As construction activity rebounds, self-storage developers are facing a familiar but emboldened foe–neighborhood opposition. “Not in my backyard” (NIMBY) sentiments can present a formidable obstacle to new self-storage projects.
“The opposition really hasn’t changed any in the past 30 years. However, how the opposition organizes is a little different,” said veteran self-storage developer Mike Parham, CEO of The Parham Group in Bulverde, TX.
Parham’s company has developed more 300 self-storage facilities over the past 30 years for its own portfolio of Noah’s Ark Self Storage properties, as well as for other owners such as REITs.
In the early days of self-storage development, hurdles were primarily zoning issues that were handled directly through municipalities. Now, property owners associations and neighborhood groups voice their opposition, or they impose their own requirements or conditions on things like setbacks and property screening. “So, it has made it more difficult in terms of finding a site that you can actually use,” Parham said.
For example, Noah’s Ark was looking at a site in Fort Worth, TX, where the neighborhood wanted a 150-foot setback from the street. “I can’t pay $10 per square foot on that land and lose that much square footage. So it killed the deal,” Parham said.
Fighting an ‘Uphill Battle’
In most cases, self-storage development is an “uphill battle,” said Todd Amsdell, president and CEO of Amsdell Companies in Cleveland. Amsdell has had his hand in developing and selling two major national portfolios. His company operates under the 35-facility Compass Self Storage brand.
As part of that uphill battle, self-storage developers face the challenge of winning over city council members and city staff, as well as local residents. Last fall, Compass Self Storage had one major project voted down–unanimously–by the planning commission in the Cleveland suburb of Shaker Heights, OH. The company had proposed a $5 million project to convert a former Chevrolet dealership into a self-storage facility with 575 units.
Although the city initially seemed receptive to repurposing the vacant property as a self-storage facility, the Shaker Heights planning panel decided that self-storage didn’t fit into the broader master plan for the area.
“We are not surprised to see some of the reactions from council members and city employees,” Amsdell said.
Self-storage is not a real estate use that cities know a lot about, as it remains a maturing industry. In addition, city officials don’t covet self-storage. A self-storage project often targets retail-oriented locations with good visibility and access, Amsdell said, but a self-storage facility doesn’t create a lot of jobs.
Local opposition to self-storage facilities stems from concerns related to safety, traffic, aesthetics and property values. One key to moving projects forward is educating neighborhoods about self-storage and addressing misconceptions about the industry. One stigma associated with self-storage is that properties will be eyesores plagued by metal buildings, metal roll-up doors and piles of junk.
“If you are going to successful today with opposition based on a misperception, you have to be able to dissuade them by showing them that you are going to be an asset to the neighborhood and are not going to lower their property values,” Parham said.
Another criticism is that self-storage facilities generate a lot of traffic. The reality: A typical facility might have fewer than 30 people drop by each day to lease a unit or visit an existing unit, according to Parham. That’s far less than a convenience store, for instance, which might serve 1,000 customers a day.
“So, you have to show them statistics and you have to show them that we are going to be a part of their neighborhood, and we are not going to make an impact at all,” Parham said.
Creating Curb Appeal
One strategy for overcoming neighborhood opposition is trying to fit into a community. Developers can do some small things in terms of screening and architecture that can go a long way toward making self-storage projects more appealing to a community.
“Even though we have our own chain, we don’t have a McDonald’s look everywhere,” Parham said. For example, Noah’s Ark built a facility in downtown Atlanta that featured Roman columns. “Everybody loved that. But until we showed them that, they weren’t going to allow it,” he said.
It’s also important for developers to convey how and why a city should want a self-storage property in a particular location. In most cases, that involves a lot of homework and a lot of individual meetings with city leaders and staffers, as well as neighboring residents and nearby business owners.
“It is never a one-size-fits-all scenario when you’re developing–no matter what you’re developing,” Amsdell said. “It’s just a whole lot of homework to understand how you may be successful if they let you build the property.”
Doing Your Homework
The key to maneuvering self-storage developments through the gauntlet of city approvals and neighborhood support relies heavily on being prepared. The basic steps are to identify zoning and building requirements, and to be aware of property owner associations and neighborhood groups when starting due diligence on a proposed site.
“When we look at areas to develop properties, we are always looking for cities where we think we can be successful, but you never know what you are going to get into once you start the process,” Amsdell said.
Redevelopment opportunities generally are much easier to move forward compared with so-called “greenfield” projects. Cities are more welcoming toward self-storage projects that are filling an existing gap, such as an empty big-box store or a vacant industrial building, than they are toward from-the-ground-up projects.
Zoning requirements for self-storage vary from city to city and state to state. Texas, for example, has C-3 zoning; anything that’s zoned industrial also will allow self-storage. On the other hand, no self-storage development is allowed within the city limits of Louisville, KY. Some existing facilities have been grandfathered, but any new development must be outside the city limits.
In addition to scrutinizing the zoning, it’s essential to check setback requirements for the front, back and sides of the property. In some cases, even though zoning allows for self-storage, building requirements are so burdensome that it’s impossible to build self-storage facilities that are financially feasible.
Ultimately, the hard work of overcoming opposition can produce a big reward—a self-storage location in a prime area with little direct competition.
“You don’t want to go and just get the easy sites, such as in the back of an old industrial property,” Amsdell said. “We have to fight for the locations that we feel are going to be successful, or it’s not worth completing the project.”
Images courtesy of Noah’s Ark Self Storage and Compass Self Storage