Site Design and Unit Mix – Two Great Hits

You have probably seen those infomercials selling the “best of the ’70s and ’80s” music collection. If you pause to listen to some of the hits being advertised, it’s probably because you have a fond memory associated with one of the songs. The same kind of association occurs with the great self storage hits of decades past. There can be so many fond memories of hitting a homerun with a storage site, whether because of how quickly it came together or how fast it filled up…

Compared to today’s standards, many of those “greatest hits” of storage included every mistake in the book and still were a success. Memories indeed, as developing a storage facility now requires more effort and resources than ever before to get through the approval phases, battle the rising cost of construction, and navigate the flood of competition. Every step in the development process must be carefully planned and evaluated. This is certainly true when designing your site layout and assembling your unit mix.

Storage Site Layout

This is the first step and requires a great deal of information about zoning regulations, setbacks and other jurisdictional requirements. This is where you want to have an experienced design-builder or very good civil engineer with self storage experience to get through the process. I always prefer to use a local engineer familiar with all the current zoning regulations and all the routines and people in the planning department. This will save you weeks in getting your site plan approved.

While hacking out your plan, some of the most important considerations are:

  • Land cost
  • Land coverage
  • Site improvements
  • Building layout

The key is to understand these variables and what they cost to maximize the coverage on your site.

Land Cost and Land Coverage Can Go Hand In Hand.

What you pay for the dirt and how much gross square footage of building you squeeze out of it affect the overall financial performance of the facility. But it goes beyond just how much you pay for the site, because you always need to consider what you will be able to build and what it is going to take to get there.

The first hurdle in maximizing your coverage is determining the setbacks and required buffers for your site. Examining the plat and verifying additional requirements with the city easily determine these. It doesn’t stop there, however. More often, the fire marshal and arborist are stealing valuable space and decreasing your coverage. Be sure to check what is required for fire-lane widths and turning radius for your local fire department. Also, determine the required landscape areas and buffers. Sometimes these are disguised by calling them “pervious cover areas” or “green space.”

Consider Site Improvements To Maximizing Coverage

Once you have determined the physical parameters of your site, consider what site improvements are obstacles to maximizing coverage. Earlier in your development process, you should have determined which utilities you have or, at least, how far you have to go to get them. Don’t cut yourself short by not using existing utility locations to your best advantage. Again, you will need to satisfy the fire marshal by installing the required number of fire hydrants and associated fire lines. Find out the exact requirements for the line sizes, if a check valve is needed, and if the fire lines need to be looped or if they can be dead-end. Looping a fire line can double your cost!

Another site-improvement consideration is excavation and grading. Will the site require a lot of dirt to be moved, or can you lay out the buildings to follow the natural grade? You might consider using split-level buildings to take advantage of steep grades on the site. Retaining walls can also help capture more useable space on a site with steep grades, but use them as a last result due to the significant cost of some of them.

Finally, storm drainage is a significant factor. Use surface drainage as much as possible to keep costs down, and make sure your civil engineer has carefully determined the requirements for storm-water detention and filtration. Detention ponds can take up valuable space and reduce your coverage. They can also add significant cost if you use concrete ponds or underground detention. Water-quality or filtration ponds will also become costly if not carefully placed and properly sized.

Start Laying Out The Buildings

Now that you have figured out how much of the site you can use while making the fire marshal and the arborist happy and spending as little as possible, you can start laying out the buildings. This is where the site plan begins to take shape and overlaps the unit-mix plan. This happens because you know certain width buildings will yield a certain combination of unit sizes. Don’t make all your buildings the same width just because a manufacturer has a clearance sale on metal buildings. Likewise, don’t get yourself in a jam by lining all the property lines with single-loading buildings of the same width. The objective is to maximize the financial performance of your facility and achieve the right unit mix.

Unit Mix Desing

Designing a unit mix can be one of the most elusive tasks in the development process, especially for the first-time developer. All too often, the newcomer to the industry is looking for the instant unit-mix package—just add buildings and doors and start leasing. Unfortunately, there is no quick answer for the eager entrepreneur and some resort to buying up the standard building package with the unit mix that works best for the installer.

However, there is a methodical approach that makes use of all of the information gathered during a proper market study. Designing your unit mix is best accomplished by taking a baseline mix and tailoring it to fit your specific site according to market conditions and demographics.

There are few ways to determine a baseline unit mix. Any good property-management company keeps a database of operating information from all of its stores and thoroughly analyzes it to arrive at a unit mix that works for a given set of market conditions. This is the baseline mix. Without the benefit of these statistics, however, a first-time developer can go to state or national industry associations to see what information is available.

The data is usually compiled from many facilities throughout a given region and, in some cases, it is difficult to integrate operating statistics with a specific set of market conditions. As a last resort, you can collect field information from existing facilities in similar markets and compile your own baseline mix. The important thing is to have a starting point, relative to a certain market type, expressed in terms of average unit size. Understand, however, the vast majority of units are smaller, not larger, than average size.

Examine Your Target Market

The next step is to examine your target market and build your unit mix by adjusting the baseline according to existing competition and the different elements in your trade area. For example, the ratio of commercial to residential composition will affect your mix. A typical market will have 75 percent residential tenants and 25 percent commercial.

If there is a larger commercial presence in your market, increase the average unit size. Keep in mind that more commercial activity doesn’t increase the net demand in your market; it just means you will need more large units. Similarly, if your market has a big medical- or professional-office presence, you will need to increase the average unit size of your climate-controlled units. Doctors and lawyers rent these units to store records.

During your market study, you should have identified the location, size, rental rates, occupancy and other details of your competitors. Use this information to adjust the average unit size to account for shortfalls in your market. For example, if there’s not a single available 10-by-20 standard or 10-by-15 climate-controlled unit anywhere near your site, put those in your mix. On the other hand, if no one across the market is renting a certain size unit at all, stay away from it.

The Role of Demographics

Further adjustments to the average unit size will come from your demographic report. The most significant component of this report is owner vs. renter housing. People who own their own homes will rent larger units and usually keep them longer. Those renting apartments move around more often and have less stuff; therefore, they will rent a smaller unit for a shorter time. Adjust your mix to include more of the smaller units if your market has a higher percentage of renters than your baseline market. Conversely, if your market has a higher percentage of homeowners, adjust your mix to include more of the larger units.

Age, income and marital status of your tenants will affect your unit mix as well. A single male between 18 and 25 will typically rent a smaller unit, while a married person with three kids will rent a larger one. If your target market has a lot of young, single people, adjust your average unit size accordingly—you will need more small units. Those in higher income brackets will rent more climate-control units. Again, it is important to remember these demographic factors do not necessarily increase the net demand, but will affect the sizes of units that are requested more frequently.

A final note: Just as there is no magic formula for unit mix, there is no way to design a guaranteed mix. The steps outlined above are derived from years of trial and error as well as consistent information-gathering and analysis. Just as you should involve a civil engineer or experienced self storage design-builder in the site-planning process, you will do well to hire a consultant or involve an experienced property manager to help design your first unit mix.

A good way of having some insurance for your unit mix is to phase in your facility. Building in phases allows you to adjust your mix based on the demand you experience during operation of the initial phase. Also, remember to select a building design that allows flexibility in case you need to move partition walls to adjust unit sizes.

Building and Plan Adjustments

Until this point, neither your site plan nor your unit mix should be finalized, because as you begin filling each building footprint with the sizes and quantities to match your unit mix, you will find you need to adjust the building shapes to get the best fit. Likewise, you may have to adjust your unit mix to accommodate the buildings on the site plan. Further adjustments to the plan will probably come as you go through the approval process with your local jurisdiction.

As you roll with the punches throughout this process, make sure to monitor how changes affect ratios for coverage and site improvements as well as the averages for unit size and rental income. Because you have designed your facility with the most economical improvement costs and tailored your unit mix, the end result will be an approved site plan with the best potential income stream that will maximize your return on investment. And that’s a greatest hit!