Developing Self-Storage Condos: A Wild, Unpredictable Ride
|Copyright 2014 by Virgo Publishing.|
|By: Ted Deits|
|Posted on: 08/10/2009|
If I were designing a ride for an amusement park, I’d model it around the development of a self-storage condominium project. It’d be a ride customers would never forget! The only problem is the cost of admission—about $8 million—and the ride would last about three years, making even the most seasoned rider shudder.
In a nutshell, that’s what I’ve been through in my desire to create the ultimate boat- and RV-storage facility, Eucalyptus at Beaumont in California. My facility has 108 units with resort-inspired amenities. Their prices range from $55,000 to $182,000 and include the extras many owners of luxury vehicles expect, including a 2,700-square-foot clubhouse, individual door alarms and 24-hour access.
The facility offers five unit sizes, all with 14-foot door heights. Nearly all units have a depth of 50 feet. A few are 35 to 45 feet deep, and some units can be combined to create a unit up to 100 feet deep. Widths range from 11 feet to 26 feet, with 10- to 20-foot-wide sectional doors. The doors are insulated and have automatic openers integrated with the unit’s alarm system. Each unit has private electricity with 60-amp sub panels and 30-amp RV plugs.
A Good Start
The ups and downs of the project have been mind-bending. The emotions I endure on a daily basis range from euphoria to absolute terror. Instead of ending the ride in a cool pool of water, I landed in a boardroom full of angry bankers. The water would eventually evaporate, but the angry bankers won’t.
Finding a location was the real first challenge. Over three years, my proposed facility plans were rejected by 15 cites. Zoning boards said vehicle storage wouldn’t bring in residual revenue for a city or enough employment opportunities.
In 2005, I finally found a 4.5 acre parcel in Beaumont, Calif., and began pre-selling units. More challenges lurked on the horizon. Midway through the project, the city changed from adhering to Uniform Building Codes to International Building Codes, which completely threw off our building design. In addition, our local utility company insisted we install industrial-sized meters, even though our electrical use only trickles.
The biggest blow came with the U.S. financial collapse. I pre-sold 50 percent of the facility’s units in two initial offerings before construction even began. But with the banks no longer lending, many of my potential buyers didn’t have access to financing.
Panicked, I spent three months seeking financing for my anxious buyers with absolutely no results. I often heard, “Sorry, we’re not making loans,” or “We’re trying to shrink our balance sheets.” Some lenders had never heard of self-storage condos and were not interested in becoming educated on the subject. There’s nothing more devastating to a developer than having a prospect walk out due to unavailable financing, knowing full well there was nothing I could do to help.
All is not lost, however. In June, my construction lender stepped up and put together a loan package that works and is actually pretty generous. I’ve contacted hundreds of prospective tenants and there is now a resurgence of interest.
The outlook is bright, despite what I’ve written here. While composing this, I made two appointments for folks to come out and view the project. One is even a potential tenant who failed to find financing two months ago.
Despite its many challenges, the project turned out to be an amazing structure. Nothing like it has ever been built. I’m proud to show it, and potential tenants really enjoy what we’ve created. What a wild and rewarding ride it’s been!
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