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07 Jan 2020

You Still Can't Build Large Self Storage Facilities In This Wisconsin Town

John Egan

Freelance Writer & Editor

Story original on Sparefoot.com

Elected officials in a town in western Wisconsin have put a different twist on how city governments across the U.S. are clamping down on self-storage projects.

In late November, the City Council in Menomonie, WI (population 16,540) unanimously rejected a proposal to permit development of self-storage facilities with more than 200 units each. That departs from the anti-storage norm around the country; in a number of communities, officials have temporarily or permanently frozen self-storage construction or expansion either citywide or in certain parts of a city.

“I am surprised”

Chris Hitler, president of the Wisconsin Self Storage Association, said the group didn’t take a stance on the Menomonie issue.

"On a personal level, I am surprised the city has a limit on units to begin with. I have never heard of that before,” Hitler, a self-storage broker with Mequon, WI-based Investment Real Estate Specialists LLC, told the SpareFoot Storage Beat. “Municipalities typically focus on where self storage is located. I would think the market would be a better arbiter of what sizes and quantities makes sense for the community.”

According to The Dunn County News, a proposed amendment to city ordinance would have authorize up to 200 outdoor units and 400 indoor units at one self-storage site. The current ordinance limits a self storage facility to as many as 200 units, no matter whether they’re indoors or outdoors.

Pinnacle Acquisitions LLC already had gained approval for a 200-unit facility in Menomonie but sought, through the potential ordinance change, to bump up the unit count to 333.

Unfair Competition?

Several owners of self storage facilities in Menomonie complained that raising the number of units allowed at one site would give Pinnacle Acquisitions and other new self storage players an unfair competitive advantage over existing locations. Even at 200 units, Pinnacle’s facility would be the largest in Menomonie, The Dunn County News reported.

Brian Kieffer, owner of Secure Storage in Menomonie, said the current ordinance already enables Pinnacle to build 200 units, and raising the limit on unit counts would hand Pinnacle a “virtual monopoly” on indoor storage, according to The Dunn County News.

Former self storage owner and operator Rick Beal, co-founder of Atomic Storage Group, a self storage management and consulting firm based in Port St. Lucie, FL, said that if he were an existing self storage operator in a city that put restrictions on new self storage projects, he “would welcome it with open arms.” But if he were a self storage developer like Pinnacle Acquisitions, he’d fight curbs on new developments.

Hamburgers vs. Big Macs

That being said, Beal disagrees with how Menomonie is curtailing self storage construction — through a cap on unit counts and, by extension, a restriction on unit sizes.

“It’s like saying McDonald’s can sell a hamburger but not the Big Mac,” Beal told the SpareFoot Storage Beat. “While they are both burgers, some people really want the Big Mac.”

Beal said that in order for financial projections to pencil out in the face of rising construction costs, a developer needs to build a self-storage facility of a certain size, “let alone make the project look nice or meet Class A standards.”

SOURCE: Sparefoot THUMBNAIL: Pinterest