As 2023 comes to a close, the team at Forge likes to reflect on the past year and make our customers aware of new laws in store for 2024. Overall, the self storage industry continues to demonstrate exceptional performance as a prominent commercial real estate sector and emerging as one of the nation’s top investment categories. Occupancy rates have remained steady at around 90% throughout the latter half of 2022, and this pattern continued with minimal variation throughout 20231. More and more people are taking advantage of self storage facilities due to the high cost of housing in densely populated areas of the country coupled with the increased frequency with which they must relocate.
So, what laws should self storage investors and owners be aware of?
One bipartisan group of House members is set to finalize a bill to upgrade and expand access to outdoor recreation areas across the nation. If signed, the bill would add more fuel to the fire for developing RV and boat storage facilities. Currently, there is still a large demand for this form of storage.
The EXPLORE Act is comprehensive in its efforts to improve Americans’ outdoor experiences. It will direct a variety of government agencies, like the Forest Service, the Interior Department, and the Bureau of Land Management to produce meaningful changes to our outdoor areas. One such improvement is modernizing campgrounds through better broadband connectivity and digital park passes, bolstered by private-public partnerships. These improvements will bolster our country’s recreation industry, which produced nearly $1.1 trillion in economic activity and supported roughly 5 million jobs in 2022. It will also bolster RV and boat storage growth 2.
The Self Storage Association is also tackling several initiatives including addressing two common concerns for storage operators. First, what to do when paying tenants are told to move out but fail to do so; and second, how to ensure that a tenant is bound by a rental agreement that he refuses to sign.
Several states already address these concerns in laws applicable to residential or commercial landlords. The SSA is pursuing legislation to address one or both concerns in Georgia, Kansas, Maine, Utah, and Virginia.
They are also looking at reforms to provide greater clarity on how to deal with trespassers who store personal items or vehicles without permission, towing of vehicles for non-monetary violations of the rental agreement, and disposal of low-value property without a lien sale (as is already permitted by a handful of states) 3.
In the state of California, Governor Newsom signed a bill that becomes effective January 1, 2024, which might be able to reduce the number of newspaper advertisements you have to run before a lien sale.
Specifically, a new option has been added to allow you to run an advertisement “once in a newspaper of general circulation published in the public notice district where the sale is to be held or in the county where the self-storage facility is located, and once on any publicly accessible internet website that customarily conducts or advertises online auctions or sales.” The online advertisement must remain online for Seven (7) days before the sale 4.”
There are several important implications to this change, not the least of which is you must choose the right place to post this “alternative second advertisement.” Further, please note the requirement to include a listing of the contents of the unit in your advertisement has been removed. There are many other changes made and nuances to AB-542. It is always advisable to consult with your California legal counsel to review and understand how you can potentially enjoy the benefits of reducing your physical newspaper advertising to one time per sale.
The need for self storage is expected to continue to rise as individuals choose to rent for more extended periods or opt not to sell their current homes, resulting in a shortage of space. Additionally, self storage construction has also notably increased over the past several years and is expected to continue as the demand for personal and business storage continues to grow. With these new laws and new initiatives, 2024 is predicted to be another growth year for self storage. Cheers to the new year!
References
1. Matthews Real Estate Investment Services. (2023, September 18). Retrieved from matthews.com: https://www.matthews.com/self-storage-market-report-northeast/
2. Stern, B. (2023, December 11). Toy Storage Nation. Retrieved from toystoragenation.com: https://toystoragenation.com/2023/12/11/new-bill-would-improve-outdoor-experience-across-america-bolster-rv-and-boat-storage-development/
3. Doherty, J. (2023, December). SSA Magazine. Retrieved from SSA Magazine: https://cloud.3dissue.com/132457/132608/155202/2023-December-SSAMagazine/index.html?page=10&_ga=2.185880489.1264725417.1701897973-44071511.1701897973
4. Self Storage Legal. (2023, December 6). Retrieved from selfstoragelegal.com: http://www.selfstoragelegal.com/2023/12/06/california-self-storage-statute-updated/
5. McLeod, A. (2022, June 23). Inside Self Storage. Retrieved from Insideselfstorage.com: https://www.insideselfstorage.com/market-conditions/can-self-storage-performance-strength-last-here-s-an-outlook-for-the-rest-of-2022
With the rapidly growing market for boats, RVs, classic cars, and other “toys,” developing or Investing in Storage Condominiums can be lucrative for both the investor and buyer of the individual units. These types of storage units appreciate in value due to the low supply and high demand, allowing owners to capture a full return on investment and more. Plus, there are many tax breaks because it is commercial real estate.1
A storage condo, like it sounds, is much like a residential condo except it is a storage unit that you own. These units are designed primarily for the rapidly growing market for boats and RVs (see our blog https://forgebuildings.com/where-is-boat-rv-storage-headed/), but can also be used to store items like classic cars, business inventory, and more. Each storage condo unit is part of a storage complex that has some shared amenities for which owners typically pay monthly dues to maintain in a similar manner as a traditional Homeowners Association.
While these types of condos share the same basic purpose as other storage units, condo-style vehicle storage differs in significant ways from the standard rental model. First, vehicle-storage condos share many characteristics with office-warehouse or flex condos, including high and wide doors, high ceilings, wide aisles between buildings, climate control, and security features. They may also be in an industrial park or on land zoned for light industry. A big difference is that the storage condo complexes usually offer services specific to boats and RVs, such as dump stations, wash stations, maintenance, and repair.
Irrespective of market conditions, storage condos appeal to buyers and developers for a variety of reasons:2
In today’s market, most storage condominium units range in cost from $55,000 to $200,000.4 They sell for around $125 to $150 per square foot. In addition, owners can expect to pay $30 or more each month for maintenance fees such as snow removal and lawn care. Also, like other real estate properties, the storage condo is also subject to local property taxes.3
How large are they?Storage condos are built primarily with the owners of large RVs, boats, and classic cars in mind. They typically range between 35 to 50 feet in depth and 10 to 25 feet in width. They also typically have 14-foot-high ceilings. The average storage condo covers about 600 square feet in total.
Because owners typically store their boats, RVs, and classic cars storage condos are usually very well-insulated, climate-controlled, and outfitted with electrical service. They also usually offer dump stations and wash areas for RVs, along with 24-hour access, and enhanced security features (due to the cost of the boats and RVs being stored).
There are many factors to indicate that the storage condo business is worth the investment, including local market conditions. Many areas of the country lack vehicle storage or places where boats and RVs can be stored securely. Limited inventory equals a great investment opportunity for both the developer and buyer of the individual unit.
There are currently over 25,000,000 boat and RV owners with another 9,000,000 expected to join the market in the next 3 years. Economic and social trends indicate that this is likely to continue throughout this year and beyond. As the sales of RVs and boats increase, the demand to store these vehicles is also likely to grow. Traditional self storage facilities have limited space and amenities to store RVs and boats, which means that demand for RV/boat condos will likely grow as RV and boat sales rise.
Owners of other types of vehicles, such as collectible and antique cars, motorcycles, and commercial vehicles, may also be in the market for storage condos. Owners of all these vehicle types will not only want a unit for storage, but for maintenance and light repairs as well – a secure place where they can pursue their hobby.
Want to know more about investing in storage condominiums ? Check out our latest video with LuxeLocker to learn more about the Storage Condominium market and why they chose to work with Forge Building Company. Then let’s connect.
References
1. The Storage Guy. (n.d.). Retrieved from thestorageguy-madison.com: https://thestorageguy-madison.com/storage-condominium-your-home-away-from-home/#:~:text=Storage%20condominiums%20appreciate%20in%20value,the%20value%20of%20a%20property.
2. Stratton, J. (2007, October 1). Inside Self Storage. Retrieved from InsideSelfStorage.com: https://www.insideselfstorage.com/vehicle-storage/entering-storage-condo-market
3. Roberts, D. (2023, August 6). Guide Home Blog. Retrieved from GuideHomeBlog.com: https://guidehomeblog.com/how-much-do-storage-condos-cost/
4. Harris, A. (2020, May 26). SpareFoot Blog. Retrieved from Sparefoot.com: https://www.sparefoot.com/self-storage/blog/23966-what-are-storage-condos/
In an unpredictable world where natural disasters can strike with little warning, such as the recent fire in Lahaina, Hawaii, safeguarding valuable possessions has become an essential concern. As individuals and businesses increasingly turn to self storage units to store their belongings, the imperative to ensure the preparedness of self storage facilities for natural disasters has grown exponentially. The significance of incorporating resilient infrastructure and developing comprehensive disaster preparedness plans cannot be overstated. This blog delves into the crucial measures necessary to fortify self storage units, guaranteeing the safety of stored items and providing peace of mind to your customers in the face of nature's unpredictability.
Some natural disasters that you should be prepared for are:
In the United States, where you live is the largest risk factor for determining the type of natural disaster to be most prepared for. For example, large hilly areas are at risk for landslides, whereas coastal areas are most at risk for hurricanes. It is always a good idea to check with your local Emergency Management Agency for a complete listing from the Hazard Vulnerability Analyses Plan.
One of the key considerations in constructing self storage units that can withstand natural disasters is the choice of materials used. Concrete has long been lauded for its durability and ability to withstand various forces of nature. Reinforced concrete, in particular, proves to be a formidable option for disaster-resilient construction. Its combination of high compressive strength and flexibility makes it a suitable material for enduring earthquakes, while also offering resistance against fire. Additionally, concrete's resistance to water damage is crucial in flood-prone areas. When reinforced with steel bars or mesh, it gains the ability to absorb and distribute stresses, rendering the structure more resistant to impacts and vibrations caused by seismic events. Moreover, concrete's low maintenance requirements and longevity contribute to the long-term sustainability of the facility, further solidifying its position as a top choice for self storage construction.
In combination with concrete, the strategic use of steel can significantly enhance the disaster resilience of self storage facilities. Steel’s innate strength, flexibility, and ductility make it an ideal material for framing and structural components. As Forge, your steel building experts always recommend, incorporating steel framing in the construction not only provides the necessary support to withstand seismic forces but also enables a quicker construction process. Additionally, steel’s non-combustible nature safeguards the facility against fire hazards, reducing the risk of extensive damage in case of an inferno. For areas prone to hurricanes and strong winds, steel can be employed to create impact-resistant roofs and doors, bolstering the facility’s capacity to endure even the most aggressive weather conditions. The combination of concrete and steel provides the self storage facility with a robust structural foundation capable of withstanding a diverse array of natural disasters.
Creating a disaster preparedness plan tailored specifically for a self storage facility is important. Such a plan serves as a proactive blueprint for managing potential crises, ranging from earthquakes and floods to wildfires and severe storms. The team at Forge helps its customers identify vulnerable points within the facility’s design that might exacerbate the impact of a disaster. By addressing these vulnerabilities early on, our team can implement structural enhancements, reinforce critical infrastructure, and strategically position emergency resources to minimize damage and ensure the safety of both stored items and occupants. Furthermore, a well-documented disaster preparedness plan enhances the facility’s credibility, attracting customers who prioritize safety and are more likely to entrust their belongings to a space equipped to weather unexpected challenges.
The advantages of a disaster preparedness plan extend beyond immediate safety concerns, encompassing economic, legal, and ethical dimensions. Self storage facilities who establish robust disaster mitigation strategies demonstrate their commitment to responsible stewardship of their clients' possessions. This not only cultivates trust but also fosters a positive reputation that can translate into long-term success. From a legal perspective, having a clearly defined and regularly updated disaster plan can shield facility owners from potential liability in the aftermath of a natural disaster, ensuring compliance with safety regulations and obligations. Moreover, a well-prepared facility is more likely to recover swiftly from the aftermath of a disaster, thereby minimizing disruption to business operations and ensuring ongoing revenue generation. Ultimately, investing time and resources into crafting a thorough disaster preparedness plan is an investment in the facility’s sustainability, reputation, and the well-being of everybody involved.
In the realm of self storage construction, material selection plays a pivotal role in establishing the resilience of self storage units. The fusion of reinforced concrete and steel emerges as a potent combination to withstand a spectrum of natural catastrophes. Reinforced concrete’s durability, flexibility, and resistance to fire and water make it a cornerstone of disaster-resilient construction. Complemented by steel’s strength, ductility, and non-combustible nature, these materials together furnish the self storage facility with a robust structural foundation capable of standing up to the most severe elements.
However, materials alone cannot ensure preparedness. Crafting a tailored disaster preparedness plan is indispensable for self storage owners. Providing customers with reference documents for Personal Preparedness using FEMA and Red Cross Materials will show a sincere commitment to customer safety. Beyond immediate safety, such plans elevate a facility’s credibility, attract safety-conscious customers, shield self storage facility owners from potential legal ramifications, and bolster overall sustainability and reputation.
Working with a company, such as the steel building experts at Forge Building Company will ensure that your facility is built with the highest quality materials that will endure even the most aggressive weather conditions, providing peace of mind for your customers should a natural disaster occur.
FOR IMMEDIATE RELEASE
Boise, Idaho – September 6, 2023 – Forge Building Company, a renowned nationwide storage builder, proudly announces its nationwide expansion with projects in eleven additional states. This significant milestone solidifies Forge Building Company as the leading expert in the self storage industry.
The nationwide expansion includes projects in Delaware, Michigan, Ohio, Kansas, Missouri, Maryland, Tennessee, Pennsylvania, Hawaii, New York, and Florida. With a focus on providing tailored and up-to-date solutions, Forge Building Company offers a diverse range of designs, including single-story and multi-level self-storage facilities, boat and RV canopies, storage condos, flex buildings, and conversions of large-scale retail spaces into self-storage facilities.
“We are excited to contribute to the development of local economies as we expand our company towards the East Coast and Hawaii,” said Hamish Bell, President of Forge Building Company. “Our transition from primarily operating west of the Mississippi to becoming a nationwide developer demonstrates our expertise in the self storage industry regardless of the location.”
Forge Building Company's commitment to customer satisfaction and close collaboration sets it apart from competitors. With 100+ projects already in the pipeline for the remainder of 2023 and throughout 2024, the company is well-positioned for continued growth and success on a national scale.
In the growing self storage industry, choosing the right builder is crucial to your success. With the Forge team, you’re not just hiring a storage unit builder; you are partnering with dedicated professionals committed to excellence in planning, design, engineering, construction, and project management.
About Forge Building Company
Founded in 2007 by veterans Hamish Bell and Hayden Farrell, Forge Building Company has become a comprehensive steel building expert and provider. With over two decades of experience as a nationwide storage builder and a portfolio of over 500 projects spanning 50 million square feet of construction, Forge Building Company, the self storage experts, remains privately owned and operated in Boise, Idaho.
In the changing landscape of the self storage industry, the integration of cutting-edge smart technology has emerged as a transformative force, redefining the experience for both operators and builders. With the advent of smart locks and smart-security systems, robotics and AI, intuitive kiosks for seamless check-in/out processes, and user-friendly software and apps, HVAC control systems, and more, benefits abound on multiple fronts. For operators, these advancements provide a competitive edge and greater profitability with heightened security, streamlined operations, and increased customer satisfaction. Developers, such as Forge Building Company, who fully understand the importance of these technologies and know how to implement them into the facilities they are building, gain a competitive advantage in creating state-of-the-art facilities for their customers. Embracing this era of technology empowers self storage businesses to stay ahead in an increasingly digital world providing its customers with unparalleled convenience and peace of mind.
Smart TechnologyThe integration of smart technology, including smart locks, smart security-systems, robotics, AI, and self-service kiosks for check-in/out, offers many advantages for both operators and builders of self storage facilities.
One of the most significant pieces of technology for a self storage business is security and location intelligence software. This software can also provide valuable insights into how foot and vehicle traffic flows at their facilities.
Many self storage software products also offer integrated security systems such as access control and video surveillance. This is key for protecting the owner’s investment.
Smart LocksWhen you combine smart locks with advanced security systems, operators have the ability for real-time monitoring and control over access points, minimizing the risk of unauthorized entry and potential theft. Smart locks and security systems also reduce the time that the building operator spends on tedious tasks such as checking and cutting locks. With the implementation of smart systems, operators can spend more time focusing on the needs of their customers and less time on “time consuming manual tasks”1.
Another trend driving the self storage market is the use of robotic/AI-driven surveillance systems. These types of systems can efficiently monitor large areas, identifying suspicious activities and alerting operators promptly, further fortifying the facility's security measures.
One major cost saving use of technology for self storage facilities is the implementation of intelligent kiosks. Instead of maintaining a physical presence on-premise round-the-clock, self storage facilities can now leverage intelligent kiosks to replicate the interactions a manager would typically have with customers. “These kiosks efficiently handle approximately 60% of the frequently asked questions, relieving the burden on staff and improving customer service”2.
Automated systems like smart kiosks offer numerous benefits by streamlining self storage operations. They play a crucial role in guiding tenants through the onboarding or move-in process. They can assist customers in choosing the appropriate storage size, facilitating unit access, accepting payments, and addressing lease-related inquiries. Embracing this technology empowers facilities to optimize resources and provide a more seamless and efficient experience for all parties involved3.
By incorporating smart locks and automated rental systems, operators have the opportunity to offer upgraded smart units at a premium price point. Tenants are willing to pay extra for the enhanced benefits. These benefits may include improved security, convenience, and the superior quality that these smart units provide. Additionally, the rental process can include automated options for tenants to select insurance coverage or other upgrades, making it a seamless and efficient experience for both tenants and managers alike4.
The incorporation of new software and apps in self storage facilities presents a wide variety of benefits for both operators and builders. For self storage management, these include:
Today, mobile apps enable self storage customers to quickly access facilities or units with scannable codes or RFID tags. These apps also supply customers with updates, such as notifications about payment due dates, access changes, and account management.
Furthermore, these software solutions provide real-time data and analytics, offering valuable insights into customer behavior, occupancy rates, and revenue generation. This data-driven approach empowers operators to make informed decisions and optimize facility performance6.
Very few places in the country are fortunate enough to avoid the frigid temperatures of winter, the extreme heat of summer and the humidity that comes with it. For that reason, climate-controlled storage spaces and HVAC control systems have exploded in popularity, and this is particularly true in areas prone to extreme temperatures or high humidity. Renters storing valuable or irreplaceable items often prefer climate-controlled self-storage units due to the high degree of protection and peace of mind they provide.
Owning a climate-controlled storage business is a great investment. Storage facilities that incorporate HVAC control systems typically command higher rental rates than traditional space of the same size. The amount of upcharge will vary by region of the country, however, in some markets, this could be 15-35% or more7. Another huge advantage is that the newest generation of 100% climate-controlled, multi-story buildings enables a developer to build roughly three times the rentable square footage on the same amount of dirt. This means the owner can absorb a much higher land cost. It also allows them to consider many more parcels for a project8.
For more details on climate-controlled self storage units, see our blog, “Is Climate-Controlled Self Storage Worth the Investment?” and our video Climate Control Self Storage.
Integrating cutting-edge smart technology and adopting new software and apps have revolutionized the self storage industry. They yield substantial benefits for both operators and builders. With enhanced security, streamlined operations, and increased customer satisfaction, operators can navigate the challenges of an increasingly digital world. The convenience and peace of mind offered to customers through smart locks, robotics, kiosks, HVAC control systems, and user-friendly apps redefine the self storage experience, attracting a tech-savvy clientele. Furthermore, builders gain a competitive advantage by offering these new technologies in state-of-the-art facilities with advanced security and convenient self-service options. As the self storage landscape continues to evolve, embracing this era of technology proves essential for thriving in the industry and ensuring unparalleled convenience for customers
Works Cited
1,4. Hembree, Jordan. “5 Reasons Smart Locks Are a Self Storage Manager’s Best Friend.” Janus International Group, 31 Dec. 2020, https://www.janusintl.com/news-media/blog/best-smart-lock. Accessed 3 Aug. 2023.
2,3. Ramirez, Rodolfo. “How AI and Big Data Are Disrupting the Self Storage Industry.” Swivl, 21 June 2023, https://www.tryswivl.com/blog/how-ai-and-big-data-are-disrupting-the-self-storage-industry. Accessed 3 Aug. 2023.
5. Burnam, C. (2023, April 18). Forbes.com. Retrieved from Forbes.com: https://www.forbes.com/sites/forbesbusinesscouncil/2023/04/18/three-ways-technology-is-changing-the-self-storage-industry/?sh=645f69c53604
6. Austin, David. “Should I Use a Self Storage App for My Business?” Storagepug, 7 Feb. 2023, https://www.storagepug.com/blog/self-storage-app. Accessed 4 Aug. 2023.
7. Regency Steel Buildings. (n.d.). Retrieved from Ministorageoutlet.com: https://ministorageoutlet.com/self-storage-industry-projections/
8. Rider, J. A. (2022, February 20). howmuches.com. Retrieved from How Muches: https://howmuches.com/how-much-does-it-cost-to-build-a-climate-controlled-storage/
Whether you are building your first self storage facility or own one that you want to upgrade, deciding on what key features you may want to include can be challenging. That’s where the team at Forge Building Company can help. We can work with you to determine upgrades and features that make sense, not just from an aesthetic perspective but financially, for both the short and long term.
When it comes to making physical improvements, you need to be smart. Invest in upgrades that will improve the customer experience and add to your bottom line.
The following are some suggestions and ideas.
So, where do you start? According to Steven Wear of IMPACT Self Storage, when it comes to facility improvements, there’s a return multiple for every dollar of increased net operating income (NOI). Cap rate is calculated by dividing NOI by value or price. If a self-storage property trades at an 8% cap, for every $1 that NOI increases, facility value grows $12.50.
Any upgrades that affect the trading cap rate also result in a return multiple. By improving a property’s class ranking, the cap rate will decrease. If a facility with NOI of $100,000 is improved so someone will buy it at a 7% cap as opposed to 8%, there’s a profit increase of more than $178,000.
When considering value-add projects to include when building or renovating your self-storage facility, any investments that can improve asset class and increase NOI should be prioritized. One example of this would be taking traditional units and converting them into climate-controlled spaces. Facilities that do this often see an increase in rental rates as well as a better class. However, the increased utility expense prevents the owner from capturing 100% of the rate increase, but if there is an overall positive impact on NOI, then it’s a good investment.
When you think about what features to add to your facility, consider that while paint and landscaping may not necessarily add a lot of value, if a lack of new paint and attractive landscaping results in customers not wanting to rent there, then improving those items will increase NOI.
Many functional items will improve the appearance and offer more benefits than an indirect valuation increase. Two of these, for example, include paving and fencing. Many times, our customers run into self-storage loans that have physical requirements. For instance, commercial mortgage-backed securities loans have some of the most favorable market terms but usually require a facility to be paved and fenced.
Does adding or upgrading your facility with sustainable improvements make financial sense? Typically, when self storage units have been in operation for a while, there are usually many ways to improve their sustainability and energy efficiency that will add to the profitability of the facility.
When trying to sort this out when you are looking to remodel an existing facility or build a new one, consider partnering with a steel building contractor, such as Forge Building Company. We have over 15 years of experience building energy-efficient structures. We use low-energy lighting but without compromising on items such as a high-quality, modern HVAC system.
Many self-storage facilities are constructed of steel, which is already very durable. With Forge, being a steel building expert, we use Galvalume in the buildings we erect. This is a proprietary coated steel, that prevents corrosion and deterioration that could result in a compromised building envelope and energy leaks. We also highly recommend that the insulation is sufficient to regulate unit temperature. Rigid foam insulation infused with non-toxic borates is a great solution that also discourages pests.
Solar panels or efficient roofing, such as the standing seam roof panels used by Forge, is another benefit to steel construction. Roof coatings with a high percentage of infrared reflectants help maintain a more stable building temperature. A “cool” finish can reduce surface temperature by up to 38 degrees and save on energy costs by about 23%.2
Retrofitting energy-efficient lights is another great way to reduce electricity consumption. Alternatively, consider fitting larger lights with a motion sensor, so they either dim or turn off completely when there’s no activity. While installing LED lights or sensor switches might seem tedious on the surface, they will be much cheaper to run and maintain in the long run.
Lower energy use isn’t only sustainable, it creates economic savings for business owners and customers.
For other sustainable improvements to consider, see our blog titled, “Sustainability in Self Storage Facility Renovation and Projects to Consider.”
With the explosive growth in the boat and recreational vehicle (RV) market, adding boat and RV storage may boost your bottom line quickly if your market warrants it. And there are many options when adding this type of storage from open canopies to storage condos.
With storage condos, many of these facilities are adding fire sprinklers, electrical outlets, fluorescent lighting, and individual door alarms. Many also offer 24-hour access with alarm monitoring and 24-hour video protection. The large sectional doors are sealed on all four sides. Driveways are 56 feet wide to allow easy parking of these large vehicles. Many of the storage condo buildings are plumbed for water so customers can wash vehicles in front of their units before storing them. And many offer an RV-waste dump and separate bathrooms with showers for men and women.
Many of these types of facilities are creating a new culture where the owners of these “toys” come to store their vehicles and then end up hanging out for the evening.
Facility improvements aren’t just about increasing value and immediately adding to your bottom line; they're also about maintaining it. So, weigh your options carefully and invest wisely. Forge Building Company welcomes the opportunity to help you choose value-added features and projects based on how positively they affect the asset from a financial point of view. Let’s connect.
Works Cited
1 Wear, S. (2021, September 25). Inside Self Storage. Retrieved from Insideselfstorage.com: https://www.insideselfstorage.com/facility-value/value-add-projects-self-storage-making-smart-upgrades-yield-positive-return
2 Barnard, J. (2018, September 14). Retrieved from Inside Self-Storage: https://www.insideselfstorage.com/eco-friendly-storage/differentiation-through-sustainability-green-ideas-self-storage
Let’s face it, the self storage industry, which continues to see amazing growth, has come a long way. According to Mordor Intelligence Research, the valuation of the self storage market reached $87.65 billion USD in 2019. By 2025, that valuation is expected to grow to $115.62 billion. This puts the compound annual growth rate (CAGR) at 134.79% over the forecast period of 2020-2025.1
More and more, today’s different types of self-storage facilities are being built with an increasing emphasis on design and amenities, as well as security and convenience. Regardless of what you need to store, there is likely a spot that will provide the space you need with a few bells and whistles, too. As the industry has grown and continues to grow, so has the value associated with this type of investment.
And for the savvy investor, there are now more options than ever - from the traditional drive-up units to multi-story buildings to climate-controlled spaces to converting an office or big box store to building storage condos for boats and RVs. There are a wide variety of self storage options to choose from depending on your budget, location, and needs within the community in which you intend on building.
To see the types of projects Forge is involved with, see:
Let’s explore each option.
The traditional drive-up self storage facility typically offers outside drive-up storage. These warehouse type of units typically charge by the month and provide wide driveways for trucks to unload belongings into individual units. The interior spaces range in dimensions from 100 square feet up to hundreds of thousands of square feet.
This type of facility works well in communities where customers want to store and organize their belongings in a safe, clean place with easy access to their goods. These types of storage units provide the highest level of convenience and work best in a community where people want to load or unload their goods as quickly as possible. They are a great option where land is plentiful enough to create drive-up pathways.
These types of units typically do not offer climate-control options.
For an example of a traditional drive-up facility built by Forge Building Company, see Wise Space Storage | Boise, ID.
Multi-StoryMulti-story self-storage is great for when land space is limited. These are also ideal for the investor wanting to add climate-control options. Some may contain drive up options for the lower levels, then climate-control options for the upper levels.
Climate-controlled self storage is a great option in areas of the country that experience extreme heat or cold temperatures and/or that experience high humidity. These units are great for your customers storing furniture, antiques, artwork, and other items where the climate needs to be controlled to avoid moisture buildup and mold prevention.
For more information on whether or not climate-controlled self storage is worth the investment, see our blog titled, “Is Climate-Controlled Self Storage Worth the Investment?” and for an example of a Forge Building Company climate-controlled storage facility build, see: Kuna Caves Storage
ConversionsWith the recent pandemic and decline in big-box retail, there is now a significant inventory of vacant buildings out there for sale. With the current trend of office vacancy rates increasing, building owners are seeking creative ways to make that empty space generate profit again. As such, some are converting these structures into self storage facilities or selling them to others who wish to do so. These buildings can be converted into climate-controlled units or more traditional drive-up units depending upon the building, location, etc.
While this development path can be an efficient time and cost-saver, there are important considerations. These are addressed in our blog titled, “Converting Office and Big-Box Retail Buildings to Self Storage.”
Americans love to travel and have been purchasing RVs and boats for years. According to numbers shown from industry trade groups and places like Statistica 2, Camper FAQs 3, and Go Rving 4, growth in ownership and usage of RVs and boats is growing.
The RV industry alone has seen consistent growth every year since 2009, and with the popularity of van life coupled with the pandemic, there was a huge spike in Gen-Z and millennial RV owners that wanted to travel and have recreational experiences without crowds. Many also found that they could work from remote locations, which meant they could live in RVs and work, not just use them for travel. This helped the outdoor recreation industry to reach close to a trillion dollars.
There are many factors to indicate that the storage condo business is worth the investment, including local market conditions. Many areas of the country suffer from a lack of vehicle storage or places where boats and RVs can be stored securely. There are currently over 25,000,000 boat and RV owners with another 9,000,000 expected to join the market in the next 3 years. Economic and social trends indicate that this is likely to continue throughout 2023 and beyond. As the sales of RVs and boats increase, the demand to store these vehicles is also likely to grow. Traditional self storage facilities have limited space and amenities to store RVs and boats, which means that demand for RV/boat condos will likely grow as RV and boat sales rise.
Owners of other types of vehicles, such as collectible and antique cars, motorcycles, and commercial vehicles, may also be in the market for storage condos. Owners of all these vehicle types will not only want a unit for storage, but for maintenance and light repairs as well – a secure place where they can pursue their hobby.
For more information on where this segment of self storage is heading, see our blog titled, “Where is Boat and RV Storage Headed?” and for an example of a Forge Building Company Storage Condo development, see: Luxe Locker.
There are many perks that investors look forward to when owning a self storage facility.
Consistent Demand
From boat & RV condos to small units that accommodate a few moving boxes, there is generally a reliable level of demand for this type of commercial real estate. Finding and/or building the facility that is right for your budget and location is key.
What’s more, self storage businesses can usually weather the storm of an economic downturn or recession. When people are forced to downsize or move, self storage becomes a valuable option.
On the other hand, when the economy is strong, people are more likely to buy things or pursue home renovations that require temporary furniture storage.
Flexible Management Options
In comparison to other types of businesses, interaction with customers is usually minimal. Facility owners may choose to have a small team, but it’s not uncommon for a single person to run this type of business.
Aside from providing tours and signing contracts, it usually isn’t necessary to always have someone on the premises. Once a contract is signed, tenants have access to their unit and can make automatic payments each month. As an investor or facility owner, you can be as involved as you want to be.
Opportunities for Additional Revenue
The base rent for your storage units will be your main source of income, but many self storage locations offer a variety of other products and services to generate more revenue.
In addition to selling moving and storage supplies, such as boxes and packing materials, many storage businesses partner up with other companies to offer truck, trailer, and van rentals.
Low Maintenance Costs
Self storage is very low maintenance. Aside from proper lighting, security, and landscaping, there isn’t much to tend to. Common areas should be clean and well-maintained, but there’s no reason to invest in extensive decor.5
Choosing the right self storage investment option will depend on your location and its market, budget, and demand. The team at Forge Building Company is happy to help you through the entire process. Just give us a call.
Works Cited
1. Meyers, S. (2020, December 1). Forbes. Retrieved from Forbes.com: https://www.forbes.com/sites/forbesrealestatecouncil/2020/12/01/a-look-at-self-storage-growth-trends-now-and-post-pandemic/?sh=79758c022165
2. Statista. (2022, December 9). Retrieved from Statista.com: https://www.statista.com/statistics/1155988/us-recreational-boating-vessels/
3. Camper FAQs. (2023). Retrieved from Camperfaqs.com: https://camperfaqs.com/rv-statistics-trends-facts
4. Go Rving. (2022, June 16). Retrieved from gorving.com: https://www.gorving.com/newsroom/rv-industry-association-manufacturing-statistics
5. Mizes, B. (2023, January 5). CREXI. Retrieved from Commercial Real Estate Exchange, Inc.: https://www.crexi.com/insights/8-pros-and-cons-of-investing-in-self-storage?g_acctid=166-395-
With the recent pandemic and decline in big-box retail, there is now a significant inventory of vacant buildings out there for sale. The current trend of office vacancy rates increasing, building owners are seeking creative ways to make that empty space generate profit again. As such, some are converting these structures into self-storage facilities or selling them to others who wish to do so.
While this development path can be an efficient time and cost-saver, there are important considerations. This blog will help you decide if conversion of an existing building is the right path for you to be able to properly transform a structure into a well-built self storage facility.
Like any building project, there are definitely pros and cons to consider for conversions of existing buildings into a self storage facility. Here’s our take.
Pros. Because of the amount of inventory out there, you may be able to purchase an existing building for less than it would cost to build it, so after completing the renovation, you’ll have a lower cost basis for your project. Another advantage is that if you maintain the footprint, access points, and site circulation, you may also be able to avoid going through the site-plan approval process with the city, which can save money and simplify entitlements. These advantages add up to an expedited construction schedule at a lower cost.
Cons. On the flip side, since the structure wasn’t originally built with self storage in mind, it may not always be located in an optimal location for visibility. In addition, the design needs to adapt the building can cause irregular unit sizes and long travel distances from loading areas to units. One other consideration is zoning. This can be a problem since many vacant buildings in commercial zones don’t allow for self storage. Finally, it is important to assess the acquisition price and building condition against all the costs of the conversion and anticipated profits down the road to determine if conversion is the right business strategy.
Along with the pros and cons mentioned above, following are some other considerations.
For any self storage building project, whether it’s a conversion or one being built from the ground up, your site selection is the number one consideration. Retail-like visibility is always preferable to being out of sight. No amount of online marketing can replace the free exposure of being located along a frequently driven, high-traffic route. Proximity to potential customers is key.
One of the most restrictive challenges in pursuing a conversion project is finding a building where self storage is permitted. Thankfully, many jurisdictions appreciate creative solutions to filling empty structures. A zoning authority that has a positive view of storage as a community-serving use will aid your cause; however, if storage is still considered an industrial use that should remain on the periphery of communities, your development path is going to be all uphill, costing excessive time and money.1
As in any type of self storage build, it is critical to understand rates, occupancies, and the competitors around you. The team at Forge always recommends that a complete and thorough market study be completed. It is also key to investigate whether or not self storage is allowed in the zone where the building is located. If it is, then you may need a conditional-use permit or rezoning permit.
Old Idaho Statesmen Building Before Conversion to Self Storage
Forge also always recommends that you check the title and survey to determine if there are covenants, conditions, and restrictions, easements, and other agreements that could impact your ability to convert the building. It’s common, especially with retail properties, to have private restrictions that prohibit self storage, easements that impact circulation, common-area maintenance fees, shared utilities, etc. Environmental problems are also common, especially in older manufacturing and warehouse facilities. Thoroughly understanding your site and its history is a key part of having a successful project.
When looking at starting a conversion project, typically a commercial zone 2 (C-2) location is the most desirable in a market area. It will typically have a large and destination-bound traffic count and great visibility. In addition, facilities in C-2 typically rent up faster than those in light industrial 1 (I-1).2
It is also good to eliminate any potential site that cannot accommodate a minimum of 50,000 net rentable feet. This is typically optimal for cost-efficient management.
Once you have your site selected, you will need to assess the structure itself – the roof, structure, parking lot, mechanical, etc. In addition, many old buildings have refrigeration systems and other items that are costly to remove. Asbestos, and other hazardous materials remediation may also need to be addressed.
Floor load. If the building you are looking to convert is a multi-story building or has a mezzanine, it is key to ensure the floor load is adequate for self storage use.3 One of the most significant costs in the conversion of office space to self storage will be the assessment and likely remediation of the structural system. Most office buildings have been designed and constructed with a much lower live load than what’s required for self storage, often rated for 50 to 80 pounds load per square foot (PSF) compared to 125. That’s about a 50 percent deficit.
To help you calculate the loading design, it is key to do field measurements with limited destructive testing and a structural engineer. (See our blog titled, “Designing a Self Storage Facility – How to Select Your Design Team”)
If the structural engineer finds that the structure doesn’t meet the required loading for self storage, there are still solutions. Adding light-gauge bearing walls is the most cost-effective, while reinforcing existing beams could also be sufficient. Reinforcing under-bar joists is the costliest solution.
Old Idaho Statesmen Building During Conversion to Self Storage
Rentable Space. Most urban and suburban self storage facilities are 100,000 to 120,000 gross square feet. However, taking into account elevators, stairs, and corridors may reduce the rentable yield to 75,000 to 90,000 square feet. It’s key to know what amount of rentable square footage is necessary to be profitable.
Another consideration you will need to make in this same area of the design, is the average unit size and mix.
In a standard conversion, you’ll use the existing building without changing the overall footprint. This is the easiest, most straightforward type of project. Depending on the building, it is also common to add one or more floors in the existing footprint.
Increasing the rentable square footage of the building through a footprint expansion or the addition of more structures can be another great option. This may include adding drive-up units or vehicle storage in the rear or side of the building.
At the end of the day, the design of your conversion will play a significant role in its success.
Thermal envelope. Energy-code compliance has only been around since 2012. Therefore, the level of renovation necessary will depend on the existing wall, slab, and roof.
Elevators. Check to see if the existing elevators are in your tenant loading/unloading area. A self storage elevator should have a 4,500-pound capacity with a taller cab to accommodate large pieces of furniture.
Loading area. An appropriately sized loading and unloading area with ample space to maneuver large vehicles, such as moving trucks, is key. Your loading area should have a minimal vertical clearance of 14 feet. It should also be convenient to the building interior, particularly the elevator.
Old Idaho Statesmen Building After Conversion to Self Storage
Self storage has some of the easiest mechanical systems of any real estate type. In the case of an office conversion, the goal is to minimize replacement. The preferred self storage HVAC system is a residential-sized split system with minimal to no ductwork. Boilers and other perimeter unit systems lack efficiency.
A sprinkler system will likely be a code requirement for self storage structures of 100,000 square feet or more. If your building has such a system already, the upgrades should be minimal. The large open areas with no ceilings allow for an optimized sprinkler-head layout.
The last item to evaluate is the electrical system. Typically, the system already in place is likely to be sufficient to meet your self storage needs, but plan to replace the lighting to more energy-efficient LEDs with motion sensors.
The exterior look of the building is key, especially to potential customers driving by. That’s why it is key that your building stands out. Fresh paint, clear, visible signage and nice landscaping increase the curb appeal.
The building-conversion process always comes with extra surprises. Therefore, it’s important to carefully select a professional design and construction team with self storage experience such as Forge Building Company (see our blog titled, “Designing a Self Storage Facility – How to Select Your Design Team”).
Self storage conversions are a great alternative to ground-up development. Evaluating the site, assessing the building, designing the project, and understanding the costs will provide you the information you need to make a wise decision. Finding one that meets the criteria for self storage with limited need for remediation can be a tricky, so working with the team at Forge Building Company can make the process much easier. The budget savings of building a self story facility from a conversion can be 25% to 50%. Give the team at Forge a call today, we would love to help you convert an existing building.
Works Cited
1. Brown, R. (2023, March 22). Inside Self Storage. Retrieved from Insideselfstorage.com: https://www.insideselfstorage.com/conversions/converting-old-office-buildings-outstanding-self-storage-facilities
2. Pollack, L. (2012, July 20). Inside Self Storage. Retrieved from Insideselfstorage.com: https://www.insideselfstorage.com/conversions/retrofitting-building-your-dream-self-storage-facility-guide-intrepid-souls
3. Wyckoff, S. (2021, January 21). Inside Self Storage. Retrieved from Insideselfstorage.com: https://www.insideselfstorage.com/conversions/self-storage-conversion-projects-pros-and-cons-building-assessment-design-pitfalls-and
Americans love to travel and have been purchasing RVs and boats for years. According to numbers shown from industry trade groups and places like Statistica1, Camper FAQs2, and Go Rving3, growth in ownership and usage of RVs and boats is growing. There are currently over 25,000,000 boat and RV owners with another 9,000,000 expected to join the market in the next 3 years.
The RV industry alone has seen consistent growth every year since 2009, and with the popularity of van life coupled with the pandemic, there was a huge spike in Gen-Z and millennial RV owners that wanted to travel and have recreational experiences without crowds. Many also found that they could work from remote locations, which meant they can live in RVs and work, not just use them for travel. This helped the outdoor recreation industry to reach close to a trillion dollars.
One other development advantageous to RV/boat exclusive storage demand is the growth in Airbnb-type online apps, which allow RV owners to rent vehicles that are parked in storage facilities. The RVIA notes that median annual usage of RVs is 25 days a year, which means that many vehicles are in storage most of the year. Renting stored vehicles can generate significant income for owners.
Recreational vehicles and boats are definitely growing as a genuine part of the American family experience, and economic and social trends indicate that this trend is likely to continue throughout 2023 and beyond. As the sales of RVs and boats increase, the demand to store these vehicles is also likely to grow. Traditional self storage facilities have limited space and amenities to store RVs and boats, which means that demand for RV/boat exclusive facilities will likely grow as RV and boat sales rise.
According to Yardi Matrix, Denver leads metros in RV/boat exclusive storage in acreage with 596.8, followed by San Francisco (420.4), Dallas (345.7), Houston (302.9), and Phoenix (299.3). Denver also leads with 47 properties, followed by Houston (45), San Francisco (39), the Inland Empire (36) and Los Angeles (35)4. Currently, there are only 3,000 RV and Boat Exclusive Storage facilities in the US. If you do the math, that would equate to each facility being required to support 2,000 boats and RVs to make up for current the demand.
While boat and RV exclusive storage facilities remain relatively small compared to other niche segments of commercial real estate, the industry registered a record-high capital flow in 2021 – $157.7 million of RV/boat exclusive facilities were sold in 2021, almost triple the previous annual high. These numbers are expected to continue throughout 2023.
The key to any successful self storage project is finding the right parcel of land in the right market for the right price, and then build the right facility on that land. Given the growth of the boat and RV market, if you’re thinking about the best way to add these storage units to your existing facility or building a new boat and RV storage facility, then give the team at Forge Building Company a call. We know all the ins and outs of building these sorts of facilities. Check out our Boat & RV product page and check out our recent video for our customer, SE Boise (https://www.youtube.com/watch?v=HmAcEcb4I-E&list=PL7FdrDM_tL-wtL-oZhF6Jk4CRIXQjkCKU&index=2).
Boat and RV exclusive facilities might be constrained by the cost of land, the amount of acreage needed to house vehicles and the fact that the facilities are geared toward specific objects as opposed to general usage. Drive aisles will need to be larger, and the costs and timelines may differ.
Generally speaking, for a facility to be profitable, you would need a parcel of seven to ten acres. Full lease-up should occur within 24 months, with breakeven occurring in the mid 14-16 months5. Typically, a ratio of 50 percent coverage yields approximately 217,800 to 304,920 square feet under roof when built out. The average unit size for an enclosed RV unit is 14-by-40 feet or 560 square feet.
Another reason for the increased land requirements is because the drive aisles need to be wider to give tenants room to maneuver boats with trailers and RVs. Aisles of at least 50-55 feet wide are recommended when accessing spaces that are 40 feet deep.
Boat and RV Storage Worth the Investment?Proper due diligence will help any investor assess how much you can afford to pay for a piece of land, based on the amount of rent per square foot of space, and your anticipated construction costs. However, the growing demand from RV and boat sales combined with the limited amount of supply means the segment’s fundamentals should remain healthy, even in volatile economic times making this a very worthwhile investment.
Works Cited
1. Statista. (2022, December 9). Retrieved from Statista.com: https://www.statista.com/statistics/1155988/us-recreational-boating-vessels/
2. Camper FAQs. (2023). Retrieved from Camperfaqs.com: https://camperfaqs.com/rv-statistics-trends-facts
3. Go Rving. (2022, June 16). Retrieved from gorving.com: https://www.gorving.com/newsroom/rv-industry-association-manufacturing-statistics'
4. Fiorilla, P. (2022, March 21). Yardi Matrix. Retrieved from yardimatrix.com: https://www.yardimatrix.com/blog/demand-for-rv-boat-storage-rising-as-sales-hit-record-highs/
5. Swingler, S. (2020, May 9). Inside Self Storage. Retrieved from InsideSelfStorage.com: https://www.insideselfstorage.com/vehicle-storage/decision-develop-boatrv-storage-differences-traditional-self-storage
