Investing in commercial real estate can be a worthwhile endeavor, but maximizing returns requires strategic decision making, especially when it comes to construction costs. While many people think that location is the most important part, smart investors know that the characteristics of a parcel can significantly impact the cost of development, especially when it comes to self storage. Factors such as terrain, utility availability, zoning restrictions, land use, and existing site conditions all play a role in determining how much a developer will spend before a project is completed. Understanding these factors can make the difference between a cost-effective development and a budget-breaking endeavor.
Investors considering building a self storage facility that are looking for ways to reduce costs and avoid overruns need to begin by properly reviewing the land they’re interested in. To make an accurate assessment it is important to analyze all the details before determining an offer price.
The land itself can drive up construction costs due to bad soil conditions, steep or uneven topography, unusable land (wetlands, floodplains, easements), and other issues.
Some other factors that can increase construction costs include:
There are other regulations that a municipality may have in place that limit how much square footage permanent structures can take up on the parcel. That is, you may only be able to build on 40% of the area of the parcel. This could directly impact on the rentable square footage you are able to obtain by developing.
It is important to understand the difference between Zoning and Acceptable Land use for a parcel. Municipalities categorize land in the community based on where it is located, the current use of the land, and what is acceptable to be developed on that parcel. Although there are many similarities on how zoning is done from municipality to municipality, each one will have its own codes and definitions.
A common mistake made amongst new developers is making assumptions that if a parcel has a specific zoning, then self storage will be okay to build on the site. This assumption could be costly. It is imperative to dig deeper and learn what the Acceptable Land Use is for that property.
If the property’s zoning and acceptable land use does not work for self storage, there are a few options. First, the property could be rezoned. This process is not consistent between different municipalities. It is essential to ask what the process is, the cost to apply for rezoning, and how quickly it could be executed. If the property is zoned correctly, but self storage is not an acceptable use of land, then a Conditional Use Permit (CUP) or a Special Use Permit (SUP) may be an option. This is an option that needs to be discussed directly with the Planning and Zoning Department for the municipality.
Ensuring that a property can be developed and used in a specific manner is part of the Entitlement Process. There are those who can be hired to assist in this process; however, this is an additional cost that should be accounted for. Below is a list of experts that could help if there are hurdles during this process.
Municipalities not only have say on whether storage can or cannot be developed on property, but they can also have specifications that the buildings(s) must meet. Some of these requirements will directly increase the cost of development. For instance, the municipality may dictate that there can be no more than 40% of steel paneling on building. In this situation, it would be required to use other material such as stucco or masonry products. These other exterior building materials are more expensive than a typical exposed fastened metal panel. There are other times that a municipality may indicate they do not want any buildings to be visible from the road. This would typically require a tall CMU wall, which in return will drive up costs.
Before purchasing land, it is important to consider the environmental regulations in the area. Depending on the location, there may be local, state, and federal regulations that need to be considered. For example, the Clean Air Act requires that any new construction projects must meet certain air quality standards. Additionally, the Clean Water Act requires that any new construction projects meet certain water quality standards.
Other considerations to consider when purchasing land for self storage development include:
Selecting the land to develop a self storage facility can be a daunting task. Finding the ideal site can take time and research. An affordable parcel may not be too visible. A visible parcel may not be zoned for a self storage facility. A parcel in an eligible zone may be prone to flooding or be in an odd shape. When selecting land, keeping these fundamental considerations in mind could prevent an investor from costly problems down the line.
Contributing Editor: Melissa Anderson, Forge Building Company
The self storage industry which has experienced remarkable growth in past years and continues to evolve. Following many years of pandemic-driven demand, the self storage industry is now entering a period of adjustment1. Despite the potential obstacles, opportunities for development persist, fueled by technology, customer trends, and strategic innovation. (See our blog, “Is Self Storage a Good Investment for 2025?”)
For savvy investors, opportunities still exist. Self storage businesses must differentiate themselves through storage facility investment. This includes upgrades, improved customer service, and the use of cutting-edge technology, keeping in mind these demand drivers:
Whether building a new facility or upgrading an existing one, so many options exist to help increase profitability. These options range from traditional drive-up units and multi-story facilities to climate-controlled spaces and adaptive reuse projects, such as converting offices or big-box stores into storage units. There’s even a growing market for Pre-Engineered Metal Buildings (PEMBs), flex space, RV/boat canopies, as well as high-end storage condos designed for boats and RVs. With a variety of choices available, investors can select the right storage model and mix based on budget, location, and the needs of the surrounding community.
The traditional 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 400 to 500 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.
Here is one example of a traditional drive-up facility built by Forge Building Company.
Multi-story self storage is great for when land space is limited. These are also ideal for investors who want to add climate-control options. Some may contain exterior drive-up options for first level, then climate-control options for the upper levels. For an example of a multi-story Forge project, see Kansas Self Storage Building Projects and to learn more on whether building a Multi-Story facility makes sense, see our blog: “When Building a Multi-Story Facility Makes Sense.”
Climate-controlled storage facility investment 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 see an example of a Forge Building Company climate-controlled storage facility build.
With the 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. 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.”
In today’s rapidly evolving landscape of construction and development, the demand for efficient, durable, and cost-effective solutions continues to soar. The pre-engineered metal building (PEMB) is a game-changer in the industry. A pre-engineered metal building system is a building that is constructed with a steel frame system that supports a metal roof and wall panels. They are pre-designed to adhere to precise dimensions in a factory, then the building components are brought to the site in completely knock-down condition (CKD), and finally, they are fixed/jointed at the site and raised with the help of cranes.
PEMBs have revolutionized the construction landscape across various sectors. These include agriculture, recreational sports facilities, warehouses, aircraft hangers, community centers, storage warehouses, and more. These structures offer a plethora of benefits that make them an ideal choice for developers, investors, and owners. PEMBs are perfect as a stand alone building or as a part of a larger self storage facility.
See: U-Haul – Overland Road and Condor Barn Breeding Facility for a couple of examples of how PEMBs are being utilized.
For more information, also see “Mixing PEMBs with Standard Self Storage for Maximum Opportunity” and “Pre-Engineered Metal Buildings – An Investment Alternative.”
Flex spaces are becoming increasingly popular among business owners of both offices and storage space. As a business owner, you know exactly how much overhead costs can add up; it’s unfortunate if you don’t need all the space, but for many, that was the only option. That's why so many companies are investing in flex spaces instead of office buildings.
For flex space storage, garage condos can be constructed for commercial applications. An investor might build several garage condos within one large structure and then rent them out to multiple businesses, such as automotive repair shops or a trade workshop. Flex spaces can be used as offices, warehouses, mechanic shops, manufacturing facilities, and so much more.
Americans love to travel and have been purchasing RVs and boats for years. The RV industry alone has seen consistent growth every year since 2009, and the RV Industry Association is predicting shipments of new RVs to be in the mid 300,000s, up from 2024’s shipments2.
There are many factors to indicate that the addition of boat & RV canopies 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. As the sales of RVs and boats increase, the demand to store these vehicles is also likely to grow.
Read about one of our recent boat canopy projects built by Forge for Havasu Riviera Marina.
Unlike the boat & RV canopies, boat & RV condos can not just be rented, but also purchased. These units are fully enclosed. 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, “Where is Boat and RV Storage Headed?” and then check out Luxelocker Storage Condos for an example of one of our storage condo developments.
Choosing the right self storage investment option and the right mix will depend on your location and its market demand. Many Forge customers have a mix of these different types of storage options on their premises. The steel building experts here at Forge Building Company are happy to help you through the entire process. Let’s connect today.
Contributing Editor: Phil Warchol, Forge Building Company
References
1. Dmyterko, A. (2024, November 5). Streams Development. Retrieved from streamsdev.com: https://www.streamsdev.com/post/self-storage-industry-trends-and-outlook-for-2025
2. Fedorick, L. (2025, January 21). Camper Report. Retrieved from camperreport.com: https://camperreport.com/the-year-ahead-rv-predictions-for-top-trends-in-2025
In today’s rapidly evolving landscape of construction and development, the demand for efficient, durable, and cost-effective solutions continues to soar. Enter pre-engineered metal building (PEMB) – a game-changer in the industry. A pre-engineered metal building system is a building that is constructed with a steel frame system that supports a metal roof and wall panels. They are pre-designed to adhere to precise dimensions in a factory, then the building components are brought to the site in completely knock down condition (CKD), and finally, they are fixed/jointed at the site and raised with the help of cranes.
An efficiently designed pre-engineered building can be lighter than the conventional steel buildings by up to 30%. Lighter weight equates to less steel and potential price savings in structural framework.
PEMBs have revolutionized the construction landscape across various sectors, including agriculture, recreational sports facilities, warehouses, aircraft hangers, community centers, storage warehouses, and more. These structures offer a plethora of benefits that make them an ideal choice for developers, investors, and owners.
There are countless benefits of using pre-engineered metal buildings, including:
Cost efficiency: One of the most significant advantages of pre-engineered metal buildings is their cost efficiency. These structures are typically more affordable to construct compared to traditional building methods—the streamlined design and manufacturing process of PEMBs results in reduced construction time and labor costs. Additionally, the durability and low maintenance requirements of metal buildings translate to long-term cost savings for facility owners. Pre-engineered metal buildings are resistant to pests, rot, and corrosion, reducing the need for frequent repairs and upkeep. This translates to lower maintenance costs and enhanced durability over the lifespan of the facility.
Speed of construction: Pre-engineered metal buildings take almost half the time of a traditional construction project to build, saving you time, labor, material, and money. Time is money, especially in the world of construction.
Design: Many owners interested in pre-engineered metal buildings are looking for a structure with an open, extensive interior space. There are endless options for the design of pre-engineered buildings, both inside and out. Modern advancements in technology and construction techniques have made it possible to customize PEMBs to meet specific aesthetic and functional requirements. Whether you envision a sleek and contemporary structure or a more traditional look, pre-engineered metal buildings can be tailored to suit your preferences.
Structural integrity: Pre-engineered metal buildings are renowned for their strength and resilience. Constructed from high-quality steel, these buildings are often more reliable, durable, and resistant to extreme weather conditions, seismic activity, and other environmental factors.
Sustainability: Pre-engineered metal buildings are inherently eco-friendly due to their recyclability and energy efficiency. Steel is one of the most recycled materials in the world, making it an environmentally responsible choice for building construction. Furthermore, the energy-efficient design of metal buildings helps reduce energy consumption and operating costs over time. These structures are tightly sealed, require less insulation than standard buildings, and can be designed with roofing that deflects the sun’s harsh rays.
Flexibility of expansion: PEMBs can be easily expanded in length by adding additional bays. Also, expansion in width and height is possible by pre-designing for future expansion.
So how do PEMBs compare to conventional steel buildings? Here’s the basics1.
| Properties | Pre-Engineered Steel Building | Conventional Steel Building |
|---|---|---|
| Structural Weight | Pre-engineered buildings are, on the average, 30% lighter because of the efficient use of steel.
Secondary members are light weight roll formed “Z” or “C” shaped members. |
Primary steel is hot rolled “T” sections which are, in many segments, heavier than what is actually required by design.
Secondary members are selected from standard hot rolled sections which are much heavier. |
| Design | Quick and efficient design since PEMB’s are mainly formed by standard sections and connections design, time is significantly reduced. | Each conventional steel structure is designed from scratch with fewer design options available to the engineer. |
| Construction Period | Average 6 to 8 weeks | Average 20 to 26 weeks |
| Foundation | Simple design, easy to construct and light weight. | Extensive, heavy foundation required. |
| Erection and Simplicity | Since the connection of compounds is standard, the learning curve of erection for each subsequent project is faster. | The connections are normally complicated and differ from project to project resulting in increasing the time for erection of the buildings. |
| Erection Time and Cost | The erection process is faster and much easier with very less requirement for equipment | Typically, conventional steel buildings are 20% more expensive than PEMB. Erection process is slower and extensive field labor is required. Heavy equipment is also needed. |
| Seismic Resistance | The low weight flexible frames offer higher resistance to seismic forces. | Rigid heavy frames do not perform well in seismic zones. |
| Overall Cost | Price per square foot may be as low as by 30% than the conventional building. | Higher price per square foot. |
| Architecture | Outstanding architectural design can be achieved at low cost using standard architectural details and interfaces. | Special architectural design and features must be developed for each project which often requires research and thus resulting in higher cost. |
| Future Expansion | Future expansion is very easy and simple. | Future expansion is more tedious and costly. |
| Safety and Responsibility | Single source of responsibility is there because the entire job is being done by one supplier. | Multiple responsibilities can result in the question of who is responsible when the components do not fit in properly, insufficient material is supplied, or parts fail to perform particularly at the supplier/contractor interface. |
| Performance | All components have been specified and designed specially to act together as a system for maximum efficiency, precise and peak performance in the field. | Components are custom designed for a specific application on a specific job. Design and detailing errors are possible when assembling the diverse components into unique buildings. |
The benefits of pre-engineered metal buildings are undeniable as an investment alternative. They can be built and adapted to suit a wide variety of applications across a variety of industries. Investors and individuals who are looking to build or expand can capitalize on incorporating a PEMB given the economic advantage of investing in a structure that takes less time to design, produce, erect, and maintain.
Pre-engineered metal buildings prove their worth from day one, providing companies and professionals with many opportunities for expansion and growth. They are also expandable and easily customized to meet the needs of a growing business across various industries. New sections can be bolted onto any side. If a section of the building is damaged, repairs can be performed easily, often using replacement parts from the original manufacturer.
Construction time, labor costs, and material costs are more predictable with a pre-engineered metal building system than with conventional construction. Components are manufactured and shipped from a controlled site, so there are fewer labor and human error costs to consider.
If this is a solution you’d like to consider, talk to the steel building experts at Forge. We’d love to help with your next project.
Reference
1. The Constructor. (n.d.). Retrieved from theconstructor.org: https://theconstructor.org/building/pre-engineered-steel-building-components-difference-advantages/37187/
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/
The self-storage industry has proven to be fairly recession-proof during the pandemic and offers many diverse investment opportunities and strategies depending on the location, according to a report from Trepp.
The report, titled “Self-Storage: Analyzing a ‘Recession-Resistant’ Sector,” looks at commercial mortgage-backed securities (CMBS) data. According to Trepp’s CMBS database, more than 1,700 CMBS loans totaling almost $16 billion were backed by self-storage properties across the US. It is one of the smaller property types in the private-label CMBS universe of over half a trillion dollars of loans, accounting for only 3% of the total CMBS outstanding balance.
The reason an individual would rent a storage unit is being driven by what the report refers to as the four Ds of self-storage: divorce, dislocation, death, and downsizing. Of course, there has been an abundance of these throughout the pandemic.
In addition, there were a number of trends that directly impacted the demand in the self-storage sector.
Another big factor contributing to this industry’s resilience are its net operating income margins which are among the highest of any real estate asset type at upwards of 60% to 70%, Trepp says, citing a Cushman & Wakefield report.
Those attributes have attracted a wide variety of players, including the five largest real estate investment trusts (REITs) that together own about 20% of the market:
That leaves thousands of other owners and other investors that have driven construction spending up by 584% from January 2015 to January 2020, the Trepp report says, citing census data on self-storage facilities.
According to this same report, rising expenses such as wages and advertising are impacting the Self-Storage industry.
There is a lot of competition, especially in a segment that doesn't typically have a lot of amenities to prompt someone to drive farther to get to and feels restricted on how much rent can be raised.
So how do self-storage operators aim to provide a value-add? The Trepp report suggests the following:
The report also suggests remote management – operating a facility without an on-site manager through digital interactions with customers. This operating model could make it more feasible to invest in a small size storage facility in a small market.
Small towns and rural areas are typically not on the radar for big players. This creates a buyer’s market for potential acquisitions. So, this is a great time to look into that steal building construction investment idea.
Adding to the competition, the market continues to be of interest to big players looking for high-quality investments in the ‘recession-resistant’ commercial real estate space. So, for smaller players, the best options might be partnering with other investors in locally owned operations in small markets, or maybe even building your own, using the increasingly robust choice of self-service digital options.
Today it’s possible to build REAL wealth in the Self-Storage industry at a fraction of what it used to cost, meaning the unfair advantages are now available to individuals like you.
To find out more about how to invest in this growing industry, let Forge be your self-storage building contractor partner. See some of our completed projects.
