Self storage: The market that wouldn’t slow down

When Ed Trice built Todd Nichols his first self storage building, the latter was admittedly nervous about the business prospects. In fact, two weeks passed before Nichols received any rental inquiries.
But once the first unit was rented, the floodgates opened. Advertising only in the Yellow Pages, and charging between $29 and $79 monthly per unit, Nichols’ self storage buildings are sold out, so he’s contracted Trice to build him more.
“It’s the best money I’ve ever spent,” says Nichols.
It’s a familiar story, and not just in Fairmount, Ind., where Trice Buildings & Supply does business. Across the country, observers who predict the self storage market is either saturated or on the verge of saturation continue to be surprised by the segment’s steady growth.
“I thought the market would be saturated five years ago, but it just keeps going,” says Trice.
Until the market is indeed saturated, self storage buildings will continue to be a no-brainer, win-win proposition for both rural builders and customers. For builders, a self storage facility is a low-frills process in which labor and scrap costs can be kept to a minimum. For customers, self storage buildings are a terrific way to use empty land to generate steady, low-effort income.
It’s easy money for everyone involved.

Self storage snapshot
According to the Self Storage Association, personal storage has its origin in England, where British banking institutions were asked to safeguard valuables for clients embarking on extended voyages. The overcrowded vaults forced bankers to seek storage in lofts from moving companies; in the 1850s, the first warehouse constructed specifically for personal items was built.
Modern self storage facilities began appearing on the domestic landscape in the 1960s, first in Texas, then the West Coast, then nationwide. The population shift west, highlighted by job transfers, retirees, and homes built without basements, helped drive the need for personal storage.
The majority of facilities operating today have been called second-generation self storage, encompassing standard row buildings, as well as multi-storage facilities and older converted buildings. A third generation has emerged recently, facilities designed with an emphasis on aesthetics, built to fit into retail or light commercial zones.
Most any construction type can be modified to build self storage buildings: metal and wood frame, as well as tilt-up concrete and metal/block combinations. The former are most cost-efficient to build, and dominate in rural areas; the latter cost more, but have the aesthetic features necessary to fit into high-visibility retail areas. Trice, who specializes in post-frame structures, points out that just about every building package company has a self storage offering, as do most independent builders.
Industry proponents are quick to point out the positives of self storage facilities. They’re quiet, with minimal traffic. They have little impact on schools or utilities. They are a source of tax revenue, often on property where none had been generated before.
Then there’s the investment hook. Builders and package manufacturers point to self storage as a passive, low-risk, stable investment that holds up well in rough economic waters.
But self storage is not completely immune from the negative effects associated with recession or market saturation. “It would be incorrect to say that self storage is recession-proof or that we don’t get affected by recessions, because we do,” Chuck Barbo of Shurgard Storage Centers said in a Mini-Storage Messenger story. “But we are resistant to them.” The same could be said for builders of self storage facilities.

Trice built his first self storage facility — he calls them mini-warehouse buildings — in 1992, for Glen Holsten, a friend from church. Holsten already owned such a building, constructed for him by one of Trice’s competitors, but when he asked Trice to build him more mini-warehouses, it wasn’t the no-brainer it has become today.
“The very first time he asked me, I couldn’t do it for what the other company was doing it for,” Trice says. “I had to get my labor down, get my scrap down.”
He did, and Holsten turned out to be a valuable customer, buying a total of 24 self storage buildings from Trice. He’s since sold the buildings for upwards of $1.5 million.
As might be expected, Holsten’s positive experience led to several more self storage jobs for Trice. He built another complex for Holsten on land in nearby Gas City, which attracted interest from a local couple who hired Trice to build in Gas City and Marion.
“They’ve got property and they don’t know what to do with it,” Trice says of potential customers.
The buildings in Marion caught the eye of Greg Bowers, who converted dumpy land into a nice profit center. Bowers also runs a construction company, but couldn’t build self storage buildings as efficiently as Trice’s crews, so Trice got the call. The setup has turned into a working relationship, with Trice erecting a building’s shell and Bowers finishing the interior.
Trice has built self storage facilities in Indiana as far east as Portland, and as far south as Anderson, the largest city between Fairmount and Indianapolis. Over the last 10 years, Trice has built more than 100 mini-warehouses. He never has built just one facility for a customer, and has built as many as 26.
“Word kind of got around: if you want a mini-warehouse, talk to Ed Trice,” he says.

If you look at a typical self storage building and think there isn’t anything fancy to it, you’re right. “Just set the poles 10 feet apart, 4 feet deep, put girts on it, rafters or trusses, purlins,” says Trice.
But there are definitely steps a builder can take to maximize profit on a self storage job.
The initial step is proper land planning. When a customer comes to see Trice, the first thing he does is sit down with his architect, John Robinson of Marion, and examine the plot of land being developed. They then come up with a plan to fit as many buildings as possible in that lot.
Nearly all of the self storage buildings Trice erects are 30×100. It makes for simple construction, but also allows Trice to place the buildings in groups of four, as close as he wants, without installing extra state-required fire safety measures. Any additional groups of four buildings — which can’t exceed 12,000 square feet — must be placed at least 40 feet away.
Situating the buildings in groups of four also saves money when buying permits. When Trice sells one self storage building, he’ll get approval to build four to avoid having to file four separate times on the same project. As long as additional buildings are started within a year, there is no need to reapply.
Gaining approval to build self storage buildings — usually a light commercial classification — is never a problem. “Normally where you end up building has been an eyesore before, it’s land they’re not getting any tax revenues from, so cities go along with it,” says Trice.
Since self storage customers want smooth, clean floors in their units, the post-frame variety incorporate a 4-inch continuous concrete footing. Trice subs the task out, and has the concrete contractor add a key feature for keeping the units waterproof: the rain lock.
The rain lock, popularized by home builders, is a 1-inch offset of the concrete slab behind the door, providing the door with a backup against hard-driven rain at ground level. Installation of the doors, roll-up models by Trac-Rite, is subbed out to Pro Garage Door of Indianapolis.
“If you’ve got a drain in the middle of the building and the floor slopes to it, and a garage door that comes down on flat cement, a hard rain can push water under the door,” says Trice. “We used to put pipes and drains under the door in the cement, but when you’d get a real bad rain it’d come in the garage.”
Trice started using the technique about 15 years ago. The only time he won’t use a rain lock is in a warehouse where forklifts are used.
For self storage buildings, Trice uses 4×6 solid-sawn posts, 10 feet on center. The 10-foot post spacing allows the buildings to be split into ascending unit sizes, which owners can rent to customers with different needs. A typical 30×100 building will consist of six 5×10 units, seven 10x10s, seven 10x20s, and four 10x15s. “That’s what I try to start somebody out with, it’s a pretty good mix,” says Trice. “They’re all built the same way, with a few minor changes.”
Nichols’ latest building is designed with classic car and boat owners in mind, and will feature 12×30 units. The slight deviation from the norm works well for both builder and owner: Nichols can charge more rent for the units, and with less partitions to erect, Trice saves on labor. (Walters Buildings uses another technique for saving on wall partitions in self storage buildings. The company simplifies door-side framing by using doubled 2x8s parallel to the wall to space the doors and receive the partition framing.)
Rafters get the call over trusses in Trice’s self storage buildings, and are the cheaper alternative. The ventilation system is standard — a ridge vent and 8-inch aluminum soffit vents. Though the buildings are not inhabited, keeping temperature and air flow regulated is important, as self storage buildings often house sensitive valuables such as antiques and old cars.
For the roof, Trice subs the job out to an asphalt shingle contractor, even though the OSB sheets required for the roof deck have more than doubled in price in the last year. “It’s the looks, it’s almost the same price, and I haven’t had any big problems with leaks,” he says. “A shingle roof I can put on any kind of day, but if I have a windy day I can’t put the steel roof on.”
The exterior cladding is supplied by McElroy Metal, tan for Nichols’ buildings. Most self storage buildings feature neutral wall cladding, but one Trice customer requested red walls with a black shingle roof to mimic the look of an old-fashioned farm building. On the inside, each unit’s interior is covered floor to ceiling in galvanized panels, to prevent would-be thieves from climbing over the partition walls into adjacent units.
Other self storage features, commonly found in more urban areas, include paved concrete driveways and fences, although Trice subs those tasks out as well. There is no plumbing, heating, or electricity involved — unless the building is climate-controlled, an option Trice is looking into.
The straightforward building techniques have helped shave the time for a self storage job from almost 30 days to less than 15. “They don’t have to read the blueprint,” says Trice. “If you’ve got a 2x4x20 you know where it goes, a 2x6x16 yellow pine, you know that’s a rafter. There might be 20 different sizes of steel on that building, but since they’ve done them so many times they know exactly where that size goes.”

The future
All told, Nichols’ latest self storage building will cost around $35,000, site preparation excluded. Kept at full capacity, with rental prices in line with local norms, such a facility should generate in the neighborhood of $10,000 per year for its owner.
Even in uncertain economic times, the conditions seem right for self storage to continue growing in east central Indiana, with both expansion and recession driving need for personal storage (see box, next page). While Indiana Wesleyan and Taylor University are growing, the area’s industrial base is struggling, as a local electronics firm recently laid off hundreds of employees. And it’s a given that each fall, thousands of classic car buffs will make the pilgrimage to Fairmount to honor the town’s favorite son, James Dean.
So when will the area’s self storage market reach its saturation point?
“I give up on that one,” says Trice, who could be speaking for builders anywhere. “It’s like Todd: He didn’t think he’d build any more, and I’ve built two for him this year. I won’t build any more for him (at that site), but knowing Todd, he’ll buy some more land in another town somewhere.
“It still amazes me, I can’t believe we have that many units around here.”

Related Posts:

  • No Related Posts