With tens of thousands of self-storage facilities already in existence and new ones under construction, it’s understandable that you find it difficult to differentiate your store from its competition. While having the most recent property or the lowest rates on the market can help, these are temporary solutions.
A wise self-storage operator helps his business stand out through the diversity of its products and services. I am talking about accessories such as retail, vehicle storage, wine storage and others. The flexible workspace is a relatively new entrant, which can help you attract a larger customer base and generate additional income.
At Storage King USA, we’ve found that flexible space is in high demand at our 110 locations. In a broad sense, it is simply a building or unit that combines elements of storage with offices or retail. It truly is a versatile workspace for a wide range of users, including small businesses and startups, entrepreneurs, artists, remote workers, and anyone else who needs a place to do things. business and maintain a local presence in the market.
The Flex space has a higher ceiling height and is larger than a typical self-storage unit, typically 14 to 16 feet high and 1,500 to 1,700 square feet. In addition to a large rolling door, it usually has a traditional pedestrian door and may even have a loading dock. There will be electricity, lighting, plumbing, a bathroom and often HVAC.
We offer flexible space in approximately 15% of our facilities. Tenants who are drawn to this product include tradespeople such as plumbers, electricians, kitchen and bathroom renovators, wholesalers, dealers, and home businesses or distributors who have outgrown their garage or home office. Spaces were rented out quickly, sometimes with a waiting list even before construction was completed.
Considering the relatively inexpensive construction cost, especially if you are expanding an existing self-storage facility, flexible space often offers an attractive return on your investment. Let’s take a look at a few other benefits as well as how to build and operate it successfully.Storage King in Spring Hills, Florida
Why would a tenant choose to lease flexible space from a self-storage operator rather than in a traditional retail building, office or warehouse? There are a few reasons.
First, the flexible space is customizable and can perform many functions. We often work with the tenant, who has pre-rented the space, to design it according to their needs. In the future, the user can add or remove features as needed. For example, they can use it as a bonded warehouse, retail showroom, or manufacturing facility.
Unlike office leases, which often require a 10-year commitment and are widely negotiated, the terms of flexible space leases are as short as several months, with the standard agreement being one to three years. It is also generally rented for less per square foot than a traditional office. Finally, there are no common charges, typical of office buildings.
Now that you understand why a tenant would come to you looking for flexible space, there are two very good reasons why you should provide it. First, it will allow you to diversify your product offering. A given market will not be able to absorb so much self-storage. Adding flexible space allows you to offer something the competition might not offer. It also optimizes the use of your land without cannibalizing existing income streams.
It also allows you to maximize your reach in the market. Smaller units will appeal to traditional self-storage tenants, while flexible spaces attract commercial tenants and a host of other business users, expanding your tenant pool.
Signage for Storage King’s flex space
Beyond the typical risk inherent in any self-storage development, there are nuances with flexible space that one should be aware of. The product is adaptive in nature and your end users will dictate the type of space you build. For example, someone who uses it to showcase a retail product will want a very different look and feel than someone who uses it as an office, art studio, warehouse, or manufacturing location.
While the typical self-storage tenant wants a safe, dry, and secure place to store their belongings, once they’re in their accommodation, they don’t care whether your establishment is in a visible location. In fact, they may prefer it not. A flexible space tenant, on the other hand, can be very concerned with visibility and traffic, especially if they are using the space for a customer-centric business. You must provide sufficient access, visibility and signage to your tenants.
You’ll also need to consider whether your flexible space has the potential to disrupt your broader self-service storage operations and hurt your bottom line. For example, renting an auto repair shop can cause the parking lot to overflow, preventing self-storage tenants from easily accessing their units. It could also create an unsightly image for the facility if there are vehicles in various states of disrepair.
In addition to determining if your self-storage property is properly zoned for flexible space, your municipality might have a strong opinion on the building materials you use, the aesthetics, and even the types of tenants you allow. . Be prepared to answer questions from officials and be somewhat flexible on the design. In addition, this type of construction requires different knowledge and relationships than traditional self-storage. You will need the right experts to help you plan and build it.
Also consider the order of events. Even if you have a strong sense of the particular user you intend to target, you need to decide whether you want to build your flexible space and modify it later to suit specific tenant needs, or register tenants first and design it based on their feedback. Aligning customers in advance certainly alleviates income uncertainty. On the other hand, continuous customization can increase authorization spend, lengthen the time it will take to complete the project, and exacerbate the headaches of managing multiple vendors and trades.
The flexible workspace for Florida Garage Door Pros, a tenant of Storage King
In terms of operation, flexible space will be rented more in line with commercial, industrial and office spaces on the market than traditional self-storage. Size, year, location, and amenities are all more important to flexible space tenants than your traditional clients. So you need a thorough understanding of competing vacancies and current market trends.
Also think carefully about marketing. Renting flexible space isn’t as simple as listing it on a self-storage aggregator website or even your own website. Considering the different tenant profiles, it should appear wherever potential tenants are usually looking for a space, for example websites like CoStar or LoopNet, or even commercial real estate brokers. You will need marketing campaigns created specifically for this ancillary product.
The lease is another important consideration. It should be a lot more than itemized than your self-storage rental agreement, as the space includes a lot more amenities. Work with a legal expert to make sure it’s written appropriately.
There are many factors for adding flexible space to a self storage facility. However, if you do the necessary due diligence and conclude that it makes good business sense, you might be pleasantly surprised at the product’s ability to differentiate your business, reach a wider customer base, and ultimately, to benefit your bottom line.
Michael Wachsman is Director of Acquisitions for Andover Properties LLC, an investment company that owns, operates and develops commercial properties in the United States, including the Storage King USA brand. He joined the company in 2015 with a decade of experience in real estate acquisition and asset management. He was involved in the acquisition and disposal of self-storage assets totaling over $ 800 million. To reach him, call 212.813.0141 or send an email [email protected].