we are seeing historically high prices and low cost of funds in virtually all markets of California and nationwide.”

California-based Bancap has completed more than $1.25 billion in self-storage sales, including independently owned properties, mid-sized chains and portfolios.

Founded in 1994 and based in Santa Monica, Calif., WWG acquires, develops and operates more than 100 self-storage facilities in Arizona, California, Colorado, Florida, Hawaii, South Carolina and Texas.

Scott Stubbs, executive vice president and chief financial officer of self-storage real estate investment trust (REIT) Extra Space Storage Inc., has been elected to the board of directors for ZAGG Inc., a global manufacturer and distributor of accessories for mobile devices. Stubbs has joined the board as an independent director, effective immediately, according to a press release.

In conjunction with Stubbs’ appointment, ZAGG announced its chief financial officer, Bradley J. Holiday, has resigned as a board director. The election of Stubbs keeps the ZAGG board at five directors, four of whom are independent.

Stubbs has served in his current positions at Extra Space since 2011, beginning as senior vice president of finance and accounting from the company’s inception. In December 2000, he became corporate controller with Extra Space’s predecessor company, according to the release. The REIT has been publicly traded since 2004.

"Scott's 15 years of experience in senior financial roles at a public company will add valuable expertise and strategic insight to our board of directors," said Cheryl A. Larabee, chair of the ZAGG board. "We appreciate his willingness to serve as a director and look forward to benefitting from his judgment and counsel."

Prior to Extra Space, Stubbs also served as chief financial officer for the Lyon Co. and was U.S. controller of Critchley Inc. He was a consultant with Neilson, Ellgren, Durkin & Co. from November 1992 through June 1995. He’s a licensed Certified Public Accountant and holds bachelor’s and master’s degrees in accountancy from Brigham Young University.

ZAGG and its subsidiaries design, produce and distribute mobile-accessory solutions. Products from the company's three brands—iFrogz, InvisibleShield and ZAGG—include device cases, gaming solutions, keyboards, power management and screen protection.

Headquartered in Salt Lake City, Extra Space owns or operates 1,146 self-storage properties in 35 states; Washington, D.C.; and Puerto Rico. The company’s properties comprise approximately 775,000 units and 85 million square feet of rentable space.