Most self-storage door companies have the same goal: to bring a viable, competitive product to the marketplace, sell it, and make a reasonable profit. No one can argue with that. But buyers can do themselves a big favor by becoming smarter businesspeople and paying attention to a few basics when purchasing doors.

The first order of business is to choose a company that manufactures doors, not just a supplier. A supplier might be an independent broker, dealer or other type of middleman that doesnt have the knowledge or expertise to deal with the details of the transaction. With a manufacturer, you deal directly with the source. The company spends time and money to research and develop door improvements and innovations, and it understands all facets of the product, including design, manufacture, assembly, shipping and installation.

The Same but Not

Though all roll-up doors are designed to perform essentially the same functions, theyre not all alike. There are obvious differences for which to look. Some are more subtle than others, but equally important. Here are the three fundamental product attributes you should expect without exception:

Doors should be durable.

After all, they get a lot of action in the course of their lifeup and down, up and down, ad infinitum until they need replacement parts. So a door must not only be able to withstand the repetition of opening and closing, it should do so with ease. This is dependent on several factors, one of which is making sure the door has long-lasting springs that are calibrated to operate without adjustment.

Door curtains should be protected.

Because the nature of self-storage doors is to roll and unroll time and again, their panels must be strongly interlocked so they wont separate during repeated use. The materials used and the interlock design are critical. To avoid damage, its important that door tracks allow additional clearance for curtains to move freely during motion.

Even small features like self-lubricating polyethylene guards and dampening strips can protect against wear and misalignment and extend door life. Dampening strips have two functions. Theyre necessary to protect the curtains paint finish and ensure smooth operation, but they also control noise. Each time a door is raised, a properly designed door-stop system can ensure a safe stop every time. Check with your vendor to make sure its doors have these features.

Doors should weather storms.

Doors installed in areas of extreme weather or hurricanes, such as Florida, the Gulf Coast or the Mid-Atlantic states, should be reinforced and roll-formed to a configuration that handles high wind loads with minimum flex. What about weathering? Higher quality doors are painted with a durable finish so there is little chance they will discolor, fade or rust.

Shipping and Handling

Nothing is more frustrating than having your doors arrive on site and finding them damaged. This can throw off scheduling and cost money in lost time. There are variances in the way each company packs its doors for shipping, so ask your supplier how it ensures safe and secure delivery. Furthermore, door installations are often left up to the buyer, so its important that detailed and understandable instructions come with every shipment.

The Choice Is Yours

In the final analysis, your buying decision revolves around three issues: quality, price and service. Quality and price go hand in hand. If you want a good product, you must be willing to pay for it. If you shop based on price, quality will invariably suffer. Cheaper doors might even look shiny and work fine for a while. Its when things start to fall apart that you realize the error of your ways.

For this reason, warranties are an important aspect of the buying decision. Theres a big difference in warranties, which can seriously impact the cost of maintenance down the road. If you warranty is inadequate or expires too quickly, youll be left paying for repairs.

Finally, consider the level of service you can expect from your door vendor. Once the sale is finalized, expect a reasonable schedule of production and delivery to coincide with your needs. This is where dealing with a manufacturer can be a distinct advantage, because the company usually assigns a project manager or supervisor to monitor your order through the entire process.

Once the doors are delivered, expect advisory assistance from your supplier during installation, regardless of who does the work. This is a critical stage of the process. Proper advice, instructions and installation will ensure trouble-free door use for years to come.

When faced with the task of buying doors, take your time and shop around. Youll be surprised how much you can learn by comparison shopping. In time, youll understand why all doors are not created equal.

Gayel Weaver is the sales coordinator for BDH Systems, which manufactures door and hallway systems for new construction and conversions. BDH is a subsidiary of BETCO Inc., a single-source manufacturer of metal self-storage buildings. For more information, call 704.872.2999; visit www.bdhsystems.com.

Much of the increase in land costs is attributable to a robust real estate marketa sellers market in many locationsand the fact that storage developers are competing with major retailers for sites. Rolled up with the purchase price of land are hard and soft development costs. Hard costs include things like land fill, demolition, grading, traffic access and utilities. Soft costs include environmental testing and monitoring, legal fees for zoning and permitting, engineering and others. These are just a few of the indirect expenses affecting projects.

Financing fees are also increasing. As the Feds have continued to raise short-term interest rates, it has become more expensive for developers to pay back construction loans, says Eric Snyder of Buchanan Storage Capital. In many cases, the interest rate on a long-term, fixed-rate loan is lower than that on a short-term construction loan.

Finally, direct construction costs can diminish returns. Many municipalities now demand more aesthetic facilities with stone, brick, block or siding. These gingerbread additions increase spending. Building requirements for fire, wind, flood, mold and seismic activity also heighten expenses. Understanding the difference between firewalls and sprinklers, for example, and getting good advice from an architect, can aid in strategic decision-making at the early stages of development.

Achieving Stabilization

We hear from many lenders and owners that the self-storage market is generally overbuilt. This is confirmed by the facilities on which we are funding permanent loansthe properties have topped out in the 70 percent occupancy range, admits Snyder. However, we are still funding loans for owners who have capitalized on a unique location and leased up in less than 12 months. In other words, these opportunities are much more difficult to find, but they exist.

While stabilization can be a challenge in some markets, a healthy project, created with the assistance of qualified self-storage consultants and professionals, can achieve absorption. There are several key factors to measuring stabilized occupancy. All these considerations are relative to the strength of the market:

1. How long it takes to reach the target level.

2. How long the target level can be maintained.

3. How much discounting occurs and whether it impacts economic vs. physical occupancy.

4. How much equity is required to fund the construction loan, and the anticipated return on investment.

Thanks to assertive lenders, stabilization is less critical to financing than in the past. Permanent lenders have become much more aggressive in their takeout of construction loans, so a developer only needs to achieve stabilization for three months prior to loan funding, says Snyder. In the past, lenders required 12 months of stabilization prior to funding a permanent takeout loan.

Is It Boom or Bust?

The bottom line is location. A poor location will likely destroy the possibility of rich rewards. Its critical for developers to understand site selection, particularly as it pertains to self-storage. Traditionally successful locations carry new risks in the face of increasing competition, which can result in an overbuilt market.

Most boom busters correspond with institutional-grade sites, which are readily sold to aggressive self-storage buyers. They leave tremendous opportunity for entrepreneurs to find niche markets, developing vertically rather than horizontally, as many institutions are likely to do. Sometimes a sites value has to be created. Developers shouldnt let this opportunity hinder their pursuit, though they should ensure the site is saleable.

The key to development in todays environment is homework, homework and more homework, advises Jim Chiswell of Chiswell & Associates LLC, a self-storage consultant. Site selection cannot be left to chance, or abandoned because you already own the land. Also, it isnt enough to have deep pockets. The basic formula for new-project success is still in place. Opportunities in our industry still exist, but using caution and getting advice upfront from self-storage professionals has never been more important.

The Path Less Travelled

Seeking out conventional markets in which the basic tenants of site selection easily apply is a sound approach. However, if you are flexible, there are less-traveled paths with higher risks but promise for rich rewards. Some of these opportunities include:

• Big-box conversions
• RV and boat storage
• Rural markets
• Lights out stores
• Horizontal-market conversions
• 100-percent climate control
• Mobile-mini hybrids

A reputable consultant should be able to guide you through the labyrinth of risk analysis, alerting you to higher hazards.

Is it too late to set sail with self-storage? Not for hard-working , innovative, research-driven entrepreneurs who are willing to test the principles of supply and demand. Do your homework. Do more homework. Be well-capitalized. Dont rush into transactions. Create value. Build wealth.

RK Kliebenstein is the president and CEO of Coast-to-Coast Storage, a self-storage consultancy firm. From feasibility studies to financing, Mr. Kliebenstein has a wide range of experience and expertise in development and acquisitions. He can be reached at 877.622.5508, ext. 81.

Constructing a self-storage facility is a huge investment, and a customer base is no longer guaranteed. Before you make a million-dollar mistake, consider some of the following issues. The better you build your site, the better you can market it in the future.

Before you even think about construction, youll need to invest in a feasibility study. Some developers ignore this step, which is a bad move. Ive seen people fall in love with a piece of property and build on it, only to discover it wasnt a viable location. Ive seen others conduct their own feasibility studies and regret it. Even if you have a real estate background or youre a veteran storage owner, its always wise to get an unbiased opinion from a qualified expert. No matter who you use, make sure he can provide hard numbers as well as understand the marketing perspective of the property.

Site Selection

When choosing a piece of land, youll often find you can steal a piece in an undeveloped area or spend a bundle on the premier lot in town. Your best option is usually somewhere in between. Unless you have unlimited funds and can afford to wait several years to break even, avoid the high-priced land in the best location. Instead, take a forward-looking approach and try to anticipate which areas may be blossoming.

When you have a choice to buy more or less land, always buy extra. As long as you can afford it, youll never regret having bought a larger parcel. Inevitably, youll want more space, whether to build another building, add boat and RV storage, or sell off a piece for a profit.

Survey the Competition

Before you build, research your competition. This survey can be completed in a few weeks and should be done concurrently with the feasibility analysis. There are several ways to accomplish the task, but a simple method involves drawing a 5-mile radius around your facility on a map (if youre in a rural area, use a 10-mile radius). Then visit every facility within the area youve identified, pretending to be a potential customer.

Bring a notebook and write down all the things you like and dislike about each site, looking at amenities, physical attributes, staff, etc. Try to determine the level of occupancy at each facility. Most operators wont willingly share this information, but its helpful if they do.

Unit Mix

Unit mix is often a tough issue for new self-storage builders. There are two key things to consider when deciding the number and size of your units. First, which of your competitors unit sizes are almost fully occupied? These are the sizes you definitely want to offer. Keep in mind, however, that every site is different. What works at one may not work at another. Attempt to build with flexibility so you can make adjustments to your unit mix if necessary. This brings us to the next point: If possible, build in stages. This will allow you to gauge demand for specific sizes in your area and add units accordingly.

Amenities

Building amenities into your site will increase your overall construction budget and, ultimately, the facilitys profitability. Consider moneymakers such as individual door alarms or climate control. Ancillary profit centers are always worthwhile. The trick is finding the ones most attractive to your target market. Choose amenities that will lend your site a unique selling point and help you battle your competition.

The Right Manager

A facility manager can make a break or business, so dont treat hiring as an afterthought. Have the right manager in place and trained before you open. You can hire someone with self-storage experience or find someone outside the industry. In some cases, experience can be a con if the manager has bad habits or doesnt possess a marketing mentality. It may be better to employ a novice and train him to your expectations. More important than storage experience is sales experience.

A Marketing Plan

Finally, you need a marketing plan. When it comes to promoting a facility, victory is the result of many small efforts, not just one big push. Some owners think a Yellow Pages ad is all they need. This simply isnt the case. Just as site construction involves a lot more than throwing up a building, a marketing plan includes lots of interconnecting elements. Pay attention to marketing details from the planning stages of your site, and youll greatly improve your chances for success.

Fred Gleeck is an expert in the field of information and seminar marketing. Hes also the author of more than 10 books and an accomplished coach and consultant. To receive his insights regularly via e-mail, send a blank message to [email protected]. For more information, visit www.fredgleeck.com.

Longevity

A standing-seam roof provides long-term performance. Its snap-together and field-seamed versions are engineered for strength, durability and weather-ability. The accompanying photos show 3-inch trapezoidal systems that have weathered unfriendly environments for more than 25 years. With virtually no wear, their maintenance costs are nominal.

Standing-seam roofs are typically made of 24- or 26-gauge steel manufactured from high-strength Galvalume, a special type of hot-dip galvanized steel sheet with a coating of 55 percent aluminum, 43.4 percent zinc and 1.6 percent silicon. These roofs are produced to ASTM A792/A792MAZ50 or AZ55, and their seams feature factory-applied mastic to ensure a water-tight seal.

Design Flexibility

A majority of self-storage buildings are made with steel columns and roof purlins on very low slopes. When using a concealed-fastener roof system, the panels snap or are seamed together over a sliding clip fastened to the purlins below. To provide maximum efficiency, the floating clip can only be installed when the tab is centered in the clip base.

The advantage to roof panels that interlock over floating clips is they have the ability to expand and contract as the temperature changes, instead of pushing and pulling at the fasteners as in a screw-down roof system. Because the standing-seam roof floats, it has a longer lifespan. In addition, with no exposed fasteners inside the building envelope, theres no way for water to penetrate.

On structures other than standard storage buildings, such as a managers residence, office or canopies, a steeper slope is often used to provide a more appealing look. This opens the door to several roof-panel options. On a steeper slope, a vertical seam panel is the ideal choice. It offers simple installation, and the trim work is efficient, maintaining the integrity of the overall system.

Aesthetics

As the self-storage industry has matured, the architectural designs required by planning boards and development covenants have become more sophisticated. First-generation styles are giving way to multistory buildings and structures with features such as glass corners and brick or stucco exteriors. The accompanying photo shows what can be done with a standing-seam roof system. With coordination between client, architect and manufacturer, almost any design can be accomplished.

Low Maintenance

When it comes to roofing, almost any properly installed system will work well for the first year, but what happens as the facility ages? Unlike flat built-up roofs that require frequent maintenance, a standing-seam roof will offer 20 years and more of trouble-free performance with little or no time or expense. Theres no need to constantly replace fasteners or caulk penetrations. The only necessary maintenance is to keep the roof clear of debris.

In addition to saving money on maintenance fees, a standing-seam roof minimizes energy costs. Because its installed over an adjustable clip, it doesnt crush the insulation, helping preserve the insulations R value and keeping HVAC costs to a minimum.

Code Approvals

The permitting process can never be taken for granted. The last thing you want to hear before your permit gets signed is your building doesnt meet all the codes and specifications for your area. Standing-seam roofs have been designed for high-profile projects in any location. For example, the 3-inch trapezoidal panel has been approved by Under-writers Laboratories, Dade County, Fla., Factory Mutual, Corp of Engineers, ICBO (International Conference of Building Officials) and ASTM (American Society for Testing and Materials).

Warranties

A 20-year materials warranty is customary for a standing-seam roof system, considerably longer than the standard protection for builtup and single-ply roofs. Long-term warranties are even offered for weather-tightness on standing-seam roofs, including those with a 1/4:12 slope. Most reputable manufacturers wont offer such a warranty for a screw-down system, as it will almost always leak, no matter how well it is installed.

Certified Installers

When choosing a roof installer, you can use one certified for your specific product. Although the systems appear to be similar from vendor to vendor, each has a particular design. A certified installer will have attended the manufacturers school and installed a certain number of square feet of the product. In addition to certification, ask for documentation of the installers license and insurance.

The self-storage market demands an attractive, trouble-free, durable roof product. Available in many styles and colors, a standing-seam roofing system meets that need and is here to stay. When designing your facility, consider the investment being made and use the best materials on the market.

Stephen Wilson is the Southeast regional sales manager for Miller Building Systems Inc., which designs, supplies and installs a full line of pre-engineered metal buildings, including single- and multistory, climate-controlled self-storage, modular buildings and rigid-frame structures. Wilson has 25 years of experience in the manufacturing and sales of pre-engineered steel buildings. For more information, call 888.323.6464; e-mail [email protected]; visit www.millerbldgs.com.

Our annual Construction & Development Edition, published each September, divides readers into several camps. On one end of the spectrum are those eager to consume the information contained within: new owners, developers and investors, as well as established operators interested in expansion and emerging building trends. At the other end are those who would gladly gather every copy and burn them all in a big, beautiful bonfire at their next BBQ.

Why? Because they feel the industry is already too populated. They would rather we not encourage new entrants to self-storage, let alone tell them how the whole process works. Why not just pull the money directly out of our pockets! they cry. Its as good as giving away our business!

As a journalist, Im not one who believes general information is proprietary. If readers dont turn to us, they will look elsewhere for the knowledge they seek. And anyway, theres no stopping the influx. The word is out on self-storage and has been for quite a while. So let them come. But let them not muck the waters with bad projects and publicity! Lets teach them to do things right.

Where do we send industry novices? Where does anyone go when they want to learn something? School, of course. Enter the Developers Seminar. While the Self Storage Association has ceased to offer its periodic tutorials on the subject, other industry experts have stepped forward to fill the need.

This month, for example, RK Kliebenstein of Coast-To-Coast Storage and John Wilson of Construction Processes International, both well-known self-storage players, are hosting a seminar for new owners at Caesars Palace hotel in Las Vegas, Sept. 7. Taught by seven of the industrys most recognized vendors, the full-day event is tailored to those interested in developing a new project or learning more about the industry, or small operators who want to grow their business.

The seminar will touch on all the most critical aspects of developing and building self-storage:

• What to expect from an investment
• Market and site selection
• Feasibility and due diligence
• Financing
• Construction costs and essentials
• Site management
• Choosing the right support team

Attendees are promised top-notch information as well as the opportunity to build a strong network of industry professionals and suppliers. For more information, refer to pages 40-41 or visit www.developingself-storage.com.

Theres no magic formula for self-storage success. The processes involved in site selection, market research, zoning, facility design and construction are not secret. All it takes is common sense, research, proper planning, the right professional support, money, and perhaps a little bit of luck. Arm yourself with accurate knowledgeregardless of the sourceand you can do more than construct a facility; you can help build a better future for the industry Heres to better building,

 
Teri L. Lanza
Editorial Director
[email protected]

Metal has also changed the face of self-storage, whose early construction began with block walls, block or sheetrock partitions, built-up roof systems, and small swing doors. Now, metal roofing and cladding are the most widely used components in the industry. Steel provides more than a quick, economical method of construction; it requires less maintenance than other materials. It also offers flexibility when it comes to framing, exteriors and roofing.

Framing

Self-storage facilities can be constructed of factory-primed red iron or galvanized steel members in a variety of designs. Metal members come in several shapes and sizes, which result in as many framing methods. Some of the most popular systems include load-bearing, post-and-purlin, beam-and-purlin, clearspan, rigid-frame or a combination thereof.

All these options vary in quality, so choose your supplier carefully. Metal comes in different gauges (thicknesses) and tolerances. Most suppliers use steel with a minimum 55 ksi yield strength to meet engineering requirements. The higher the yield, the stronger the steel; therefore, yield strength correlates with cost.

One way to ensure youre getting the proper steel is to request its mill reports. A qualified architect or engineer can also help determine the quality and applicability of materials. Every municipality has its own building codes and requirements, so make sure your supplier can meet those standards.

Exteriors

Most steel frames work well with popular exterior finishes such as block, EIFS (synthetic stucco), stucco, brick, concrete tilt wall and cladding. Wall applications come in a variety of profiles based on preference or architectural requirements. They can be multi-rib with various spacing, smooth finished, embossed, textured, corrugated, colored and insulated.

Metal wall panels come in an assortment of finishes and colors that can give a building a unique look. Pre-painted systems use Kynar or siliconized polyester over a galvanized or Galvalume substructure. Some wall panels can even be used for structural support to achieve required engineering values.

Cladding is the most economical product for exterior wall finishes. Its a low-maintenance product that lasts much longer than many other materials and can be used in conjunction with other products to achieve architectural appeal.

An aerial shot of Castle Hill's metal roof and building.

Roofing

A metal roof is one of a self-storage owners best investments. It can come in an array of styles ranging from the less-expensive screw-down roof to a high-end standing-seam roof. Metal roofs can be galvanized or pre-finished with color or Galvalume. Because of its level of performance, Galvalume is the most common finish. It offers durability and has been proven to outlast G-90 galvanized steel up to four times. It also provides excellent reflectivity. When properly combined with insulation, it can result in a cost-effective, energy-efficient roofing system.

Your Supplier

Its important to know your metal supplier stands behind its products. Ask for a sample warranty and read it carefully, as warranties vary from one vendor to another. In addition, there are separate warranties for Galvalume and pre-painted products.

Its also wise to check your suppliers references. Know how the company performs in the supply and erection of its buildings, as well as how it addresses problems and warranty issues.

Just Metal?

Is metal just metal? Not anymore. For self-storage, its the quickest, most economical method of construction. In todays market, building with steel provides more flexibility than ever, with multiple options for framing, aesthetics and roofing. Developers and contractors are getting the best value for their projects by using metal components.

Justin Farris is the sales director for Capco Steel Inc., which specializes in the design, engineering, supply and erection of metal-building systems for the self-storage industry. Based in San Antonio, the company is licensed from coast to coast and has built more than 22 million square feet of self-storage in 42 states. Capco supplies and erects metal framing, roofs, partitions, wall cladding and canopies for projects ranging from simple conversions and single-story buildings to complex five-story structures. For more information, e-mail [email protected]; visit www.capcosteel.com.

A rabbi was once asked to answer the ancient Zen question: What is the sound of one hand clapping? He responded, Had you done a good job clapping with both hands, this wouldnt be a question. As in any business, there are sages and fools in our industry. Between tradeshows, seminars, magazine articles, associations, etc., theres a lot of information out theresome good, some bad. Sometimes theres more than you need or want to know. So how do you find the right place to start?

Before Thought

Every week, self-storage builders get calls from excited novices who say, Im ready to go! Lets get started! When asked for details about land, financing, concurrency, building size, etc., their response is, I dont know. But hurry up and get started! Heres where we can apply the Zen concept of before thought, otherwise known as What in the world wasnt I thinking?

A metal-building manufacturer may not be the best initial point of contact. While he usually wont mind visiting with you about storage and construction, a responsible vendor will refer you to an industry consultant for a feasibility study and pro forma. If land and financing are already in place, a good design-build general contractor with storage experience is the best starting point.

The next round of excited phone calls builders receive is from people who say, Such a deal I got on this piece of property! Its perfect for storage. But they still need to answer some pertinent questions. Is the land properly zoned? Are there good access, egress, visibility and traffic count? What is the buildable area, taking into consideration setbacks, easements, wetlands, retention, etc.?

These are questions to be answered before you commit to buying a property. If you have a good premonition about a particular piece of land and the price is right, by all means, tie it up. However, always stipulate that a final agreement is contingent upon necessary details. Leave yourself a way out. This is where an experienced consultant can help provide answers before you buy.

Zen Masters (Catching Two Fish)

A good pro forma will tell you how many square feet of storage space you should build; and a thorough market study will reveal the type and size units that will provide the best return in your area. Now youre ready for a site layout. Should you get in touch with the building manufacturer now? Not yet, Grasshopper.

Building a self-storage facility is a fulltime job. Before you begin, consider how much you will be involved and whether to hire professional support. Local subcontractors and suppliers can provide input on building design, but at some point you need a guru to pull it all together. An experienced design team will add cost to your project, but it will also add value. Experts can help you avoid unforeseen pitfalls and reveal timesaving shortcuts that reduce spending.

Some new builders boast about how they cut costs by not using an architectat least at the beginning of the project. By the end of the endeavor, theyre complaining about how much all the problems cost them. Its one of those tough Zen lessons: Sometimes we spend money while trying to save money.

Theres also an old Chinese proverb that says, The man who tries to catch two fish at the same time usually catches neither. When determining how much you will be involved with building construction, consider the time that will be taken away from your other businesses and ventures. Remember the last time you bought a piece of unassembled furniture to economize? Several hours into assembly, you wished you had help, or at least better instructions. Now imagine that on a much grander scale.

The Path

Actually building a project is the easy part. Getting to the point of readiness can be difficult. Even once you have your demographics, feasibility study, pro forma, financing, plans and specifications, youre still not ready to build if you dont have the right permits.

In some areas, the permitting process is very simple and takes only days or weeks. In others, it can be an arduous process, taking months or even more than a year. A design-build general contractor and local design professionals can help expedite the course, but you need to know how long its going to take and allow for that time in your schedule and financing.

One Master

Youre finally ready to build. At this point, a good general contractor will hold a preconstruction meeting with all of the subcontractors. During this gathering , a scheduleand more important, a hierarchywill be established. Youll make clear who is in charge and determine the role you will play. Youll also create a plan for coordinating all the work.

Its natural for subcontractors to feel their particular part of the project is more important than the others. Usually, one or two will try to take charge. If one master is not established beforehand, overzealous players can end up costing you money.

True Enlightenment

As with many life questions, we already know the answers. The key is having the discipline and focus to use this knowledge. Zen masters practice mindful walking , mindful sitting, and mindful eating . What this means is they are totally focused on the task at hand, dedicated to its successful completion. Be patient. Carefully plan and coordinate as much as possible before you build. I wish you great success at mindful building.

L. Bruce Mc Cardle is the eastern division manager for Mako Steel Inc., a supplier and installer of storage buildings from coast to coast. More than 80 percent of the companys business comes from repeat customers or their referrals. Mr. McCardle enjoys working with first-time facility builders from design through grand opening. He has been involved in almost every aspect of the metal-building and construction industry for more than 20 years. Look for his presentation at the upcoming ISS expo in Miami. For more information, call 888.795.7594; e-mail [email protected] ; visit www.makosteel.com . 

"The Payment Advisor" is a monthly Q&A column to which readers can submit questions about card transaction systems, electronic funds transfer, check acceptance and processing, wireless transactions, international funds transfer, and other payment issues. To participate, e-mail questions to [email protected]. Also watch for quarterly articles on related topics.

When should I start thinking about payment acceptance for a new facility?

The sooner the better. As soon as you have decided to build a new facility, consider how you will handle payments. One of the major issues to contemplate is how your management system will integrate with the available payment options. Does your software have an integrated payment module? Does the system handle checks and credit cards? Does it handle debit as well as traditional credit cards? Does it offer a choice of payment-service providers?

How does facility location relate to the types of payments I should expect?

Based on population, some areas have a greater likelihood of cash transactions. These days, areas with a higher probability for cash dealings are migrating to the use of debit cards. Since debit cards link to an actual banking account, they are easier to secure than credit cards, which represent an open line of credit.

How do the regulations set by MasterCard and Visa for credit-card acceptance affect facility construction?

The rules and regulations related to the acceptance of payment cards require detailed facility planning, as they involve security issues. The physical structure of the building must take into consideration operation policies and protocols, as well as the transmittal of credit-card information.

What other payment-related items should I consider when planning a new facility?

Carefully evaluate the communications systems available in the area, such as satellite and high-speed Internet, as these will affect your payment options. You should also know in advance if you will be locked to a single communications provider or have multiple choices for service.

Ross Federgreen is a co-founder of CSRSI, which provides an integrated approach to the analysis, design, implementation, deployment and management of electronic transaction services and systems. Since 1999, the company has helped more than 350 public and private institutions reduce the cost of acquiring money and minimize the liability exposure related to payment transactions and customer data. For more information, call 866.462.7774, ext. 1; e-mail [email protected]; visit www.csrsi.com.

Smaller means more compact and convenient. The theory is if an item is easier to manage, more people will use it. The same theory could hold true for self-storage. For your next venture, consider the advantages of starting small.

Why Start Small?

A smaller facility may better serve the market.

Fast-food restaurants, self-serve gas stations and convenience stores have adopted a philosophy of convenience for decades. Convenience storagesmaller, self-serve storage facilitiesare more readily accessible for sparsely populated areas or infill locations in densely populated metropolitan markets.

A smaller facility may be easier to manage.

While some self-storage facilities are managed by an owner/operator, most are run by an employee or management company. In either case, its becoming increasingly difficult to find a great manager. To add to your troubles, you now compete with restaurants and retail stores for the best employees. While the average self-storage manager makes around $22,000 to $30,000 per year, a department-store manager in the Cincinnati market earns about $32,000 to $37,000 (see www.salary.com).

To effectively manage a facility to its highest potential, you need a person with all the necessary traits and skills. Todays self-storage manager is a marketer, salesperson, janitor, collector and bookkeeper. This is a tall order, and most people are stronger in one area or another. By starting with a small facility that is managed remotely rather than using onsite staff, you can outsource key skills, such as sales and customer service, while having a low-level hire perform routine janitorial and maintenance duties.

A smaller, remotely managed site also capitalizes on the publics perception that all storage facilities are the same. Since most customers will call before renting a space and most sales are handled via the phone, onsite staff becomes immaterial. The important thing is that when people call, they are greeted with a friendly, professional counselor who can solve their problem immediately. The remote manager can rent the space over the phone and assign a gate code that gives the customer access to the site.

Small, remotely managed facilities also enjoy other benefits. First, they are never put in dire straights by a manager who is sick or otherwise absent. Because there are no face-to-face cash transactions, employee dishonesty is rarely a concern. In fact, with all payments handled by technology, customers enjoy greater convenience and owners have a more thorough audit trail.

Finally, even if a smaller site is not remotely managed, the owner can maximize productivity by using a part-time manager in lieu of a full-time employee. A good full-time manager can operate 500 to 700 units. What if the site has 300 or fewer spaces? The owner can economize by having a part-time manager who is available on a flexible schedule.

A smaller facility requires a smaller parcel of land.

As self-storage development increases, the task of finding properly zoned land becomes difficult and costly. Rezoning a larger parcel of 4 to 6 acres is not always feasible; however, rezoning a 1-acre lot may be more palatable to the zoning board. Smaller sites tend to be more readily available, and because they cost less, you can invest more in finding a better location.

A smaller facility requires a smaller investment.

Assuming construction costs of $26 per square foot, land costs of $100,000 per acre, and startup capital of $10,000 per month, a 60,000-square-foot facility would require a cash outlay of $790,000. This is more than the entire development cost of a 20,000-square-foot facility. In addition, by eliminating the rental office, a 20,000- square-foot site would cost less than $26 per square foot to build, saving even more money at startup.

A smaller facility rents up faster, requires less startup capital, and achieves quicker stabilization.

The payoff on a 20,000-square-foot facility is only 12 months away vs. a typical 20- to 30- month payoff on a new 40,000- to 60,000-square-foot facility.

A smaller facility yields a smaller return.

This one is not necessarily true. A smaller, remotely managed site reduces overall expenses because you dont have to:

• Build a rental office or apartment.
• Stock an office with supplies.
• Maintain a computer or software (if you use a management company).
• Provide manager training.
• Provide ongoing supervision or handle the many responsibilities associated with having multiple employees.

In the accompanying chart, which compares the finances of a 60,000-, 40,000- and 20,000-square-foot facility, youll see that a small, remotely managed site can yield the same cash-on-cash return as a larger onewithout the large debt and risk. The return is even higher if you project the actual construction cost without a rental office.

Yes, sometimes bigger is better. However, all real estate investments are a risk. In a smaller venture, you can test the waters. Until recently, operators of small sites relied solely on their own sweat and tears for success because it was not economically feasible to hire a manager to run the business. Resources such as call centers, kiosks and remote-management companies not only improve operations and reduce costs, they allow the operator of a small facility to think big.

Melissa Hermes is the owner of Crown Property Consultants Inc., a self-storage management and consulting firm in Wilder, Ky. She specializes in providing remote-management services and turnaround services for underperforming facilities. For more information, call 859.547.5409; e-mail [email protected].

There are many ingredients that go into developing a successful self-storage project. Some of the more important ones are a suitable site, a proper feasibility study, a professional design team and the right contractor.

How do you choose your contractor? Its important to hire someone you can trust, who has your best interests at heart, who will prevent you from making mistakes. There are other factors that are equally essential, such as the contractors experience, attitude, knowledge, reputation and dependability.

Experience

Your contractors level of experience is critical. You wouldnt go to a doctor who just got out of medical school for a heart surgery. Likewise, you shouldnt hire a contractor who has never built self-storage to construct your facility.

When it comes to building an office or restaurant, an architect, engineer or design team prepares the drawings that outline how the project is to be constructed, and then a contractor is hired to build what is on the plans. In self-storage, however, it is becoming increasingly common for the contractor to participate in the design process, assisting in the prevention of costly mistakes and ensuring the projects constructability.

Self-storage presents many distinct issues that are not present in other types of development. Its much less expensive to fix problems on paper than in the field, but if a contractor has no self-storage experience, it will be difficult or impossible for him to foresee potential pitfalls. Sometimes mistakes will occur even when the contractor is building the project exactly to plan. Without experience, hell never recognize errors made by others in the design phase.

Attitude

In self-storage, your contractor is more like a development-service provider than just a builder. Its important that he be flexible, not intent on pushing a personal agenda or limiting the scope of the project to his personal abilities.

Your contractor should work as part of your construction team, and his attitude should reflect a team mentality. Ideally, he should view himself as an extension of the ownership entity. The owner identifies the goals of the project; the architect helps interpret and design those goals; the engineer ensures the goals are realistic; and the contractor works cooperatively with all professionals to produce the desired result.

When it comes to the written contract for your business arrangement, make sure the agreement is very clear so everyone knows the role they play in the project. This will facilitate the overall process and move the plan to completion in a timely manner.

Knowledge

While the builder of a restaurant may not need to know about food service, the self-storage contractor must have in-depth knowledge of the business. Some of his clients will be first-time owners or developers, so he needs to know the effect even a minor decision can make on a projects bottom line. He can also be a vital source of information, providing input on small but critical issues such as turning radiuses for trucks on the property and office setup. The list of items for which new owners need guidance is almost endless. If a contractor has been in the industry for a while, he will have a pool of knowledge from which his clients can readily draw.

Reputation

The next item to examine is the contractors past performance. Is he able to bring projects in on time and on budget? Do not be disillusionedevery contractor occasionally has a bad job. The question is how good is his overall track record?

Check references. Talk to people for whom the contractor has built, recently and in the past. Get a sense for his overall performance.You cant make an informed decision based on one facility, good or bad.

Its also important to look at the types of projects your contractor has built. If your site calls for a state-of-the-art, four-story building, you dont want to hire someone who has only worked on simple, single-story facilities. Some of the multistory projects being built today include complex designs, building codes and fire regulations.

Dependability

Finally, your contractor should be reliable. The true test of any professional is what he is willing to do to solve problems when they arise, for example, warranty-related issues. Any experienced owner will tell you what a headache it is to have a contractor who refuses to come back for warranty work. You want absolute assurance that you can count on your contractor when you need him. This is the kind of thing you can find out when you contact his references.

Other Factors

Once youve examined your candidates based on experience, attitude, knowledge, reputation and dependability, you may allow other factors to affect your decision. For example, you may feel you need to hire someone local or a contractor youve used in the past. Don t rule out an experienced self-storage builder because he isnt based in your area. Contractors who work nationwide are accustomed to travel. They also know how to effectively compete with local companies based on their expertise.

You might also be tempted to act as your own contractor. If you have the skills and time, this may be an option; but dont base the decision on money. Some owners undertake the building of a project on their own because they think it will be cheaper. Most find it takes them longer to finish the project and they have spent more than the contractors fee in the form of mistakes, repairs and delays.

One final note: Most states have laws that require contractors to be licensed, so make sure your contractor is in good standing with the licensing board. Also be aware this prerequisite may extend to you if you choose to act as your own contractor. The conditions for licensure can range from relatively easy to extremely difficult and take several months to fulfill.

Find a contractor with whom you think you can really work. You should have a good feeling about this member of your team, knowing that he is looking out for you and has the integrity, knowledge and experience to see you through this exciting, challenging development.

Charles Plunkett is president of Artistic Builders Inc. of San Antonio. The firm has specialized in self-storage construction for more than 10 years, completing many millions of square feet in self-storage projects nationwide. Services include value engineering, predevelopment consulting and site analysis, design assistance, and full construction. For more information, call 210.479.3450; e-mail [email protected]; visit www.artisticbuilders.com.