2022 Self-Storage and Boat and RV Storage Construction Costs
I sat down with four industry experts as they looked into their crystal balls and shared what developers can expect this year. Spoiler alert: in the face of continued record-high construction costs, experts agree self-storage and boat and RV storage development still makes sense in many markets.
Highest Costs Yet
Experts agree; current self-storage and boat and RV construction costs are the highest they’ve seen since the inception of the pandemic.
Angie Guerin, Vice President of Business Development for Mako Rabco, a nationwide company that specializes in self-storage design, supply, and installation, thinks steel has stabilized but expects the high self-storage construction costs to continue for the foreseeable future. “We've been at kind of a static high point since the beginning of the fourth quarter of last year,” she said. “But I'm being told that now all the other trades like masonry, concrete, sprinklers and electrical, all of those trades are starting to tick up, at a rate that's exponentially higher than 2021.”
“In 2021, the steel industry was suffering the brunt of escalating prices and now we're seeing a list of other trades starting to do the same,” Guerin elaborates. “When it comes to the escalation of overall construction costs, I don't think it's over, not by a longshot. The steel building component is probably stabilized at this point. But stabilized at a high price. We're seeing some indication that pricing may start to soften, but I don't think it’s going to go low as fast as it went high. However, conflict in Eastern European countries and Russia could blunt some of the decreases.”
Relocatable and portable self-storage units are experiencing continued high costs, especially pertaining to freight. “Although manufacturing costs have gone up over the past year or so, the real increase in cost is in freight charges,” said Lisa Maloney, Director of Strategic Accounts for Boxwell, a leading provider of relocatable self-storage units and portable storage containers.
“This is especially true with products manufactured overseas. Ocean freight rates are higher than they have ever been with rates doubling and even tripling to some destinations. Shipping costs began to rise late in 2020 and have continued to shoot upwards until today,” Maloney said.
The cost of steel has started to decline. But can developers expect a similar decline in the price of storage buildings?
Pertaining to relocatable and portable self-storage units, Boxwell expects prices to begin to drop for this type of storage. However, if freight costs remain high, the overall prices will remain higher than in years past.
Guerin points out that price changes are going to vary based on location. “Declining pricing for steel are going to change on a geographic basis because there are so many regional producers of steel, and they're all moving. They're all moving numbers, increasing incrementally in different ways,” she explained.
“Right now, the cost of steel has dropped yet the consumer prices are staying high due to strong demand,” Guerin said. “And prices will stay high until demand drops, which we certainly hope that doesn't happen..”
No relief in sight for other trades either
Guerin and Jamie Lindau agree: increased labor costs will continue to keep overall construction costs high in 2022.
“I don't care what you are, whether you're a manufacturer like we are or anything in the construction trade, labor will not go down,” stated Lindau, National Sales Manager for Trachte Building Systems, one of the largest manufacturers of steel self-storage systems in the industry. “Though the steel building cost went down, labor went up.”
“For example, in markets like the Northwest, really every major MSA has a $15 an hour minimum wage,” Guerin elaborated. “For the last 18 months, labor costs escalated there. And what that means, in addition to the raw cost of changing labor market, is increased insurance premiums. It means increased costs of renting construction equipment - that's probably doubled in cost over the last two years. I don't see any future compression in labor cost. And I think that's going to be true for really every construction trade.”
“My best hope right now is that 2022 is a year of stabilization,” said Ted Culbreth, Vice President of Sales and Marketing at SBS Construction, a construction management firm with 25 years’ experience in the self-storage industry. “I foresee the price of steel coming down. But if oil continues to go up, then what's that going to do to the trucking and the price of manufacturing and inflation with everything else that goes into it? My steel might go down, but the other components of actually getting it into my jobsite will not.”
Self-storage and boat and RV storage’s silver lining
Despite the dramatic increase in development costs, it is still possible – and profitable – to push forward with new facilities.
“As one of our largest clients, who is also a dear friend said, the only thing that has outpaced escalations in construction costs is the valuation of this asset. Many developers are still very bullish on continuing to construct new self-storage facilities because you can build them - even at this dramatically higher construction cost point - far cheaper than you can buy them,” said Guerin about the saving grace of our asset class.
Lindau concurs. “Costs are higher than two years ago, that is the truth. And it can be painful to watch.” But the flip side of the equation is the strength of the industry and increase of rental rates. Even though you're paying more, rental rates can offset construction costs. You’ve just got to make sure the project still works out on paper and that consumers in the market you’re going into can absorb the true costs of developing today.”
Let’s Do the Numbers: Current Construction Costs
Following are construction cost ranges per square foot (PSF) to use when penciling out your facility. Costs vary by manufacturer, by market and final costs are dictated by the site selected and when the order is placed and work is completed. The construction costs that follow are current as of this writing and should be checked and updated regularly in your proforma.
Boxwell: A good budget range for relocatable self-storage and portable storage units is between $27-37 PSF. This cost includes freight for overseas or domestically produced units. For overseas production the manufacturing cost is lower with freight on the high end yet our USA Made products have higher manufacturing costs and lower freight. The installation process is quick with relocatable units and typically runs between $3-4 PSF.
Mako Rabco:
Non-climate control drive-up units: $55 to $65 PSF
Climate-control drive-up units: high 60s to mid-70s PSF
Enclosed boat and RV units: $55 to $65 PSF
Canopy boat and RV units: $30 to $35 PSF
Multi-story climate-control: 90s to the low hundreds PSF
SBS Construction (based in the southwest region):
Multi-story climate-control three-story: $65 to $70 PSF
Multi-story climate-control four-story: $70 to $80 PSF
Trachte Building Systems:
Non-climate control drive-up units no fence or office: as low as $40 PSF if basic, generally $45 to $55 PSF
Climate-control building with interior corridors with an office, fence, gate and basic security: $50 to $70 PSF
Enclosed boat and RV units: $50 to $60 PSF
Multi-story climate-control building with interior corridors with an office, fence, gate and basic security: $100 to $130 PSF
Join Sensei Katherine as she moderates a panel of industry leaders at the 2022 ISS World Expo at The Mirage Hotel & Casino in Las Vegas on Wednesday, April 20 at 9am.
Listen to what Fernando Angelucci, Mark Helm and Stacy Rossetti have to share on how to shake off ‘Analysis Paralysis’ and pursue your dream of developing and acquiring a self-storage and boat and RV storage facility.
Click on the link below for more details. We hope to see you there!
https://iss22.mapyourshow.com/8_0/sessions/session-details.cfm?scheduleid=16
Need help deciding if the parcel of land or building you are converting is viable and worthy of a feasibility study? Book a preliminary report with Sensei today! Your first report is free and successive reports are $75. Sensei looks forward to researching and reviewing your prospective location together.
Let’s Do the Numbers: Current Construction Costs
Following are construction cost ranges per square foot (PSF) to use when penciling out your facility. Costs vary by manufacturer, by market and final costs are dictated by the site selected and when the order is placed and work is completed. The construction costs that follow are current as of this writing and should be checked and updated regularly in your proforma.
Boxwell: A good budget range for relocatable self-storage and portable storage units is between $27-37 PSF. This cost includes freight for overseas or domestically produced units. For overseas production the manufacturing cost is lower with freight on the high end yet our USA Made products have higher manufacturing costs and lower freight. The installation process is quick with relocatable units and typically runs between $3-4 PSF.
Mako Rabco:
Non-climate control drive-up units: $55 to $65 PSF
Climate-control drive-up units: high 60s to mid-70s PSF
Enclosed boat and RV units: $55 to $65 PSF
Canopy boat and RV units: $30 to $35 PSF
Multi-story climate-control: 90s to the low hundreds PSF
SBS Construction (based in the southwest region):
Multi-story climate-control three-story: $65 to $70 PSF
Multi-story climate-control four-story: $70 to $80 PSF
Trachte Building Systems:
Non-climate control drive-up units no fence or office: as low as $40 PSF if basic, generally $45 to $55 PSF
Climate-control building with interior corridors with an office, fence, gate and basic security: $50 to $70 PSF
Enclosed boat and RV units: $50 to $60 PSF
Multi-story climate-control building with interior corridors with an office, fence, gate and basic security: $100 to $130 PSF
Katherine D’Agostino, Founder, Self-Storage Ninjas
Katherine D’Agostino, MBA, is the founder and owner of Self-Storage Ninjas, a national feasibility consulting firm. A former marketing-communications executive turned Sensei, Katherine has a background that includes 24 years of creating and implementing business plans for a wide range of companies. A self-storage developer and owner herself, she focuses on delivering quality in-depth unbiased reports that empower investors to make knowledgeable well-informed decisions.