Brian Mende, CPG is a vice president at GRS Group. He can be reached at 845.786.9092 or via email at [email protected]
If you wanted to learn more about one of the most wrongfully overlooked commercial real estate sectors in the industry, the Self Storage Association’s Fall Conference & Trade Show, which recently took place at the MGM Grand in Las Vegas, was a worthwhile event.
Attendance was high, and the informative educational sessions touched on several issues and trends impacting self-storage real estate.
I’d like to touch on a few topics of importance that were discussed by both the well-informed panelists and my fellow attendees.
Solar Energy
Many know the increasing importance of solar power in overall commercial real estate industry but might not be aware of its application in self-storage because the sector is considered by many to be operationally inexpensive compared to other property types. But representatives from solar firm Pivot Energy in a session titled “Solar Energy 101,” explained how these sustainable systems operate, and how they provide major cost reductions and improve ROI.
Solar panels on a facility’s rooftop are not only relatively inexpensive to install, but it can save owners energy costs of around 40 percent in the long term, which is huge, as energy accounts for about 20 percent of a development’s expenditures.
Plus, in a time when tenants are increasingly concerned about the environment, having a green building can give an owner potential absorption advantages. After all, buildings are said produce nearly half of the world’s man-made CO2 emissions.
Design Innovation
Self-storage is far from the top of the list if property types considered when thinking of design innovation. Traditionally, many of these facilities simply look like utilitarian cubes. But Bruce Jordan, of Jordan Architects, said it doesn’t have to be that way.
A good-looking self-storage building can make a world of difference when attracting tenants and gaining government approval. Some important new trends include, drive-up units for loading and unloading convenience, multi-story buildings that can fit in densely populated areas and make financial sense to offset land costs, enhanced lighting for safety concerns, and in-unit air conditioning. The front-ends are changing, as well, to look more like a retail store, with modernized waiting areas and a larger selection of packing and moving utilities.
Acquisition Due Diligence
As with any commercial real estate property environmental due diligence is key when entering a transaction. Attendees heard from Metro Self Storage, which owns more than 125 assets, on the due diligence the firm performs before getting involved in a deal.
Some vital points to consider in the transaction process are:
- Know everything you can about the deal in which you’re getting involved.
- An acquisition is nothing more than risk management. Even in simple transactions there is bound to be risk. How you manage it is what counts.
- Keep process and methodology separate if possible. Sometimes unplanned improvisation is needed for the execution of a deal.
- Do all of the leg work possible to know everything about an asset’s location and competition in the area.
- Understand the risk vs reward in the transaction.
GRS Group’s expertise has provided our clientele our full range of due-diligence services on single site and large portfolio acquisitions, and we are here to help with any questions you might have about potential transactions in the self-storage sector.
- Zoning Reports and Feasibility
- Title Search
- Phase I ESA
- Property Condition Assessments
- Energy Audits and Evaluations
- Construction Plan and Cost Review
- Construction Management
About GRS Group
GRS Group is a leading provider of commercial real estate (“CRE”) services worldwide. With offices across the United States, Europe, and affiliates around the globe, GRS Group provides local market knowledge with a global perspective for institutional real estate investors, occupiers and lenders worldwide. The GRS Group team has evaluated and advised on over $1 trillion in CRE transactions.
Through the company’s proprietary management process, Global Services Connection, GRS Group delivers an integrated suite of services including Financial Advisory, Transaction Management, Assessment and Title Insurance. We provide a single point of contact, capable of leveraging the GRS Group portfolio of companies and delivering customized solutions to assist our clients in achieving their investment goals.