Drive by the latest self-storage facilities being built today and you may need to look twice.
The face of self-storage is clearly changing as developers find ways to blend their projects into neighborhoods. For example, Skeans built a three-story, 104,000-square-foot facility on nearly 2 acres in the San Antonio suburb of Schertz.
Such multistory facilities are becoming more common, said Jeffrey Dallenbach, managing partner at Archcon Architecture in San Antonio.
Multistory projects can be essential to creating density to make a project economically feasible.
Amsdell has a redevelopment project set to open in May in downtown Cleveland that features a combination two- and three-story facility containing more than 500 climate-controlled units.
Multilevel facilities require elevators, stairways and more interior corridors—all adding to the construction costs. Amsdell estimates the cost of building a modern, single-story self-storage property at $32 to $42 per square foot, while a multistory project generally costs $45 to $65 per square foot.
In Texas, Skeans typically builds multilevel, fully climate-controlled facilities at roughly $50 to $55 per square foot. However, it’s important to note that when site work and land costs are included, a multistory facility actually may be less expensive. The upside to multistory projects is that they can cost less to operate on a per-square-foot basis. On the cleanliness front, dust and dirt don’t come in the door and then get into an elevator and go up to the higher floors, Skeans pointed out. As for security, multilevel facilities usually have more controlled-access points, making it easier to keep an eye on things. In areas like New York City and Chicago, where customers are used to living vertically, multilevel facilities aren’t a drawback. At a multistory facility, you don’t always “have that ease of going into a drive-up unit and grabbing a large, heavy item and putting it in the back of your vehicle,” Dallenbach said.
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There are various reasons to build a multi-story self-storage project, including a lack of available land or the high price of land in a particular area. The per-square-foot cost of building this structure is more expensive than that of traditional self-storage because the buildings require more support for the large door.  A power operator is also commonly used to operate the door.
In many markets, average self storage rental rates per square foot equate roughly to average two-bedroom apartment rental rates per square foot.
For maximum profit margins to be realized, however; the rates charged to customers must remain close to the highest the market can bear. For most self storage managers, more income for the facility means more money in their own pockets as well.
An owner who feels his manager is looking out for the business and is mindful of the supply and demand forces within a market knows that he or she has a valuable employee who is more than just help behind a counter.
Pushing rental rates can also provide the extra money for capital improvements that you feel will make your self storage facility even more appealing to customers.
When opening a facility or performing due diligence on a potential self storage site, a prudent operator will uncover what rates competitors within the facility’s market area (usually a one- to five-mile radius) are charging for units of various sizes.
Factors such as location, security, curb appeal, manager’s competency, and hours of operation should be examined as well. When opening a new facility, one approach is to avoid setting your rates at the highest price point relative to your competitors; instead, set rates closer to the mid-range. Before beginning the process of evaluating your property for a rate adjustment, it’s important to understand the difference between street rates, contract rates, and push rates.
Contract rates are the rates current customers are paying per their lease agreements and any increases that have been implemented. Street rate adjustments are typically larger than the periodic adjustments to contract rates and they can be adjusted far more often than contract rates.
The manager behind the counter also has the very important job of communicating new rental rates to the customer base. In fact, how well customers accept rate increases has more to do with the manager’s approach than any other factor. Of course there are some customers with whom you may reach a line in the sand as far as pricing. Setting rental rates is simply a matter of understanding supply and demand and having a process in place that will ensure that your rates are appropriate for market conditions. For self-storage, we typically refine multiple budgets long before we have our final construction budget.
Once you have your concept budget, you can update it using site specifics and typical per-unit costs to create your preliminary construction budget. Self-storage budgets can and do change quickly depending on your experience, the land cost and features, the economy, and where you plan to build. By way of example, let’s create a concept budget for a 50,000-square-foot self-storage facility for which no land has yet been purchased. When owners project a lower cost per square foot, they’re often assuming everything is perfect, which is rarely the case, or they fail to include soft costs such as banking and professional fees, design costs, and a franchise fee (if there is one).
As you can see, multi-story facilities cost more and can’t be phased, so they require significantly more capitol and initial equity.
You have successfully run your single-story self storage business for a number of years and have reached a comfortable rental capacity. Are you a Self Storage Business owner with a successful single-story self storage business with nowhere to grow?
Mako Steel introduces Double Up, a mezzanine structural concept that enables single-story self storage businesses to build up without impacting your current storage capacity.
Like many of these first generations facility owners, they kicked around the idea of tearing down and starting over.
The building costs to add the DOUBLE UP mezzanine structure is similar to the cost per square foot of traditional self storage construction but there are no additional costs for land or other outside costs. Mako Steel is the only Self Storage Building company with experience building DOUBLE UP sites. What does the entrepreneurial Self Storage operator or owner do to expand their business when there is no more room to grow? Self Storage business owners that are looking to increase revenue by expanding their Self Storage Facilities have had few options - until now.

It is not necessary to tear down a single story building in order to build a Multi-Story Self Storage Building.
Mako Steel creates additional square footage on an established site by designing a Rigid Frame Mezzanine that can span two existing single-story structures. Business owners with single-story self storage buildings now have a cost effective way to grow their Self Storage Business without the time commitment and financial risk that tearing down existing buildings or investing in property in a new area would entail.
The costs to add the DOUBLE UP mezzanine structure is similar to the cost per square foot of traditional Self Storage Construction BUT there are no additional costs for land or other outside costs.
The contemporary brick-and-glass facades and multilevel designs make these projects look more like office buildings than storage facilities. Such multistory properties have been on the rise as self-storage moves out of industrial parks and into more visible locations—bringing with it a higher price tag on land. The old-school method of developing self-storage was to enter an industrial area or an empty field where land was cheap.
So, you have to go vertical,” says Mark Skeans, managing partner of Skeans & Associates LLC, a self-storage developer based in San Antonio. In that case, the site was desirable because of its highway frontage, with exposure to 172,000 cars a day.
Seven of the last 10 self-storage projects Archcon has designed have included multistory construction for all or part of the projects. Yet developers also must grapple with projects that are more expensive and complicated to build. The size of a multilevel project often requires fire and safety codes be followed, such as equipping buildings with sprinkler systems.
By comparison, single-story “drive and drop” facilities cost about $39 per square foot to build.
In addition to meeting fire codes with features such as a fire-proof shaft, a storage facility must install larger elevator cabs that can fit a couch or other big storage items. A single-story self-storage project typically requires 3 to 7 acres, while a multistory facility can fit on less than 1 acre. Furthermore, multilevel facilities also might be cleaner and more secure than their single-story counterparts.
For example, at one of Skeans properties, people can enter and exit through just two spots.
Outside major cities, though, units in a single-story facility generally are easier to lease than those in a multistory facility.
This white paper identifies major trends and best practices in rate management, occupancy analysis, rental contracts and profit management.
If you’re considering the development of a multi-story facility, there are pros and cons to be considered.
On average, 25 percent of the building’s square footage will be non-rentable space, taken up by corridors, entry ways, staging areas, elevator shafts and stairwells. Operators who have extra land can consider adding a standard storage canopy or simply designating an area for outside parking. The only security for the client is the initial gate access to the property.  Also, there’s zero protection from the elements, as the vehicles are simply parked in an open area. When it comes to weighing costs, many business owners forget to consider whether their storage canopies or three-sided RV-storage units are considered “buildings” by their local tax authority.
Fire sprinklers, which increase construction costs and ongoing operational expenses, are another overlooked outlay.
The additional structural strength required by these oversized units also increases the cost of building components. There is no mystery to this; in any industry supply and demand will dictate what profit levels are achievable.
A bonus structure based on increases in gross income is becoming more common in the industry, and even managers who aren’t paid according to profits can generally expect an annual or semi-annual pay hike.
How do you determine rental rates at a facility opening, and when do you adjust the rates at an existing facility? Recording the features and prices on a spreadsheet is a good way to highlight the differences between each facility. For example, if the pricing within your geographic area for 10-by-10s ranges from $60 to $80 monthly; offer 10-by-10s at around $70 or 10 to 15 percent below the market rate leader. Some operators peg revisiting contract rates to a calendar schedule based on annual, semi-annual, or even quarterly reviews. It is important to recognize that when multiple units sizes at your facility reach targeted stabilized occupancy, which for most operators is about 90 percent, it’s time to review your pricing structure. We can begin to adjust street rents upward when any unit class approaches targeted stabilized occupancy.
Accordingly, how much you can adjust your rate in this scenario is less a function of market conditions and more about unit availability and what that customer is willing to pay at that moment.
Operators who understand the value of pushing street rates frequently adjust rates weekly or even daily.
They should monitor the supply and demand characteristics of each unit class and alert the owner whenever a given unit size and class falls into imbalance with supply and demand. Customers affected by increased rental rates should be called before they receive letters of notification.
Editorial Advisory Board and is Director of Sales and Marketing for Norfolk, Virginia-based AAAA Self Storage Management Group, a full-time operator and developer of self storage facilities since 1973. Even how and when you request an estimate from a contractor can have a significant outcome on a project’s final cost.
If you’re planning a new facility, I recommend sketching out a simple concept budget before you even search for land.
These revised numbers are then plugged into your business plan, which includes typical operational expenses and local rental rates, to confirm the project is feasible. The typical land requirement will be 4 to 5 acres for a single-story facility and 2-plus acres for multi-story.
You may have acquired land at a great price years ago and built a cost effective, single-story self storage business.
The facility was a first generation store, with long rows of 25a€™ and 30a€™ wide single story, exterior access buildings.
To a storage operator, that is a hard decision to make, and many times, not viable, as it would require evicting existing tenants and forgoing the revenue that units would have generated while the new construction is taking place. Using the highest quality building products and unmatched customer service, Mako Steela€™s team of experts will help you design, engineer and build your self-storage project on time and on budget. In the past, expansion for your self storage facility has meant increasing your building footprint or investing in more land.
Double Up is a mezzanine structure that enables single-story self-storage businesses to build up without impacting current storage capacity and rental income. It is an elegantly simple concept that solves many problems for our customers that need to grow.

Ask us for referrals from real customers who are now benefiting from our DOUBLE UP Self Storage Expansion products. The facility also sits in a busy commercial area near a grocery store, a Home Depot and a Walmart. For example, Stor Cresta Bella is an 86,228-square-foot facility in San Antonio that was recognized as the 2013 Facility of the Year by Mini Storage Messenger.
Therefore, some facilities charge less for higher-floor units than ones on the ground level, Nesbitt said.
A single-story facility often provides drive-up access to units, whereas such access may be limited or nonexistent at a multistory facility. Every project must be carefully evaluated for its individual circumstances, and the factors involved can be complex. It’s important to compare the construction costs and lost floor area to those of a single-story facility, which will likely not have the same issues.
It is mostly protected from the environment, but is not individually separated from other units. This will have a significant impact on the tax assessment, so be clear before you make a decision about unit types to build. The total price of RV storage usually ends up being slightly higher than that of traditional self-storage but significantly less than climate-controlled storage. Imagine, self storage investments produce the same per square foot income as apartments at significantly less construction costs and far fewer headaches; when was the last time self storage operators got a midnight phone call from a customer complaining of a broken furnace or clogged sink? At opening, you should be willing to wheel and deal but try to avoid a straight reduction of rates, as this will be difficult to make up later.
One of the drawbacks to this approach is that new customers may get hit with an increase only a few weeks or months after renting a unit.
Even in markets where overall occupancy is soft, there may be individual unit sizes that are in demand and can be raised. Once again, an alert, well-trained manager can bring in significant extra income for his or her owner through this technique.
In fact, our property taxes here in Chesapeake have gone from $6,000 two years ago to $60,000 currently.
A temporary drop in occupancy of a few percentage points, however, is typically more than offset by the increase in income derived from the higher rates on all the occupied units.
Preliminary budgets can easily be directed higher or lower on a quick change to the price per square foot.
You’ll want to engage an industry expert to assist as you refine these numbers for your actual project. Construction costs will run approximately $40 per square foot for single-story and $70 to $80 per square foot for multi-story. Many multi-story sites will even have higher price tags to offset the land cost per unit and generate a better return. The result is additional rentable space for the self storage operator without the need to tear down the existing buildings.
This article will outline an innovative and cost-effective self storage expansion alternative.
How long will it take to recoup your lost rental income, as well as your construction costs? The result is additional rentable space for the Self Storage operator without the need to tear down existing buildings. The project contains about 500 storage units, as well as 32 mini-offices on the ground floor. If a single-story facility incorporates climate control, there will be loss of floor space to corridors, but not normally on the same scale as with multi-story. This type of storage is often used in areas prone to snow, as it provides more protection than open canopies. This type of structure will protect vehicles from the sun, but there is little protection from rain, snow or wind.
Another approach to contract rate adjustment may be to tie it to the anniversary date (quarterly, semi-annual, etc.) of the lease date. Two common mistakes made by operators are failing to evaluate their facility rate structure often enough and basing the decision to adjust rates on overall facility occupancy. When your available inventory is down to about 15 units (90 percent occupancy within your 10-by-10 unit class), this would be a good time to raise the street rate for that size.
It should be noted that publishing rates via preprinted rack cards, a Web site, or elsewhere can inhibit an operator’s ability to push rates at the counter. Experienced managers, however, will work hard to increase customer acceptance of rate increases because they know that very few customers actually do move out simply because of a rent hike of a few dollars.
Due to this, I’m going to have to adjust your rent from the present rate of $100 to $107.
It helps you understand the basics of what goes into the development of a project and the money required to build it. It’s generally anticipated that because a multi-story project can be located in a more desirable area, it should be able to demand higher rents. They'll usually have an eve height of about 16 feet and a 12 -by-14-foot door to accommodate even the largest RV. It is important to understand that the objective with a new facility is to generate counter-activity and achieve stabilized occupancy as soon as possible.
This approach automates the process somewhat since the adjustment is programmed into the software at the time of rental and it ensures that the customer will never get a premature increase. And they know that if their market evaluation was on target, those who do move out will be quickly replaced at the higher rental rates.
It’ll also let you know if you should be seeking land for a single-story or multi-story facility and how much you can afford to pay for it.
Multi-story facilities usually offer climate control as well, which also translates to a better bottom line. Though multi-story has a potentially higher investment, the higher income may provide a better return when compared to a typical drive-up, single-story project. Many developers appreciate multi-story building because it offers a higher barrier to entry as well as the opportunity to have a larger investment in a single property.
Because the amount of time and effort involved is roughly the same as for a simple single-story project, a multi-story facility seems to maximize that input.

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