Over the past few years, the permeance of portable storage has increased, as have questions from curious self storage owners who wonder whether putting down some portable storage at their facility is a prudent move. “Portable storage” can mean offering a service that involves dropping off and picking up containers from your customers’ homes and transporting or warehousing them. However, let’s focus on the pros and cons of adding portable storage units to your existing storage facility and renting them like a standard drive-up unit, without the hassle of moving them around.
Pros of Using Portable Storage Units:
- Implementing portable storage units does not increase your property tax. This is due to the mobile nature of the units themselves – since they are not permanently attached to the ground, they are not technically real property and therefore do not incur an additional property tax.
- Another byproduct of the portable units not being real property is the fact that they are technically classified as personal property. This allows a storage owner to depreciate the asset over (typically) a seven-year period as opposed to a thirty-year period like a traditional storage building.
- The newest technology in portable units implements an easy set up into their design. This allows a storage operator to have a new unit ready to rent within hours, or even less, as opposed to the lengthy process of constructing a new building on premises. The time element is especially true if a storage facility has reached the maximum build-out that was approved by the county or township. Drawing up new plans, doing site work, getting approvals, making sure there are no water retention issues, etc. are not a concern when putting down portable storage units, which can save potential headaches and delays.
- Portable storage units vary in sizes, which lends the storage owner a certain amount of flexibility in terms of placement of units. Picking a portable unit to fit into a smaller or more awkward area is easier than trying to place a building. Sometimes there are areas such as gas line easements that do not allow permanent structures to be built. Mobile units, however, can still be utilized to fill up this otherwise empty space. In addition, mobile storage can be placed on a grade where a building would not easily be placed.
- A portable storage unit is similar enough to a standard drive-up unit that the two options provide similar rents. This revenue is not counted differently than other rental revenue that a storage facility generates. Therefore, placing portable storage units affects the valuation of a facility the same way as building a permanent expansion. Besides the initial capital investment, portable units do not affect costs of a stabilized property such as property taxes, utilities (unless using a temperature-controlled container), on-site management, phone/internet, or professional fees. This allows the additional stream of income to add greatly to the net operating income of a facility and push the value higher in addition to the increased immediate cash flow.
Cons of Using Portable Storage Units:
- One of the trade offs with using portable storage is the expense. The expense comes from not just the cost per square foot of the container itself but in the transportation and setup, which can add thousands of dollars. Be sure to have a full picture of all the associated costs when getting a quote for portable storage units.
- If the portable units are assembled and put in an area where they might need to be moved for one reason or another, then it may be required to have a forklift or other specialized equipment on site. This alone may tilt the equation into making the portable units not worth the investment. The other option in this case would be to have a service close enough that could move the units in a short enough time frame.
- A unit mix in which portable units represent greater than 10% of a property’s revenues may cause various issues with appraisals and financial institution’s decisions to refinance or fund a purchase.
- Finally, the insurance company that covers the self storage property may not have coverage options available for portable storage. This may also affect the tenant insurance program coverage and even the rental agreement itself if the boxes are being transported. These are important legal considerations that need to be taken into account for adding a successful operation of portable storage units.
Self storage as an industry is constantly moving forward and finding more effective and efficient ways to serve its clientele. From portable capabilities to automation, the landscape is always changing. Portable storage units provide an interesting option for generating additional revenue and potentially increasing the value of an existing storage property. If you would like to learn more about how utilizing portable storage could potential benefit your self storage facility, contact us today and one of our knowledgeable brokerage advisors can help advise you.