Feature, V2I4

Is the Time Right to Expand from Storage Buildings to Dwellings?

Building small dwellings can be a natural progression for a shed builder.
Building small dwellings can be a natural progression for a shed builder.

Shed builders looking to differentiate or expand their business into other product lines often see cabins and/or cottages as a perfect fit. While the intention is different—and housing people versus tools is a critical difference—the size, framework, and even construction materials of these outbuildings bear many similarities. And for builders who build only a shell to be finished later by the homeowner, there may be little to change in terms of construction processes.   Many customers immediately see the similarities between the small structures, particularly with today’s hot trend of sheds as aesthetic extensions of the home. It’s often customer requests that can cause a shed business to grow into a new product line.

Making the Decision to Expand
Historic Sheds in Brooksville, Florida, began with a focused goal—creating sheds to match homes in historic districts. The storage buildings were each customized with a specific design
motif that had to undergo architectural design review to match the main home.

“Garages were the next obvious thing, as they’re basically just big sheds,” says Jo-Anne Peck, president of Historic Sheds. “Someone asked for a two-car garage and we said sure. Then the next thing, of course, was a request for an accessory dwelling in the backyard. That’s very common in historic districts so it was the natural progression. In fact, a lot of cottages are even smaller
than a two-car garage.”

Montana Shed Center in Great Falls—which was founded, as its name implies, to sell sheds—added cabins and cottages to its product line when a local builder recognized the sales compatibility between small outbuildings for storage and for dwelling.

Shortly after buying the company, current owner Virgil Stoltzfus was approached by a log cabin builder who asked if Montana Shed Center would be interested in marketing his product line.

“I’ve been doing that since 2009,” Stoltzfus says. But he’s also expanded on the interest gained from that product line. “In our own shop we do some of the same, and then finish out cottages.”

It was a similar start for Mega Storage Sheds in Spring, Texas.

“We started just with sheds and from there were led into the cabins,” says co-owner Katrina Garcia.

Garcia says it was a natural evolution for the company. She explains that the shed business had evolved out of her husband’s carpentry skills, tested in Louisiana in the residential building
boom that followed the devastation of Hurricane Katrina. Given that experience, constructing small dwellings was a logical next step for the shed builder.


The Trend Toward More Outbuildings
Well-constructed, eye-catching sheds have taken off in popularity in recent years, and now consumers tight on space are thinking of this traditional storage space as a detached addition to their home. Today shed builders are getting questions about creating a structure that can do double-duty as home office, studio or “man cave.” Given this leap, the similarities between basic cabins and
cottages and today’s designer sheds are more obvious than ever.

“Customers began using the sheds as camps and living spaces, so it was a natural progression,” says Domenic Mangano, president of Jamaica Cottage Shop in South Londonderry, Vermont.

“A portable building or guest house that can be set on any given weekend at any given location always has a marketable value,” Stoltzfus says. “The tiny home value also has been a big storm.”

TheTinyLife.com describes this as a social movement where people are making the choice to downsize the space in which they live. “The typical American home is around 2,600 square feet, whereas the typical small or tiny house is between 100 and 400 square feet. Tiny houses come in all shapes, sizes, and forms, but they enable simpler living in a smaller, more efficient space,” the
authority states. TinyHouseDesign.com even encourages those interested in this movement to consider a shed shell.

“Now I’m not marketing a tiny home,” Stoltzfus says. “But look at the cost of a Tiny Home for $135 per square foot or more. Then you see our storage sheds already have the groundwork and
framework done; [all that’s needed] is finding the right avenues to finish off the inside and having it inspected. For around $90 to $100 per square foot you have a little house.”

Educating consumers on the difference between a shed and a dwelling can often be your best sales tool.
Educating consumers on the difference between a shed and a dwelling can often be your best sales tool.


Beware the Similarities
Builders know, however, that no matter the structural similarities a shed is not a cabin or cottage—and should not be marketed as such.

“They have the same style of ‘log’ construction,” says Michael Ronneseth, owner of Bavarian Cottages Ltd. in Kamloops, British Columbia, of his sheds and cabins. “The primary difference is size,
and we don’t specifically design our sheds for varying snow/rain loads unless the client specifies and is willing to pay the difference. The cabins also use a higher level of finished lumber and have additional features, such as sealed full-sized doors, etc.”

Interior finishing is certainly a big difference, agrees Peck, who points out that cottages will of course feature interior walls, whereas few sheds do. But it goes well beyond finishing.

“It’s permitting, and a design to meet residential codes,” she says.

In fact, the more significant difference is the intended use of each building type. Cabins and cottages are intended to house people, so builders must meet more stringent codes in the construction of those outbuildings.

“They’re very different,” Garcia says. “Sometimes people want to purchase a large shed to use it for a cabin, but a shed isn’t constructed for living quarters. A shed is just for storage purposes. There are obviously modifications and building codes that have to be abided by so that you can use a building for living quarters.”

With this change in intended use, permitting requirements also must be factored in.

“In many places storage structures up to 100 square feet do not require a permit. Cabins in most areas require permits, so that involves designing the cabins to meet local codes and also drawing up plans for the various jurisdictions for permitting purposes,” Ronneseth says.

By ignoring code and permitting differences, shed builders could land into serious trouble.

Educating the Consumer
Builders understand these differences. The real question is whether customers know about these important differences.

At a glance, the consumer might see today’s aesthetically pleasing sheds as a functional extension of the house. Consumers might see that a finished interior and a cozy front porch are all that separate a shed from a cabin or cottage. Less scrupulous builders may see the exterior similarities as a way to reduce overhead—by selling sheds as cabins or cottages.

This has been Garcia’s biggest competitive challenge since adding cabins to the company’s product line.  “We’ve noticed our competitors tend to sell the customer a shed with an added-on porch so that it looks like a cabin. It gives the appearance of a cabin but that’s not what you want in all actuality. For me it’s a big no-no,” Garcia says.

In this regard, pricing sets Mega Sheds apart—the company’s cabins might run double what the competition asks. But that’s because the company is following code requirements in all buildings intended to serve as dwellings.

“Again, what they’re giving you is a shed with a porch on it but it’s not actual living quarters. There’s a lot of misleading advertising,” Garcia says.

The company supports its cabins, and their pricing, with competitive research and by educating consumers to better understand that they’re getting what they pay for.

“Our intention is to put videos up on our website to advise consumers to look out for scams, and to offer ‘buyer beware’ information as well,” Garcia says.

Sizing Up the Competition
Of course, the unscrupulous builder isn’t the only competition to weigh before expanding your product line. Because these product lines fit neatly together, more shed builders may be considering this add-on. In general, however, it’s a relatively untapped market.

Peck sees the cottage addition as a strong market in her region. There are few competitors within the local shed industry, and general contractors aren’t interested in these small projects.

“We don’t have much competition because builders are so busy,” Peck says. “Any builder can build a little house in somebody’s backyard, but they don’t want to deal with the smaller buildings because there’s not as much [revenue] in it and building has gone crazy. If the economy drops out again then we’ll probably have a lot more competition.”

Having sized up the competition, Peck is able to market to homeowners exactly how her product line is superior. For example, Peck says, “Because we are set up to prebuild all components in our shop, you don’t have construction in your backyard as much as you would if you had a regular contractor come in and build the same unit.”

After all, just because you can easily start building cabins or cottages today, doesn’t mean it’s necessarily the right decision. Size up your local market first to determine if this is the best move for your business.

For Stoltzfus, the move brings in enough business to make the addition worthwhile.

“It’s not a huge market, but it definitely keeps a guy or two busy,” he says.


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