New self-storage going up, literally, in Asheville
Posted on June 1st, 2016
ASHEVILLE – A new kind of self-storage is coming to town, and it’s going to catch your eye.
Typically, self-storage units involve sprawling, single-story metal buildings spread over several acres.
But these new units under construction in east and south Asheville, with more possibly to come, will be multi-story buildings with brick exteriors, elevators and climate control throughout.
“It used to be you had a gravel lot and you weren’t doing anything else with the land, so you would throw a building up and rent out spaces,” said Will Batson, chief development officer with Diversified Development, which is building a three-story self-storage unit on Bleachery Boulevard in east Asheville. “Now, you’ve got a law firm that’s looking to store their documents, and they want a clean, climate-controlled space. Or maybe your parents left you some nice furniture, and you’re looking for that kind of a space. It really comes down to consumers are demanding it — a class A facility.”
Their three-story building, which should open in early 2017, will comprise 93,000 square feet, with 64,000 square feet of that rentable space. The building, complete with elevators, will take up 2.25 acres of a six-acre site.
Diversified paid $750,000 for the land alone, a site that’s less than a mile from a Walmart Supercenter and dozens of apartments, and the total cost of the project will come in at about $6.5 million. With more apartments coming along and more scheduled to be built, demand for storage will go up, but land will become harder to find.
“What you’re finding with land and development costs getting more expensive, it makes more sense to go vertical rather than spreading out,” Batson said.
Thanks to shoppers, a growth industry
With two-thirds of the American economy driven by consumer spending, we buy a lot of stuff — and we don’t like to get rid of it. That feeds the self-storage industry, which offers small, secure spaces that range in size and allow us to hang on to items that won’t fit in our homes.
It is a growth industry, and multi-story facilities play a key role. The Self Storage Association, the industry trade group, notes that of more than 10,000 facilities it surveyed, about 4,000 are multi-story facilities.
All of them have seen strong growth.
“The industry has been the fastest growing segment of the commercial real estate industry over the last 40 years and has been considered by Wall Street analysts to be ‘recession resistant’ based on its performance since the economic recession of September, 2008,” the storage association states on its website.
The estimated revenue for the industry in the U.S. for 2016 is $32.7 billion, up from $31.6 billion in 2015 and $29.8 billion the year before. In 2015, 9.5 percent of U.S. households — nearly 11 million — rented some type of self-storage unit, according to the storage association.
“One of the main factors that brought us to Asheville and especially south Asheville is that over the last five years that area has exploded with multi-family housing,” said John Marshall, president of Mountcastle Corp. based in Johnson City, Tennessee.
The Asheville area has a 1 percent apartment vacancy rate, and city officials have called the lack of apartments part of a housing crisis.
Mountcastle is building a three-story, climate-controlled facility on Hendersonville Road, just south of Long Shoals Road. The building will be 94,659 square feet, with 69,842 square feet of rentable space — for a total of 614 rental units.
Going multi-story on the $7 million project was an easy choice, as was locating in a retail area.
“It’s the land prices in that area,” Marshall said. “It’s hard to find enough contiguous acreage to do a one-story that makes sense.”
They want to be in a retail area for the same reason retailers do: visibility and traffic. But with that comes a need for the building to look a little nicer than a metal storage unit. Storage units will rent for $55-$250 a month, depending on size, so customers expect a nice building.
“I think a lot of municipalities have a bad taste in their mouths on self-storage,” Marshall said. “I think you’ll see the (appearance) on the outside of this building will be stepped up a notch or two. We’re using two different styles of brick, and aluminum accents on top. We want it to be something the community can be proud of.”
At Diversified Development’s east Asheville site, Batson said the company will probably spend “an extra $300,000 on the exterior,” which will feature brick and glass. All units will be climate controlled and accessible with elevators.
That air conditioning and heat costs more up front, but it also translates into higher rent. The storage association states the average revenue per square foot in 2015 stood at $1.25 for a standard, non-climate controlled 10 x 10 unit, compared to $1.60 for climate controlled.
The facilities are not big employers, typically hiring two or three workers.
‘They stay full’
Rusty Pulliam, who heads the Pulliam Properties development company in Asheville, said his company brokered the land deal for Marshall’s project on Hendersonville Road. As a partner in several new, upscale apartment complexes in Asheville, including Weirbridge Village in Skyland, Pulliam says he expects to see more multi-level storage units coming online because that’s what consumers want.
“We’ve got about 75-100 garages at Weirbridge Village that we rent out for cars and storage, and they stay full,” Pulliam said. “With all the multi-family (apartments) being built around here, I wouldn’t be surprised to see two or three more of (the multi-level storage buildings) go up.”
Melissa Dermid, whose family has operated the one-story, multi-building Arden Asheville Mini-Storage in Arden since 1982, says demand for self-storage is strong.
“With us personally, we’re out of parking spaces right now, because we just added two new buildings and we’re adding two more,” she said. “We do have some climate controlled units — about 20 percent of ours are climate controlled — but we’re out of all of those, except for one unit.”
Linda Carter, manager at George’s StorMor location on Swannanoa River Road, said the business has 322 climate-controlled, indoor storage units.
“The demand is extremely good, especially in the summer,” Carter said. “It’s very seasonal, but even in the wintertime I’d say we’re past 90 percent full. Right now we have just the one size available.”
She said customers are looking for climate control, whether they’re pharmaceutical sales reps who have to keep temperatures under control or wine sellers with excess product that can’t get too hot or cold.
Batson likes to hear that demand is strong, especially since Asheville has a fair amount of climate-controlled, single-story storage facilities already. A resident of Columbia, South Carolina, whose company does development projects across the Southeast ranging “from coffee shops to hospitals,” he said Diversified Development has three self-storage projects underway, counting the one in east Asheville.
“No apartments were built for years and now there’s a pent-up demand,” Batson said. “It’s the same with self-storage.”
The Great Recession of 2008-09 killed off demand for awhile, and Batson said financing remains tough to get on self-storage projects because it’s hard to show lease commitments before you open up and start leasing. But with demand surging, he’s optimistic.
“This all started for us because I wanted to store something (in Columbia), and I couldn’t find anything,” Batson said with a laugh.
Self-storage facts for the United States
- At the end of 2014, the U.S. had 52,500 self-storage facilities.
- Total self-storage rentable space in the U.S. is roughly 2.5 billion square feet, or more than than 78 square miles, an area more than three times the size of Manhattan Island.
- U.S. self storage facilities pay more than $3.25 billion in property taxes to local government jurisdictions.
- The distribution of U.S. self storage facilities in the second quarter of 2015 was: 32 percent urban, 52 percent suburban and 16 percent rural.
- The average revenue per square foot in 2015 stood at $1.25 for a non-climate controlled 10 by 10 unit, compared to $1.60 for climate controlled.
- Occupancy rates for self storage facilities as of second quarter of 2015 were 90 percent (percentage of units rented per facility), up from 86.8 percent at year-end 2013.
- About 9.5 percent of all American households currently rent a self storage unit, or 10.85 million households (as of 2013), up from 6 percent in 1995.
- U.S. self storage facilities employed more than 170,000 people, or an average of 3.5 employees per facility.
- The average size of a self-storage facility is about 56,900 square feet.
Source: Self Storage Association.