77 W. Minnesota Park Blvd. | Hammond, Louisiana
The What and the Why
Hammond Square Self Storage is the new construction of a roughly 94,000-square-foot climate-controlled self-storage facility located on 2.28 acres of raw land, directly behind an existing retail corner and just across the street from Hammond Square shopping center. The main building is three stories tall and contains 626 storage units. There is an ancillary building that is not climate-controlled with 15 units for boat & RV storage. Stirling Properties served as the developer of the facility. This site, adjacent to a functioning rail line, was excess acreage from a land acquisition ten-plus years ago for the development of a pharmacy and neighboring strip center.
Stirling Properties has had a pulse on the storage industry for several years now. We currently manage self-storage facilities in Houma and Lafayette, Louisiana (along with this new addition to the portfolio). Each of these is owned and was developed by Stirling Properties affiliated entities.
After engaging an acclaimed self-storage consultant, reviewing feasibility study information, and performing our own market analysis – primarily focusing on rental and occupancy rates in the Hammond region – we determined the potential of this location was highly indicative of a successful project.
In the past, we had repurposed former retail spaces into self-storage facilities as “second generation” uses, but this was our first foray into this product type, utilizing new, ground-up construction. The industry-wide surge in requests for material and labor, combined with the looming threat of government-imposed steel tariffs, had an immediate impact on both our cost and schedule. We issued the Notice to Proceed (NTP) to our General Contractor (GC) at a time of peak demand in the marketplace – the first week of January 2018. Immediately following the NTP, our GC contacted the original Pre-Engineered Metal Building (PEMB) supplier who had priced our job in October/November 2017, and they were no longer able to schedule us into 2018 due to PEMB material demands across the country!
We traditionally negotiate our contracts with general contractors, as opposed to soliciting bids. One byproduct of this process is establishing a certain degree of trust and mutual support. As soon as we realized there could be significant cost increases and schedule delays, our development team sat down with the GC to revisit the entire project scope. We quickly converted this project into more of a design-build approach. In doing so, it allowed us to make seemingly minor design modifications (e.g., switching to a 10’ high glass storefront instead of 10’3” height – standard sizing vs. custom sizing), which resulted in substantial cost savings throughout the project. These savings were then used to offset the increased pricing associated with structural steel, pre-fab sheet metal, etc., which were occurring throughout the industry.
The timing issues were multi-faceted. Once our original intended supplier informed us that they couldn’t get to us until 2019, our GC contracted with a PEMB supplier to provide the structural shell and a self-storage supplier to provide and install the corridor system. As demand for PEMBs (and specifically self-storage facilities) spiked around the country, various building materials began to dissipate. Imagine a do-it-yourself piece of furniture arriving in a box at your home – with a few key parts missing. At this point, we decided to hone in on the delivery of materials on a floor-by-floor, as needed basis. This meant, for example, instead of receiving all associated materials from the same supplier as initially planned, we wound up sourcing a variety of materials from local, small shop vendors. As we modified our schedule, we also got permission from the appropriate local and state authorities to open the office and ground floor units for business while the second and third floors were still being built out. The boat & RV storage building subsequently slid to the back of the schedule.
Every project has its hurdles. A solid, working relationship with your General Contractor – and maintaining open lines of communication – can make all obstacles surmountable.
Ultimately, our timeline extended out about three months from our original construction schedule. However, we were able to stay within our overall development budget. Considering that this was going to be a business we operated internally, we determined that we could live with the delayed opening so long as we kept project costs under control. An oft-recited expression is about knowing “when to hold ‘em and when to fold ‘em.” In a roundabout way, we ‘folded’ on timing, but ‘held’ on cost. Taking all things into consideration, we can chalk this one up as a win!