Self Storage- Building Cost increases

17 Replies

Just got our latest estimate for our Phase 2 of a location. This is for your normal drive up units. Last fall Phase 1 we were $3,200 erected for 10 x 15 or 10 x 20. This was contracted around February of last year. Latest quote is $4,000 per unit erected.

Steel for buildings, rebar steel and Concrete caused the increase. Erection cost didn't change that much. This is for 7 buildings. About 198 units.  About $150,000 increase on the project for the erected buildings.

Still moving ahead, since the project "numbers" only work with the whole site completed. Our builder is actually going to buy the Steel rebar now versus in 3 months, and store. He does other Steel work and thinks both the price and Availability will get out of reach.  I agree with him.  I think there will be a Choke point on the West coast Cargo Ship ports as the economy plays catchup from last year.  Steel will have to battle, staplers, lawn mowers and plastic tubs, to get on a ship and get unloaded and distributed.

This is a solid location from both a Customer and a competition standpoint, so we can take on the additional costs.  A weaker location, would have to do some re-calculations.

If you have used historical data on a project you are running the numbers on, you might re-do the figures and challenge them.

"Start small and Make Your Big Mistakes Early."  You will still get Whacked sometimes even when you have learned a lot, but you can absorb it, when your bigger.

Got our latest quote on a new building, phase 3 at a different location.

Building 30 x 250 roll up doors, drive up access $162,000
Concrete Slab $ 47,000
Erection of Building $26,000

Total $ 235,000

50 units, averaging $ 4,700 per unit

Already own the land, does not include driveways, grading, electric, security, etc.

If you see my first post above, this was $4,000 per unit erected March of this year.

This location needs more storage, but is not a super strong market. Price for a 10 x 15 runs $55 per month.

At $55 per month before taxes and costs, $4,700 at full occupancy at $55 per month would take 85 months or about 7 years. Thus 9 years based on rent up phase. We normally expect to pay these second phases off in about 4 years, including the extra costs except land.

We have 8 locations in 5 different towns. Plus two other non self storage operations we can invest in. Most of the other locations have a higher demand potential and higher rates for the same units. At this time we are deciding not to build these units at this location.

A.
Basically priced out of this market. Our multiple location and town approach, however keeps us in the game.

B.
We could use 10x20 cargo containers at $3,200 delivered and set. Versus the $4,700 for regular storage. We can add and sell containers as needed. No property tax. Can write off in year 1. About 1/2 of the customers won't rent or like these, since they are harder to open.

C.
You might use this information for different purposes. We might decide to take a run at buying other operations.

If an existing place had 150 units, using the brand new cost of $4,700 = $705,000. Using a 3 acre parcel. Land $150,000. Fence $25,000. Gate $25,000. Electric $25,000. Security $25,000. Grading/rock roads= $50,000. Misc $15,000. Total= $1,020,000 brand new.

You would take out the rent up phase. Know the market is there. Take away both the work and the risk of developing. Easier to finance, since already cash flowing. Need to find a place where 10 x 15's are $70 or higher. You would offer around $700,000 in that market and start from there. You get cash flow for the time you hold it. As long as you maintain it, you sell for the same unadjusted inflation price 10 years later.

Originally posted by @Henry Clark :

Got our latest quote on a new building, phase 3 at a different location.

Building 30 x 250 roll up doors, drive up access $162,000
Concrete Slab $ 47,000
Erection of Building $26,000

Total $ 235,000

That building cost seems awfully high? I just finished, and got occupancy on a 30x280 drive up. 

Building package: (all steel, engineering, doors, delivery) $91,700
Foundation: $58,700
Erection: $26,500

I'm in Michigan; I can understand some regional costing differences in the labor intensive portions of a build, but I'm surprised to see that much of a difference on a building package (I'm assuming you are utilizing all steel construction as well, and not rolling other costs into it). For context, I locked in my building price in March.

@Bill Snyder

$4,700 per unit above.  $3,158 per your costs.  Same 10 x 15 unit average.

1.  Standing seam.  Take out $20,000 over 50 units.  $400 difference unless your doing Standing seam.

2.  Labor, probably isn't it.  Use my small town (5,000 pop) local crew.  I've quoted the city contractors and they are almost double due to higher labor rates and also GC costs.  My guy doesn't charge GC fee.  We have both about the same erection cost and similar size buildings, so this isn't it.

3.  The building manufacturer I use is generally about 5% higher than competition, but that is just on the Building itself, not concrete or erection.  I like their paint jobs on old building with years on them.  Structurally and metal quality not enough to argue about.  About $162 per unit more, if we are not using the same Building manufacturer.

4.  Slab.  Our per unit is $940; yours is $1,048; so that isn't it.  All in the building package.

Can see about $562 per unit difference, if the above are different.  The other $1,000 per unit difference, would need to look at specific manufacturer and contracts in detail.

If you want PM on your manufacturer.  Don't want to make mine look bad if there is a legitimate reason for the building cost difference.  I can go back to my manufacturer and give them a specific competitor to look at.

Thanks,  For that much I will switch manufacturers.

That's why I like numbers.  You can compare.

I have utilized Trachte Building Systems out of Wisconsin for all my buildings and been very happy with them. My design is a 3/12 pitch, overlapped flat panel roof. My oldest building is 18 years, and I have had zero issues with it.

I don't have my exact unit mix at my fingertips right now, but I ended up with 61 units on this expansion.

@Bill Snyder

We use the same manufacturer.  Its a matter of timing on the order.  Prices have escalated with metal and production very quickly. Talking with our rep, the buildings we are getting in two weeks cost $528k, would be $763k today if ordered.  We ordered them earlier this spring.

Taking a pass on building in our lower rental price areas (10 x 20 for $65 per month), since economics and payback aren't there.  Have to really sharpen the pencil for our City locations where 10 x 20 is $130 per month.

Thanks for sharing.

@Henry Clark Regarding Construction costs, are these buildings built with Steel Framing? If so, do you install steel ‘poles’ in the ground around the perimeter (concrete in) and ‘frame to’ for a stronger structure or do you just use purlin and channel iron bolted to the concrete? Also, do you insulate any of the non-climate units? What about pitch of roof (2:12 vs 3:12)? I know you deal with more snow than we do down here in the Lonestar state (last year was the exception). Trying to evaluate our proposed addition and looking to find ways of cutting costs without compromising the integrity of the structure….

@Chris Gossett

Check out Mueller in Texas. 

Check my post on the forum under building a new location. Has pictures and shows everything from cutting trees down to installing the gate. 

The building normally is only about a 1/3 of your cost.  Plus it’s the only thing people will “see”.  Don’t cut corners on the building. 

If your market is $130 or higher for a 10x20 keep analyzing.  If your in the $65 rent level I would recommend you hold up buying till steel prices go down in late spring (no crystal ball on me).

You will probably make more money buying one of your local competitors “today” versus building. Buy the lowest “rent” location.  

@Henry Clark Enjoyed the post (2nd time Read). Always funny how you find things you may have skimmed over the first time (whether it be a book or a thread in this case). Pictures were a little difficult to see, but did I see correctly that your roof of the buildings were designed similar to a ‘leanto’/Shed as opposed to standard pitch? I believe you mentioned being able to get snow/water off the roof and to one side as opposed to the other. At what slope did you use for this (1:12,2:12, etc.) for 30’-40’ wide building?

Single both on the 30 and 40.  Drainage faces the sun for winter.  If snow is on the shady side it will freeze thaw freeze thaw for a week and leave sheet ice every night.  Facing the sun the roof snow will melt off in about two days and the concrete road has no ice