Welcome to our “Ask the Expert” section, where you can ask any question, from anywhere, at any time, and receive personalized advice from Trachte’s resident experts, Jamie Lindau and Steve Hajewski. Whether you’re first starting out and need guided development advice, or you’re a seasoned self-storage veteran looking for the latest tips and tricks, use this forum to get the answers you’re looking for, from an industry professional who knows self storage best. Read the answers below, or submit your own!
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This is one of the first questions asked by new developers, and often one of the most misguided.
In developing your self storage facility, you’ll most likely need get an offer accepted on land, confirm zoning status, possibly apply for a conditional use permit, secure financing, close on the land, apply for state and local commercial building permits, and stormwater permits.
Once all of the above is complete, your grading and foundation contractors will need time to prepare your site and foundations.
The above process takes many developers a few years to complete.
During this process, you’ll work with your Trachte Regional manager to develop ballpark estimates, a building layout and quote, and eventually a permit set that you’ll need in order to gain approval from your city and possibly your state. Trachte’s lead times on these tasks will vary, based on your project complexity and current workload from other clients.
Once you’ve reached the point at which you have a building permit and ordered buildings from us, our goal is a 10 week turnaround, however during busy times this lead time may be longer. We suggest to order buildings and contract with your erectors well in advance on your desired ship date.
A small facility will cost $20-25 per square foot. The building, erection, and foundation will cost $12-15 per square foot, but additional costs include excavation, grading, fencing, etc. A larger site with enhancements, such as paving or an office, will cost $28-32 per square foot. A state-of-the-art facility with an apartment, total security system (door alarms, cameras, etc.) would cost $35-$46 or more per square foot. All of these estimates exclude land costs. If a site requires a stormwater retention pond or extensive grading, these figures may be low.
Every area of the country is different with rental rates, and it’s the sites within about 3 miles that you are concerned about. Call a couple of sites that are close to you. I would ask what their 10′ X 10′ size cost is and then divide by 100 times 12 months will be your average. For a more conservative number, ask for a 10×15 rate and divide by 150 times 12 months.
The smaller the unit the higher the return but that’s assuming that you have tenants in them. Check out your potential competition to see if certain sizes are over or under built in your area.
Your building footprint will also impact unit size. The most popular building widths are 30′ to 40′ wide, which to some extent can drive unit mix. You’ll have the option of adding small endwall closets, but throughout the majority of the building the two units that are back to back must equal the building width.
Narrower buildings cost a little more per square foot, and increase your foundation and paving costs while reducing the amount of rentable sq ft on your property.
For typical drive-up units, about 30 to 35% of the land ends up as rentable sq ft. This is influenced by easements, setbacks, and various stormwater requirements.
Drive up units are most commonly 30 to 40′ wide. Land coverage can reach 40 to 45% by building wider buildings with interior corridors. If the land has minimal setbacks and exceptionally wide buildings are used, it may be possible to reach 50% coverage.
To get a quick snapshot of the possible financial performance of a property, try our basic investment calculator.
Yes you can use your land and its improvements as collateral. If collateral or start up money is a concern, consider an SBA 7a loan for your project because you will need to have less down payment with this type of loan. Self storage was only recently allowed to participate in the SBA program (since October 1st 2010). With SBA loans, it’s possible to borrow up to 90% of the project costs. Cash flow is one of the most important factors for SBA lenders.
For one-story buildings, anticipate 30-38% building coverage. This rule of thumb provides approximately 13,000 to 16,000 square feet of storage per acre. The ideal site would consist of 30′ to 40′ buildings with driveways so that all of the units face the outside with drive-up access. Customers love to be able to drive up to their own unit. The problem this creates is that it burns up a lot of land and you get only 30% coverage. In areas with high land costs it is not feasible to build this way anymore. The trend today is to build wide buildings and eliminate driveways. Developers are constructing buildings anywhere from 60- to 200-foot wide. This method allows you to increase your coverage up to 45%. However, if you build wide buildings, it is necessary to climate control the hallways. This ensures the units are rentable and will also increase your net revenue since climate control demands a higher price.
If you land has more than a ten-foot elevation change in it, it might be wise to build a two-story into a hill design. This design is superior to conventional two-story buildings because there is no need for stairs or elevators. Consequently, to the customer it seems like a one-story building. Since you use two floors, you will lose around 20% of the building to hallways, but you should still end up with over 40% building coverage. The negative of this design is that your grading costs and foundation/retaining wall costs are expensive.
With land costs escalating, many developers are looking to build two-, three-, or four-story buildings. With each story you build, you gain a lot of square footage, but each floor carries a lot of additional costs. Customers do not want to walk upstairs with their goods. So it is recommended that all multi-story buildings have elevators. Two-story buildings are the most common design. They typically can be built without sprinkler systems, while three- or four-story buildings normally need to have sprinkler systems. Regardless, with any multi-story building, you will lose around 25% of building due to hallways, stairs, elevators, etc. The cost of multi-story buildings typically runs at least $10-12 per square foot per floor.
We recommend that you look at the competition near you and your land costs to determine what type of building design you should construct. Check out our investment calculator to determine the amount of net rentable square footage you will need to have a viable self-storage project.
Self storage is a retail business. A good retail location is essential to renting units. Visibility, ease of access, and how close you are to the population are also important. If the location is good, go to the city building department to determine if the property is properly zoned to build self storage. If so, get the proper permits and approvals needed to build (i.e. architectural review board, conservations board, department of transportation approval, etc.).
I recommend that you talk to the building departments for the cities you are interested in developing in to find out what zoning you need to develop self storage. All cities have developed a city/county map that shows the zoning of all the land in the community. The process is much easier if you only pursue properly zoned land. If you want a zone change, I recommend you hire an expert to have a better chance for success.
While every self-storage owner dreams of building the perfect facility on the perfect site with perfect land conditions, in reality, this ideal site can be extremely hard to come by. In my opinion, if you can find a site that has the right price, location, and visibility, but is small, you can cut costs and make it work by being creative in the way you build or run it.
One way to increase net rentable square footage is to maximize the amount of units on the site by laying out wide one-story buildings with interior hallways, instead of narrow buildings with all exterior drive-up access. The buildings might be over 100 feet wide, which minimizes the need for driveways. If even more net rentable square footage is needed to make your project economically feasible, consider incorporating a multi-story building into your plan.
You must also take into account how you will manage the facility. In an ideal situation, you would have a manager on site everyday. If your site can only accommodate 200 units versus the 300-350 on a large site, you will need an alternative management approach in order to make your project economically feasible. One suggestion is to have the entire site run from a nearby business. Another idea is to build an office on your site, but lease it out to a business such as a carwash, tool rental, real estate office, etc. That business can then manage and rent your units out for you. The last option is to utilize an ATM-type machine to rent out your units, in combination with renting out units from your home.
This depends on how you’re going to manage your facility. If you plan to run the facility yourself out of your home or through another business you already own, you can make a good return on your investment with as little as 2,000 square feet. If you employ a manager to run the self-storage site, you will have to build at least 25,000-30,000 square feet to offset this cost. If you build an apartment and have a live-in manager, you will need to build at least 45,000 square feet. These are rough estimates that will change depending on the rental rate structure of your community.
We do offer this, and have completed a number of such projects throughout the country. There are multiple ways to do this, depending on your desired building features. Contact one of our Regional Managers with your layout to discuss the options.
Yes. Communicate the weight of the solar system and size of the mechanical room needed for it to your Trachte Regional Manager when requesting a quote.
LED lights cost a little more up front, but their reliability and energy savings makes them worthwhile in our opinion. Space them every 40′ along the buildings, mounted high on the jambs. When two buildings face each other, stagger the installations so that every 20′ there is a light on one side or the other.
Inside heated building, florescent tubes are still common, but LED options are growing in popularity. Interior lighting should be bright and center mounted in halls.
See our photo portfolio on the topic of lighting and electrical for more examples of how to equip your facility.
Many of the projects that are built do not have a manager on site. Typically a site will need to have over 300 units before you can afford to have a manager. There are three ways to manage a site where you do not have a manager on site.
1. Run the project from another company. For example, a Trachte client owns a project in a town called Whitewater Wisconsin and he runs it from a liquor store about 1 mile away. The sign at the site tells the customers to stop in the liquor store to rent a unit or pay their bill. We have many customers that run their sites from a realty company, car wash, convienence store, etc.
2. Run the project from your home. All the calls from your site are routed to your cell phone and you set up times to meet the customers on site to rent their units. How well this works depends on your ability to meet the customers in a timely fashion. Trachte’s marketing manager operates a site this way, and finds that clients prefer meeting during weekends and evenings to sign rental agreements.
3. Install an ATM type machine at the site so the customer can rent a unit or pay their bill right there on site without talking to anyone. A company called Open Tech Alliance has a machine that will do this for you. To see examples, go to the resources section of our site and download the “Self Service Offices” Photo Portfolio that shows some of these types of ideas for you to look over.
Whether or not these solutions will be acceptable in your market depends on the level of service offered by your competition. To be successful, you should provide a higher quality experience than existing sites.
The worst thing that can happen to a spring is rust. When a door spring rusts, especially on a door that isn’t used often, the individual coils begin to rust together if not treated or lubricated. When you open the door and the coils can’t move, that’s when a spring breaks. Starting in 2007, Trac-Rite began using the EP3 coating, which prevents rust and eliminates the need for lubrication. For Trac Rite doors made before 2007 (or doors made by other companies) we recommend ZEP 2000 penetrating grease. Search for “ZEP 2000” or visit zep.com to find a source near you.
Typically the owner has insurance on the building and liability insurance. This insurance does not cover any of the items in the unit. All owners should offer separate insurance for the customers goods. In actuality most do not need it because if they have homeowners or renters insurance their stuff is covered by this insurance. If they have neither they can get insurance which is typically fairly cheap. The problem is this insurace only pays 1/2 of the declared value if there is a robbery. The insurance pays the full amount for a disaster. Our regional managers can provide you with examples of insurance policies typical to self storage. If you have any other questions please do not hesitate to contact us.
There are no state agencies that govern storage. Most people set up an LLC corporation and run it themselves. Each state has rules on how to sell units that are in default but not much more than that.