Self-storage development has been making a comeback in the past two years with a growing number of new projects in the pipeline.
Although building remains well below levels recorded before the Great Recession, construction activity is on the rise. According to a report from Marcus & Millichap, 4.7 million square feet of storage space was expected to be built in 2014 and another 3.2 million square feet is already in the pipeline for 2015.
Here’s a look at eight of the top development trends that experts say will be at the forefront in 2015 and beyond.
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1. Retail locations
One of the key drivers behind a number of development trends is location.
“As the industry matures, the sites that we desire are more retail in nature – whether that is ground-up, redevelopment or re-purposing existing space to self-storage,” said Todd Amsdell, president and CEO of The Amsdell Companies, a Cleveland, OH-based storage developer and operator.
Developers such as Amsdell are trying to get as close to “First and Main” locations as possible. The desire to secure those high-traffic, highly visible—and often higher-cost—sites is creating a ripple effect of trends related to the size, scope and design of projects.
2. Bigger buildings
Developers are building larger facilities to help to offset some of the acquisition and development costs associated with urban or dense suburban sites.
“We’re seeing larger and larger self-storage properties,” said Amsdell, whose facilities operate under the Compass Self Storage brand.
One extreme example of that is in New York City, where operators such as self-storage REIT Public Storage are building facilities upwards of 300,000 square feet. On a more modest scale, Amsdell has seen the typical size of its projects grow from about 65,000 square feet several years ago to around 85,000 square feet today.
3. Multistory projects
Urban developers also are foregoing traditional one-story design to build multistory projects. The trend is not that every self-storage developer wants to build vertical, because it’s expensive. Rather, vertical construction is necessary because urban building sites are smaller and also can be more expensive than outlying suburban and rural sites are.
Multistory design helps developers maximize density, particularly on small sites. “There are some very large vertical projects proposed that are going to surprise some people in the industry if they get approvals,” self-storage consultant Jim Chiswell said.
4. Upscale design
Developers are upping the stakes when it comes to design amenities and features. Properties that are getting built, particularly in major metro areas, are featuring elevators, climate-controlled units, sophisticated security systems, larger offices and more glass.
“As the self-storage industry continues to build new product, we’re continuing on with the trend of building higher-end product with more bells and whistles,” Amsdell said.
In fact, David Rogers, chairman and CEO of self-storage REIT Sovran Self Storage, recently said that much of Sovran’s acquisition strategy now focuses on high-end “third generation” properties. This new generation tends to be multistory facilities with modern amenities such as security systems and 24-hour access. Sovran operates under the Uncle Bob’s brand.
For insights into one architect’s approach to self-storage design, visit blog.selfstorage.com/self-storage-ideas/peter-blitstein-brings-elegant-design-to-self-storage-4756.
5. Climate control
Jamie Lindau, sales manager at Trachte Building Systems, said the supplier of steel for self-storage facilities is seeing more developers build large climate-controlled facilities that contain optional climate-controlled units with outdoor access. Developers can install an R-16 sectional door on those units, Lindau said.
“We are also seeing that in some areas, owners will offer that building as a premium climate-controlled unit that is priced higher,” he said.
For example, a 10×20 climate-controlled unit with outside access might cost $20 to $30 more than a harder-to-reach 10×20 climate-controlled unit inside.
Conversions will continue to be an active segment of self-storage development in 2015 as developers seek creative ways to enter urban markets, or try to capitalize on the cost benefits of repurposing underused properties.
“I think there is a lot of great potential in conversions, because you might get a great spot in a town where there is no other self-storage for a mile,” Lindau said.
For example, developers are repurposing empty big-box retail stores or grocery stores. If a building also has ceiling heights of at least 20 feet, a developer can add a mezzanine level and double the density, Chiswell said. Also, big-box sites generally have ample parking space that can taken up by storage units or sold to other developers.
For more information on self-storage conversions, visit blog.selfstorage.com/self-storage-operations/self-storage-conversions-3116.
7. Mixed-use development
Some self-storage projects are combining a mixed-use element to either secure zoning or city approvals, or perhaps help make a project financially feasible. The reality is that the retail component is something municipalities want, in terms of both more customer traffic and more tax revenue.
“Right or wrong, we are certainly seeing municipalities asking for some of that retail use to be included with the self-storage developments,” Amsdell said.
8. New building codes
Many developers are trying to get projects built quickly before building codes adopted in 2012 take effect, Lindau said.
Although the 2012 International Building Code (IBC) and the 2012 International Energy Conservation Code (IECC) already are in place in some states, such as California and Illinois, they haven’t taken effect in several others. Some of the key changes, depending on the building size, include requiring developers to install sprinkler systems or add firewalls to improve fire safety. The new codes also might mandate extra insulation.
All of those things can boost building costs, prompting some developers to push projects along so they can bypass the building-code changes.
Rendering of Needham project courtesy of Bowdoin Construction Corp., photo of BullsEye Self Storage courtesy of Browne McGregor Architects, rendering of Florida storage facility courtesy of Blitstein Design Associates, photo of Devon Self Storage facility courtesy of Devon Self Storage, photo of Compass Self Storage courtesy of Compass Self Storage, rendering of New Jersey project courtesy of Vincent J. Cioffi, photo of self-storage building courtesy of Rhino Steel Building Systems