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To build one building or two, that is the question.

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  • To build one building or two, that is the question.

    Hi! We are debating a question of building one building or two in addition to the one we currently have on this property.

    A little background. This property is rural (about 5 miles north of a town of approximately 8500 people and about 2 miles south of a town of about 200 people. We purchased this property in 2011 with 1 building with 40 storage units in it. It was 100% occupied when we purchased and has remained that way since. We have raised rent twice since acquiring this location and are now the highest in our area but still remain full.

    In 2013 we did not do any advertising except for our website and still turned away 127 unique customers due to no vacancy's. This number does not include customers that we were able to satisfy due to move outs. I have tracked by date when the requests were made and according to this historical data, if we opened the doors to the new building on May 1st, we would fill the first building by July 16th and the second building would be filled by September 12th. We are located in a northern climate and have very little move in/move out activity after the third week of November so it is critical that we get a decent fill by then. Our current average length of stay at this location is 523 days so move outs are not a huge issue for the purposes of this calculation.

    We can build up to 4 buildings of progressive smaller sizes on our property. The first proposed building would be a 40x140 with 36 units, the second 40x120 with 32 units, then a 40x110 with 30 units and the last would be a 40x100 with 28 units.

    So, based on the above information, what are your thoughts about building one building or two this year?

    Thank you very much for your input!

  • #2
    Re: To build one building or two, that is the question.

    You could make a case either way.

    Benefits of building one building at a time:
    - Preserves cash (ideal for smaller businesses starting out)
    - Allows you to fine tune unit mix more on future buildings
    - Avoids possible depression of your rates (and competitors) by over building

    Benefits of doing two at once:
    - Paperwork (permitting, building design) is reduced by doing them together
    - Project cost could be lower by having contractors out there for one big build instead of two small ones
    - Only mess up existing site one time for earthwork and foundation work
    - Larger supply in area will help ward off new competition

    My suggestion based on your post: Do all the permits, earthwork, foundations, etc for both buildings. Finish one right away. The building permit is probably good for at least two years. Lead time for the actual steel building isn't all that long, so when your new building is nearly rented up, then order the 2nd building to go on that extra slab.

    Also, if you are 100% full, increase your rental rates. We're too nice in WI.

    Steve Hajewski
    Marketing Manager
    Trachte Building Systems
    www.trachte.com
    800 356-5824

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    • #3
      Re: To build one building or two, that is the question.

      missing one key ingredient how much competition is there locally? 40 units for that many people isn't very much so its no wonder your full and turning people away. I agree with steve build one more now. just my 2 cents

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      • #4
        Re: To build one building or two, that is the question.

        Originally posted by roadrr View Post
        missing one key ingredient how much competition is there locally?
        We do have a lot of competition within a 5 mile radius of our location.

        Thank you Steve and roadrr for your input! It is greatly appreciated.

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        • #5
          Re: To build one building or two, that is the question.

          I would agree with Steve. Go ahead with the pad site work foundation etc for 2 but only build one out and wait for next spring to build the second out. You will nearly double the facility with just the first building. Having 127 unique is great have you have to convert them. Good Luck!
          Chasing Perfection to catch Excellence

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          • #6
            Re: To build one building or two, that is the question.

            Advantage IT, thanks for the input. You bring up a great point! I have a nearly 100% conversion rate if I have an opening.

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