Update 8/27/18 – Adams French Property has requested that Niles officials extend its special-use approval as well as recommend to Cook County that it receive a class-7B property-tax incentive for its Waukegan Road self-storage project. Though the developer received approval last August, the special-use permit it received expires after one year. Village trustees are expected to discuss granting a one-year extension on Tuesday, according to Ostman.

The city approved the project on condition that Adams French add 6-foot shrubs around the facility. It also stipulated that no trucks could be stored onsite, the source reported.

The 7B tax break would lower property-tax rates at the site from 25 percent to 10 percent for 10 years. The rate would increase to 15 percent in year 11 and 20 percent in year 12, before moving to 25 percent in year 13. To be eligible, a property must be vacant for at least two years and receive more than $2 million in redevelopment, according to the source.

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9/11/17 – Adams French Property received zoning approval last month to move forward with its mixed-use development in Niles, Ill. Expected to open in about a year, the project will cost $8 million to $9 million and comprise 90,000 square feet of climate-controlled storage, according to the source.

Residents opposed to the project expressed their concerns about increased crime and decreased property values during the Aug. 22 village-board meeting. “This is a bad idea from a [village] branding perspective,” voiced resident Georgia Logothetis, who said she moved into the neighborhood to be close to schools, the police station and the library.

Dean Strzelecki, former chief of the Niles Police Department and a village trustee, noted that other storage facilities in the area haven’t had problems with crime.

Developer Phil French purchased the vacant site at Jarvis Avenue near Milwaukee Avenue in 1985. It previously housed a dry-cleaning business, dating back to the 1920s, that left the land contaminated. Although the pollution was cleaned up in 2000, the developer’s attempt to “identify and secure non-commercial options for the site have proven fruitless,” according to a memo to village officials.

Prior to the vote, Niles Village Trustee Joe LoVerde noted the vacant property isn’t generating any tax revenue for the village. “I’m trying to represent the citizens and their wallets,” he said.

As part of the approval, the storage facility will be required to include 6-foot shrubs around the property. If the business offers truck-rental services, the vehicles must be operated offsite, the source reported.

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7/25/17 – Indianapolis-based self-storage developer Adams French Properties LLC (AFP) intends to build a four-story mixed-use facility in Niles, Ill. The structure at 7421 Waukegan Road would be 50 feet tall, with the top three floors dedicated to storage and the ground floor featuring office and retail space that could serve as a business incubator, according to the source. The planning and zoning board voted 6-1 on July 10 to approve several zoning variances. It also recommended approval to change the zoning from residential to manufacturing on four adjoining parcels as well as two special-use permits for self-storage and parking.

The variances were necessary to minimize the gap between the building and the sidewalks along Niles Terrace and Waukegan Road. The three smaller parcels also targeted for rezoning would house a parking lot and retention pond, the source reported. The planning and zoning board has full authority to approve the variances, but the zoning changes and special-use permits must be approved by the board of trustees.

Though all the parcels have been zoned for residential use for the last 10 years, they were originally zoned for manufacturing. Residential proposals that have come before the board in the last decade required too much density for approval, according to Charles Ostman, director of community development.

The project has drawn opposition from residents who voiced concerns during the meeting about an increase in noise and other negative impacts on the area. Some expressed a desire to have a residential development that would be better suited for the community. “Personally, I would rather see it as a vacant lot than [self-storage],” resident Jeremy Foszcz told the board. “I hope to see condos or townhouses or something go up instead.”

Some residents also raised concern over what other manufacturing uses would be allowed under the zoning change should the self-storage project ultimately not be built or if the business failed.

Jim Adams, owner of AFP, told the board Niles is underserved for self-storage, with no facilities within a three-mile radius. He expects 75 percent of tenants will be residents and argued the location will assist startup businesses that don’t have offices in addition to providing space for inventory and delivery-acceptance services.

“We’ve been, for many years, [building] top-of-the-class storage facilities,” Adams told the board. “We’d like to say good communities have good facilities.”

Under its proposal, AFP would update the sidewalks and alley at the rear of the parcels, and redirect water toward Waukegan Road and away from lots to the east, the source reported.

The board of trustees is expected to review the project during its July 25 meeting.

Sources:
Journal & Topics, Developers of Niles Self Storage Facility Seek Extension, Tax Break
Bugle Newspapers, Proposed Waukegan Road Self-Storage Facility Moves Forward in Niles
Journal & Topics, Over Objections Of Some, Storage To Fill Vacant Site

There are a lot of factors that contribute to the success of a self-storage development project: a reliable feasibility study, the right location at the right price, a professional team of experts and contractors, zoning approvals, and more. But the real secret is to create and use a comprehensive checklist to manage the overall process.

If you’re thinking about or already building a storage facility and don’t have a development checklist, start one immediately! If you’ve been conducting preliminary research—and you should—you’re likely amazed at how much information is available on the topic of building self-storage. Every time you read an industry article or speak with an expert, expand your list to include any new or missing elements.

As you develop your project, there will be times when it needs your attention around the clock. There will be other times, sometimes weeks, when much less of your input is needed. Having a comprehensive checklist will allow you to take advantage of down time and work ahead so you never have to rush, which can lead to costly mistakes. A solid list will help reduce stress, save money and ensure a winning project.

Where to Begin

At first, you may not know all the items that should be on your development checklist; but at the top should be “Assemble a team of professionals.” This team will include an industry real estate broker, loan officer, attorney, civil engineer, architect, building manufacturer, contractor, insurance agent, consultant and others. As you hire them, ask for recommendations. What does each person need from you and other team members?

You need to know everything that must be done to build a great self-storage facility on time and within budget. The goal is to create a thorough, end-to-end list, from groundbreaking to grand opening. Personally, I use a five-page checklist that covers 19 major categories:

• Getting started
• Financial review
• Development team
• Land requirements and review
• Pre-purchase offer, site and zoning review
• Land purchase letter of intent
• Land contract
• Due diligence
• Site design
• Local, city and state applications and permits
• Architectural services for site-plan applications
• Architectural services for building design, specifications and permits
• Bidding
• Final contract
• Loan/banking
• Building permits
• Construction
• Pre-opening preparations
• Pre-opening marketing

Keep in mind each topic will be broken into subcategories. For example, I have more than 60 items just under “site design.” As a professional engineer, I’ve designed many self-storage facilities and reviewed those designed by others, so I know which items are often forgotten or done incorrectly. Unless you have this kind of firsthand knowledge, it’s critical to consult with your team regarding every step.

Use their expertise to minimize mistakes and create a detailed, point-by-point list. For example, ask the city planner or engineer which applications are required, the components of each and timeframes for approval. Get copies of each application so you know what’s required to complete them and can add those specific tasks. Ask your civil engineer and consultant the same types of questions. They’ll have additional insight on timeframes and what’s necessary to earn approvals.

Finessing the Timeline

While it’s important to have all the right items on your development checklist, the order in which they appear and are completed is also vital. In addition to tasks, you need a timeline to ensure you stay on track. You’ll need to understand the best- and worst-case scenarios for:

• Completing due diligence
• Closing on your loan and property acquisition
• Finalizing facility design
• Obtaining project approvals
• Collecting construction bids

Many things can go wrong if the timing is off. For example, if you make the land-purchase option too long or short, you risk losing the property. Far too often, the end of the approval and bidding process becomes a crunch because you’re running out of time; but rushing the purchasing process can literally cost hundreds of thousands of dollars. You may even have to pay for an extension.

Think ahead and use moments of free time to work on items further down the list. For example, while you may not need your loan for several months, contact lenders well in advance to understand the options available and which is best for you.

A good checklist will help you understand and mitigate the risks involved in your project. Begin compiling information as early as possible, with help from your team, and add requirements as you go.

Details, Details

There’s no better business than self-storage, but you must have a good game plan. The devil is in the details (particularly those that are missed), so a solid, evolving checklist is critical to success. While the idea of creating and maintaining such a list may seem cumbersome, the secret to staying on course is the motivation that drove you to pursue your project in the first place. Make your list and check it much more than twice. Add to it, and stick with it. You can do it!

Marc Goodin is president of Storage Authority LLC 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, e-mail [email protected], visit www.storageauthorityfranchise.com. You can also purchase his books on facility development and marketing in the Inside Self-Storage Store.

While the self-storage business is fairly simple, the things that come with it aren’t always cut and dried. For example, it’s critical for owners to have the right insurance coverages to meet their specific needs, but standard commercial policies can have gaps that leave you and your business vulnerable.

When you hear terms like “specialized services” or “specialized coverages,” expensive probably comes to mind. The good news is this doesn’t have to be the case when it comes to self-storage insurance. In our industry, specialty products can be affordable because the coverages limit risk without forcing you to waste money on things you don’t need.

All businesses have distinct exposures and risks. The things that make a self-storage business unique are also the reasons you need specialized insurance. Below are some of the coverages tailored to meet your needs and maximize protection of your investment.

Well-Known Coverages

Most commercial business owners are aware of building and personal-property insurance coverages. These are essential for any property-related claims that may arise, such as a fire caused by faulty wiring or a car crashing though your fence or gate.

When purchasing this coverage, owners should look for a policy that includes replacement cost vs. actual cash value. Replacement cost doesn’t take depreciation into consideration when valuing a claim. This makes indemnifying and getting your property back up and running quicker and more efficient. You may also want to look for the ability to have blanket coverage on buildings, which gives you a little more flexibility.

Another well-known coverage is commercial business liability. This covers exposures that arise from bodily injury or property damage at your facility. The biggest (and perhaps most common) types of claims in this category are trip-and-fall injuries. Having the correct limit in place will help you avoid paying the large sums that can be associated with these incidents.

The above coverages are extremely important to most commercial businesses and required when working with a bank or lender; but there are other familiar policies you may need, such as workers’ compensation. If you have employees, this coverage is vital in case one of them is injured during work hours or while on site. States may have different requirements and regulations related to workers’ comp, so consult with your insurance agent to determine the best coverage for you.

Lesser Known Coverages

There are other insurance coverages that are just as vital for a self-storage business but are sometimes overlooked. These are specific to the industry.

Customer goods legal liability (CGLL). This provides coverage for claims that arise from damage to or loss of tenant stored property. Though storage operators aren’t responsible for the contents of a tenant’s unit (this should be clearly stated in your rental agreement, along with a requirement that customers provide their own insurance), unfortunately, situations can occur that create some legal liability and trigger claims. An example would be if a tenant’s goods are damaged due to owner negligence. CGLL can cover such claims as well as the related legal costs, even if a claim is determined to be false or groundless.

Sale and disposal liability (SDL). Sooner or later, every self-storage owner will be faced with the unenviable task of evicting a tenant for failure to pay rent, reclaiming the space, and removing or disposing of the property. SDL coverage provides protection against the act of wrongfully removing, selling or disposing of a customer’s goods. If state lien laws aren’t followed, the facility operator is vulnerable to claims. If you or your staff are involved in the sale and disposal process, you must be aware of your state’s laws.

SDL insurance isn’t normally available through regular business insurance carriers, but it can be secured through insurers that specialize in self-storage. The cost is typically reasonable for the peace of mind and protection you receive.

Pollution liability (PL). Did you know most standard insurance policies exclude various types of pollution exposures? They may include a small pollution-cleanup sublimit, but the circumstances for this to kick in and cover a claim are very restricted and typically don’t even cover an actual pollution-related event! This creates large coverage gaps that leave owners vulnerable to the huge costs that can be associated with a pollution accident.

A standalone PL policy can cover these gaps and provide peace of mind when facing a pollution-related loss. Leaking RVs or other stored automobiles, illegally stored substances, toxic chemicals, and oil drums are just a few of the common items that could lead to an expensive, catastrophic event. Strongly consider adding this coverage to your insurance portfolio.

These are just a few of the coverages that are essential for self-storage. When shopping for insurance, consider working with a specialist who can provide a custom-tailored policy. By working with agents and carriers who focus on the industry, you’ll be able to build a strong package that suits your facility’s needs.

Accidents can and do happen, even to the most conscious and diligent owners. Having the right coverages in place is step one in protecting yourself and your business. The cost of one accident or claim can easily outweigh the cost of an insurance premium—sometimes years of premiums! Don’t get caught without the best coverages for your unique operation.

Melanie Wichelman is an account executive with Universal Insurance Programs, which has created and provided specialized insurance coverages to the self-storage industry for more than 20 years. For more information, call 800.844.2101; visit www.universalinsuranceltd.com. 

Public Storage Inc., a self-storage real estate investment trust, has purchased six Central Self Storage properties in the Minneapolis market. The seller was Pegasus Group, a real estate investment and management company that owns and operates self-storage facilities, according to a press release from JLL Capital Markets, the commercial real estate and finance firm that helped broker the deal.

The locations total more than 360,000 square feet of storage space in 3,243 units. Facility features include climate control, electronic access control, drive-through loading areas, video cameras and retail-oriented management offices. The properties are:

• 150 81st St. W., Bloomington, Minn.
• 7225 Bush Lake Road, Edina, Minn.
• 407 School Road N.W./1015 Highway 7, Hutchinson, Minn.
• 21002 Heron Way, Lakeview, Minn.
• 425 Washington Ave. N, Minneapolis
• 5040 Winnetka Ave., New Hope, Minn.

JLL Managing Directors Steve Mellon and Brian Somoza led their team in the deal. “This portfolio was an attractive, turnkey investment opportunity that allowed the buyer to increase their presence in Minnesota by 12 percent,” Somoza said. “Stabilized occupancy, combined with upward trending rents and minimal capital expenditures, should result in healthy cash-on-cash returns for the new ownership.”

Based in Glendale, Calif., Public Storage has interests in 2,615 self-storage facilities in 39 states, with approximately 171 million net rentable square feet. Operating under the Shurgard brand name, the company also has 223 facilities in seven European countries, with approximately 12 million net rentable square feet.

JLL is a full-service global provider of capital solutions for real estate investors and occupiers. The firm completed $170 billion in investment sale and debt and equity transactions globally in 2017. The firm’s Capital Markets team comprises more than 2,000 specialists globally.

Strategic Storage Growth Trust Inc. (SSGT) and Strategic Storage Trust II Inc. (SST II), both public, non-traded, self-storage real estate investment trusts (REIT) sponsored by SmartStop Asset Management LLC, have released their financial statements for the second quarter of 2018, which ended June 30. In general, the companies showed year-over-year gains in total revenue, same-store revenue and net operating income (NOI).

SSGT increased total revenue 57 percent to $1.7 million, while same-store revenue and NOI grew 7.8 percent and 6.2 percent, respectively, compared to the same period in 2017.

Average physical occupancy was 88.5 percent at the end of the quarter, down from 92.5 percent the previous year. The REIT reported growth in same-store annualized rent per occupied square foot, showing an increase of 14 percent ($13.84) year over year. Modified funds from operation grew 1.8 percent to $673,981 compared to the same period in 2017.

SSGT acquired a self-storage facility in McKinney, Texas, during the quarter for $10.4 million. It also completed development and opened a new property in Stoney Creek, Ontario, Canada.

“We continue to experience solid growth in SSGT’s portfolio, both in our same-store results and in our more recent lease-up acquisitions and completed developments,” said H. Michael Schwartz, chairman and CEO.

After factoring operating and other income expenses, SSGT reported a net loss for the quarter of about $1.2 million, up slightly from a loss of about $1.1 million from the same period a year ago. The REIT took in more than $4.6 million in self-storage rental revenue and $144,496 in ancillary operating revenue during the quarter.

SST II increased total revenue 5 percent to $1 million, while same-store revenue and NOI grew 3.9 percent and 2.9 percent, respectively, compared to the same period in 2017.

Average physical occupancy was 88.7 percent at the end of the quarter, down from 93.7 percent the previous year. The REIT reported growth in same-store annualized rent per occupied square foot, showing an increase of 10.1 percent ($15.95) year over year. Modified funds from operation declined 6.8 percent to $4.7 million compared to the same period last year.

“Our results thus far in 2018 remain solid, despite moderate property-tax expense headwinds,” Schwartz said. “Our annualized revenue per occupied square foot continues to climb in both the U.S. and Toronto, and our lease-up assets continue to fill up, both indicators of our strong North American portfolio.”

After factoring operating and other income expenses, SST II reported a net loss for the quarter of about $1.4 million, an improvement from a loss of $3.5 million from the same period a year ago. The REIT took in more than $19.5 million in self-storage rental revenue and $490,036 in ancillary operating revenue during the quarter.

The SSGT portfolio includes 27 self-storage facilities in 10 states comprising approximately 2 million net rentable square feet in 18,400 units. The SST II portfolio includes 83 self-storage facilities in Canada and the United States. It comprises approximately 51,300 self-storage units and about 6 million rentable square feet of storage space. Both companies are sponsored by SmartStop Asset Management, a diversified real estate company with a managed portfolio of 118 self-storage facilities in Canada and the United States. Its managed properties comprise approximately 8.6 million rentable square feet.

Phoenix-based U-Haul International Inc., which operates more than 1,500 self-storage facilities across North America, has purchased land in Harrisonburg, Va., on which it plans to build a two-story, climate-controlled building. Expected to open in 2020, the property at 3170 E. Kaylor Park Road is near James Madison University, according to the source.

Once complete, U-Haul Moving & Storage of Harrisonburg will contain more than 500 units. It’ll offer moving and packing supplies, hitch installation, propane sales, truck and trailer rentals, towing equipment, and U-Box portable-storage containers. The site will also feature a U-Haul Re-Use center for sharing boxes and gently used household items.

“Harrisonburg is growing, and U-Haul is ready to give residents the quality moving and self-storage services they demand,” said Clinton O'Neill, president of the U-Haul Co. of Richmond. “James Madison University is a top-ranked college and brings many new residents into town. We need to provide a secure self-storage facility for students and permanent residents alike.”

U-Haul is also building a new facility in Sparks, Nev. The three-story, climate-controlled building on the northwest corner of Pyramid Way and Sha Neva Road is expected to open in fall 2019.

Established in 1945, U-Haul owns more than 32 million square feet of storage space. The company’s corporate sustainability initiatives, which support infill development to help local communities lower their carbon footprint, has led to dozens of conversion projects in recent years.

Source:
PR Newswire, Growing Harrisonburg: U-Haul to Bringing Self-Storage, Jobs with New Store

Baron Real Property Holdings LLC, which specializes in multi-family housing, has purchased Continental Ranch Self Storage in Tucson, Ariz., for $7.15 million. It’s the company’s first foray into the storage market, according to a press release from NAI Horizon, the real estate firm that brokered the deal.

The property at 5650 W. Coca Cola Place is just off Cortaro Farms Road and Interstate 10, adjacent to the Arizona Pavilions Shopping Center. The facility comprises 99,810 net rentable square feet of space in 736 units. It’ll be managed by self-storage real estate investment trust Extra Space Storage and branded under its name.

The buyer and the seller, LPG Associates of Rohnert Park, Calif., were represented in the transaction by NAI Senior Vice President Denise Nunez.

Headquartered in Denver, Baron owns 18 multi-family properties in Arizona, Colorado and Texas. It also has an office in Arizona.

Established in 1992, NAI Horizon has offices in Phoenix and Tucson. A member of NAI Global, it’s a managed network of independently owned commercial real estate brokerage firms. It assists corporations with negotiating leases, sales, business brokerage, investments, relocation, site selection and development.

 

Update 8/23/18 – Metro Storage has opened its conversion of a former lawn and garden shop in North Plainfield. It’s the company’s sixth self-storage location in the New Jersey/West New York market, according to a press release.

“New Jersey is an exciting market with lots of opportunity through the population density, and this new facility is a valuable addition to our portfolio,” said Martin Gallagher, president. “Metro is well-established in this market with an operational competitive advantage that enables us to provide our customers with the quality storage experience they expect.”

The facility is near major retailers as well as new and existing residential developments on a highly traveled thoroughfare, the release stated. “We've seen some great results with our storage facilities in the New Jersey/New York City market, and we're excited about the opportunity ahead of us to improve the storage location offerings in this submarket,” said Marc Harris, vice president of operations.

This project is the 13th completed through Metro’s partnership with Fremont Realty Capital, the real estate merchant-banking arm of Fremont Group. Earlier this year, the partnership opened facilities in Addison and Naperville, Ill.

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1/7/2016 – Metro Storage LLC, which operates more than 100 self-storage properties in 12 states, has acquired a former lawn and garden store in North Plainfield, N.J., that it plans to convert to a Metro Self Storage facility. The existing two-story structure at 351 Route 22 will be redeveloped into a five-story building comprising 65,000 rentable square feet in 653 climate-controlled units, according to a company press release. The building will include a business office, interior-loading area, and several elevators and entrances. The site is near retail stores and new residential developments on a highly traveled thoroughfare, the release stated. Construction is scheduled to begin in March.

“This is an excellent location and outstanding opportunity for us. We’re looking forward to expanding the Metro presence in the New York/New Jersey market,” said Matt Nagel, chairman.

Headquartered in Lake Forest, Ill., Metro Storage is a privately owned, fully integrated real estate operating company specializing in the acquisition, development and management of self-storage facilities nationwide. Its facilities comprise more than 6.7 million square feet of storage space.

Sources:
Markets Insider, Metro Storage LLC Opens New Self Storage Facility in North Plainfield, New Jersey
PR Web, Metro Storage LLC to Convert Former Lawn and Garden Store to Self Storage Facility in North Plainfield, New Jersey

SiteLink, which provides cloud-based facility-management software and payment-processing services for self-storage operations, has added new options for automatic billing and tenant invoicing to its offerings. Operators can choose between several batch-processing procedures based on their needs, including automatic and “set-and-forget” overnight billing options that work in the background, according to a press release.

“Operators can process auto-pay credit cards and invoices behind the scenes automatically in SiteLink,” the release stated. “Once enabled, there is no need to review and click a button each day on your batch-processed credit cards and invoices. Users can continue with other daily tasks while SiteLink completes the work behind the scenes.” Customers will be notified via e-mail with a list of any failed transactions.

Batch processing can be set up for auto-billing credit cards and automated clearing house (ACH) accounts. Operators can also choose to e-mail receipts to tenants based on their preferences and opt to charge fees. Scheduled move-outs can be included in credit card/ACH auto-billing if desired. Transaction limits can be set to provide special attention to large account balances instead of automatically processing through autopay, according to the release.

If desired, operators can still choose to manually review invoices and auto-payments in Web Edition or myHub before they are batch-processed each day.

Founded in Raleigh, N.C., in 1996, SiteLink offers cloud- and Windows-based self-storage management software as well as built-in, in-house payment processing. Its software integrates with dozens of technology partners’ services including call centers, insurance, kiosks, mobile devices, websites and other platforms. Sitelink was acquired in March by online self-storage marketplace SpareFoot.

Source:
SiteLink, More Choice: Automated, Overnight Credit Card Processing and Invoicing added to SiteLink