By Nick Zent
Self-storage development has evolved into a unique sector within the design and construction industry. Projects have grown increasingly complex, with multi-storied, urban structures replacing drive-up, fortress-style facilities as the most in-demand product type for institutional entities. In particular, conversions in major Metropolitan Statistical Areas have allowed for significant capital investments to existing facilities as well as new and beautiful projects.
However, municipalities across the country seem to have uniformly adopted a policy of “Your self-storage building should look like anything but a self-storage building.” This attitude is driving evolution in the design of a traditionally simple product type to a surprisingly complex structure and façade. Architectural enhancements increase construction costs. As such, efficient unit mix and layout is becoming even more critical.
Gentrification is driving infill, repurposing and other forms of creative reuse for almost every development sector. Currently, self-storage just happens to be one of the more profitable and, with the right team, the most feasible. Upgrades and remodels of existing facilities should always be paired with an underlying assessment of return on investment. Does a dollar spent equal a dollar earned? If so, find a better vehicle to invest your money. However, if a dollar spent equals $1.25 earned, it may be worthwhile to make some upgrades.
What improvements yield the greatest return? That’s an easy question. If occupancy rates are stable, adding rentable square footage holds the greatest potential for increased revenue. When faced with a choice between remodeling a leasing office and adding units, bear in mind that while new tile and paint may attract a tenant or two, real revenue is based on rentable square footage. This fact is even more relevant in self-storage, where tenants make certain assumptions about their storage space and often rent a unit sight-unseen from a website. In such cases, cosmetic improvements yield very little return.
There’s nothing new about this concept and, unfortunately, additional rental space is rarely to be had because it’s already been developed. So what’s the second most effective improvement? That’s a much more difficult question to answer.
Façade Renovations
Money invested to increase facility curb appeal is certainly near top of the list. Even with Internet traffic driving the majority of institutional self-storage business, curb appeal remains critically important. A simple Google Maps search of a facility address and a quick zoom to the street view will give a client a first impression, which (other than pricing and proximity) is usually the deciding factor if he’ll become a customer. Pricing being equal, structures that appear secure and modern from the outside are likely to have higher occupancy than those that don’t.
Façade renovations are effective and have a distinguished advantage because they don’t typically require the displacement of existing tenants. However well-intended, even a short-term displacement can wreak havoc on a facility’s cash flow and take months from which to recover.
Although they’re less intrusive than most renovation projects, façade upgrades aren’t without complications and logistical challenges. Architectural requirements for self-storage across the nation are trending closer toward the ornate than the simplistic, and exterior envelope treatments have been adequately meeting the challenge. Still, a simple paint job can dramatically improve the outward appearance of a property.
When looking for a more substantial change, however, façade enhancements are required. Cementous and engineered synthetic panels can be attached to existing exteriors without jeopardizing the integrity of the waterproofing. To keep costs in check, avoid modifying the structural system of the building in anyway. Assessment and re-engineering of the structure are costly and lengthy processes that will quickly consume the value gained by remodeling.
The addition of windows, accent texture and colors, sweeps, and reveals can all add notable curb appeal. Never underestimate the value of well-placed lighting to give a facility an after-hours facelift. Well-designed landscaping can also provide a boost, but use it sparingly. If not properly maintained, landscaping can have a negative effect, and maintenance costs can quickly exceed any added value.
Unit-Mix Modifications
Self-storage owners may have experienced a shift in clientele’s storage needs and wish to respond with a unit mix that’s better suited to their demographic. Modifying a mix can be an effective remodel. As mentioned earlier, displacing tenants rarely has immediate, positive financial results, so a remix needs to be done with careful consideration. Demand and revenue need to be analyzed, and it can be challenging to identify the ideal configuration.
Relying on metal-framing subcontractors or architectural teams to provide layouts for unit-mix remodels can be inefficient and extremely time-consuming. Demand is currently high for these services, and the smaller the project, the less attention it warrants. Typically, architects are more focused on form than function; efficiencies may play second fiddle to aesthetics.
Likewise, subcontractors are in such high demand that the turnaround time for a unit mix is several weeks. A specialty contractor with years of experience and expertise can develop layouts based on region-specific historical data in a BIM (building-information model) platform, which provides instantaneous feedback of efficiencies, unit ratios and square-foot-cost analysis. Even the most basic management software can report occupancy rates based on unit type. This historical data is key in anticipating needs and making forecasting decisions.
Renovations don’t have to be extensive to yield bottom-line results if they’re undertaken with a focus on adding value. Consider your options carefully, then proceed with the ones that will give you the best value for the dollars spent.
Nick Zent oversees the design and preconstruction efforts for P.B. Brown, which provides general contracting, design-build, conversion and buildout services to the self-storage industry. Nick has a unique blend of academic and real-world experience, with a bachelor’s of science in construction management and a graduate degree from the NewSchool of Architecture and Design. While working for a general contractor in Southern California, he established one of the most advanced BIM (building-information modeling) departments in the nation, completing more than $4.6 billion in construction projects. For more information, e-mail nzent@pbbrown.com; visit www.pbbrown.com.
