Upgrading an Aging Self-Storage Facility: Options for Increasing Site Value and Marketability
|Copyright 2014 by Virgo Publishing.|
|By: Devan Williams|
|Posted on: 07/10/2010|
In today’s economic climate, many self-storage owners and developers are looking to invest in or modernize existing facilities rather than construct new ones. This is in no small part due to the vacancy rates and depressed values the industry is experiencing, and the challenge in gaining or retaining tenants. Thankfully, it can be beneficial to renovate and upgrade aging facilities.
Older facilities were designed to suit the needs of years past, sometimes several decades ago. Those needs are not necessarily the requirements of today and beyond, and the value and marketability of many self-storage sites can be increased through renovation and upgrades.
Of course, every facility is different, and not all approaches work at every property. A separate analysis for the possibility of restoration should be done for each site. There are many ways to upgrade a property. The following are some of the more effective and practical methods.
Depending on the particular facility design, adding climate control can be an easy modification or quite complex. Many things need to be reviewed, such as power requirements of the HVAC units. Does your current electrical system have enough capacity to add the HVAC units, or will additional power be needed? Another consideration is insulation for the walls and ceilings, and the kind of work this would require, particularly if a new roof would be needed to accommodate insulation or roof-mounted units.
Occasionally, older facilities were built with materials that would not last, or the design was simplified to the point that weather-proofing of certain structures was basic at best. Oftentimes maintenance was not performed on caulked joints, roof sealants, etc. This may have caused damage to roof systems, roof supports, and even walls and foundations. In these situations, cost-effective solutions are many and diverse.
If there has been roof damage, the roof may need to be replaced entirely or only certain portions of it. If metal components have started to rust, you may be able to salvage the material, or it may be necessary to change it. In all situations where structural members are subjected to damage, it’s a good idea to have a structural engineer review the destruction and determine the proper course of action.
At some sites, a portion of land was left open with the intention of adding to the facility later, which may never have occurred. There are now several ways to use that available space.
If funds are low, you can create RV and boat parking by simply adding a dust-resistant surface such as gravel, crushed asphalt, etc. If you already have this kind of parking, you can upgrade to covered parking by paving over the area and adding canopies to protect vehicles from the sun and weather. This would allow you to charge additional rent above that of uncovered parking, thereby increasing the value of the property.
Another option, if funding is available and there’s demand in your market, is to construct a new building. There are a couple ways to approach this expansion. You can match the existing building’s style and type, keeping it homogeneous. The alternative is to build toward a sector of the storage market that’s not yet accommodated by your facility or its competitors. If the facility has primarily interior storage space, consider adding large, exterior enclosed storage for vehicles. This would attract a different sector of the market to the facility.
A facility facelift can dramatically increase traffic and public opinion. Some entrances and façades look rundown, driving the public perception that the structures are unsafe and undesirable. Revamping the façade, entrance, security gate, parking, landscaping, signage and office can rejuvenate a facility, and potentially lead to increased occupancy, rental rates and value. Some ideas include:
Change the Use
Some older facilities were built as mixed-use projects, with office-warehouse suites or retail as the primary use and storage in the back of the lot as an afterthought. It may be worth a review of the rents garnered from the non-storage uses vs. the benefit of expanded self-storage use. It may be better to change the primary use of the property to self-storage.
At this stage, it likely would be worthwhile to convert to storage units. Many buildings are already built for climate control, eliminating one step along the way. The demolition can be a bit messy, depending on the age of the building, but to get a building back to profitability it can be well worth the cost. A structural engineer should be consulted concerning the structure of the building.
As the self-storage industry has evolved, so has the security systems that keep tenants’ goods safe. Security was almost never included on older facilities and is still lacking in many of them. The perception of a facility with no security is that it is an unsafe one, one where tenants’ belongings may be stolen or damaged. Personal safety is also a significant concern.
Adding security can go a long way toward bringing a facility up to date and attracting more tenants to store in the facility at higher rents. There are many options to increase security including video cameras, digital video recorders, unit alarms, keypad-controlled access, lighting and perimeter fencing. A good combination can be cost-effective and efficient while providing the desired marketing results.
Green building concepts have been gaining popularity, and though slower to be applied in storage facilities, they have become more prevalent. Placing solar panels on storage facilities makes a lot of sense for several reasons, including the massive areas of unused roof space and new tax incentives for solar-power systems. Plus, in some cities and states, if a surplus of energy is created, the power company will buy the excess power created by the panels or credit against hours of usage.
Other ways to make a facility “green” include water-harvesting systems for landscape water use, replacing plumbing fixtures with those that are low-water-use, installing low-energy-use light fixtures, etc. Along with the future cost savings of installing efficient equipment is the marketing influence eco-friendly efforts can have on potential customers.
There are many ways an aging facility can be enhanced to increase its profitability and value. Through use of market studies, analysis of individual facilities, and cost/benefit comparisons, the most beneficial renovations and upgrades can be chosen to bring your facility current and help it perform optimally.