Are you a self storage owner looking at capital improvements to increase income? The team at Forge would love to help with assessing your self storage property. All existing self storage properties will eventually need capital improvements and/or redevelopment. This means making improvements to an existing facility to maximize its physical and economic performance and preserve asset value.1 Buildings suffer from general wear and tear over time, and sometimes you just need to upgrade to keep up with the current trends. For this reason, it’s important to regularly assess your site for potential upgrades, maintenance, and expansion. This blog will discuss what goes into developing a plan, including why these measures are important and their impact on facility value.
To begin, it’s helpful to understand the “why” of investing in capital improvements. The two most common ones are to attract new customers and to improve the current customer experience.2 Other factors to consider include how well your facility competes in its market, current condition of the facility’s units, and opportunities for growth.
The first step in determining whether or not to invest in capital improvements is to develop a plan after assessing your self storage property.
Create a maintenance checklist for your facility broken into daily, weekly, monthly, and yearly tasks. This will help you assess areas of need.
Next, drive around your area and check out all of your competitors within a five mile range. Make a checklist so you can keep track of what you see and learn. Focus on:
Create a spreadsheet and list each competitor. Then give each property a rating of one to five in each category so you can compare them side by side. Also create a notes section so you can document what products and services each provides – climate-controlled units, drive-up units, boat/RV storage, wine storage, record storage, packing and shipping supplies, truck rentals.
Be as objective as you can. This will help you understand how your facility compares to others and help you determine if you are missing key products and services being offered by other operators in your target area. Once you have completed this assessment, the team at Forge can help you decide and prioritize upgrades to consider as well as help in the complete planning for these upgrades.
When deciding which upgrades to make, the Forge team can help you determine which projects are worthwhile – which ones maximize facility aesthetics, function, and value. The areas Forge looks at includes:
1 Will the project increase sales? Will it attract new customers? Having features that are distinguishable from competitors can improve conversion rates.
2 Will it improve the customer experience? If tenants are happy, they’ll stay longer and leave better reviews; and positive reviews are part of the formula to rank well on search engines and attract more business. Improvements can also demonstrate your company’s value and commitment to current customers.
3 Will it prolong the life of the asset? If the project is preventive or good for the long-term value of the property, then the costs are more easily justifiable. The Forge team will suggest measures to take to help decrease expensive measures later and capital expenses over time.
4 Will capital improvements make the property more attractive to buyers down the road? If your long-term strategy is to sell, capital improvements can raise facility value, commanding a higher sales price. In addition, they can help justify higher rental rates, which improves cash flow and makes the asset more attractive to buyers.
Assessing Your Self Storage Property: Project Focus and TypeCapital improvements can be broken into the following four categories.
Aesthetics. This includes things such as painting, façade upgrades, signage, and landscaping. The objective of an aesthetic project is to attract attention with a retail appearance and clear branding elements, so potential customers driving down the street see this is storage, and it’s clean and modern.
Functional/operational upgrades. These include things like door replacements, additional parking, gate upgrades, point-of-sale systems, and office retrofitting. It might include the installation and implementation of technology such as kiosks and smart locks. These improvements enhance the customer experience and make your site more competitive.
Asset preservation. This area includes items that have worn out over the years. It includes items such as roof replacements, parking-lot repaving, sealcoating, mechanical-equipment servicing, and drainage issues. These are areas where Forge can really help. We can provide you with many cost-effective options from which to choose.
Expansion and conversion opportunities. This includes expanding existing buildings, constructing new ones on extra property, teardown and rebuild, or a conversion of portions of your existing facility. Again, the Forge team can step in and guide you through this process from start to finish.
Here are a few final tips to keep in mind when considering capital-improvement projects.
Pay attention to market dynamics. Besides surveying what your competition is or isn’t doing, keep an eye on other factors shaping the self storage industry, particularly in your market, such as future residential and commercial developments in the pipeline. These could drive the need for additional self-storage or lead to necessary projects at your facility.
Build relationships with trustworthy vendors.3 The Forge Building Company team has your back. The company has completed over 500+ jobs and built over 50 million square feet. It is key that anyone you hire is looking after your best interests. Forge has your back! And the company provides the right team for your construction project. This includes a contractor, site planning engineer, building supplier, architect, and project manager. Build a team of people you trust to bring your project to completion. The Forge team knows the self storage industry.
Redevelopment is a great way to add lasting value to your self-storage facility and maximize its physical and economic performance. Creating an honest assessment of your property and understanding how it competes in your market will allow you to create an appropriate scope of work that will make your operation competitive and viable in today’s changing market.
Works Cited
1 Wyckoff, S. (2020, February 28). Inside Self Storage. Retrieved from Insideselfstorage.com
2 Tom Heick, M. S. (2022, January 8). Inside Self Storage. Retrieved from Insideselfstorage.com: https://www.insideselfstorage.com/site-maintenance/capital-improvements-assessing-your-self-storage-property-and-planning-potential
3 Live Oak Bank. (n.d.). Retrieved from liveoakbank.com
