While self-storage conversions seem to be getting a lot of attention these days, they certainly arent a new idea. Since the real estate crash of the late 80s and early 90s, conversions have become not only a viable alternative to conventional self-storage, but in many cases, a preferable investment. There are many obvious advantages to converting an existing building to self-storage.
Lets start with zoning. Any conventional self-storage owner will tell you zoning laws alone are becoming more restrictive, complicated and costly. Plus, the approval process can be convoluted and discouraging to an owner who has done all the right things, but sees zoning officials delaying his project.
By contrast, conversions often bypass zoning headaches because, in many cases, structural and site work is less involved. Things like excavation and grading, foundation pours, landscaping, irrigation, electrical and HVAC systems may not be an issue because they are already in place. And if much of the site and structural work has been done, it also means a savings of money and time. Remember, speedier occupancy for owners and investors means a faster return on investment.
Next, the potential owner is faced with what has lately become a pair of chronic problems in real estate: escalating land prices and scarcity of available land. If an investor has to find a piece of land he can afford in the proper location for self-storage, he may give up before he even gets started. But an inexpensive, existing building in a high-density location is a good candidate for conversion.
Theres no question the first priority for success in self-storage is location, and the beauty of conversions is this: Many existing buildings originally built for retail establishments, offices, hotels, warehouses or specialty stores are usually in heavily populated urban areas, ideal for self-storage use. Now the owner has already solved one of his biggest challengesthe need for good demographics and the ability to tap into a sufficient number of potential customers in his market area.
Its a fact that higher rents are often received for the convenience of a shorter drive and easy access. In-town locations also lend themselves to a rental-truck operation, which can generate a considerable amount of additional income.
But an urban location is not the only opportunity for conversions. Suburban communities are beginning to undergo changes in zoning and the retail landscape. Many department stores have abandoned smaller structures for the larger big box concept, so this frees up more existing suburban buildings for self-storage.
Convert or Conventional?
Conversions are not a panacea by a long shot. The potential owner must ask himself some hard questions before deciding to convert:
- Whats the condition of the building? Heres where you have to be very careful. For example, make sure the roof is in good repair, because if it isnt, this could be a costly, unexpected expense.
- Is it a single- or multistory building? If its multistory, are there working elevators in proper locations?
- What about the electrical and HVAC systems? Most self-storage facilities today offer climate control. Is the buildings HVAC system operational and equipped to handle this?
- Consider access to the building. Is it located in such a way that potential renters can easily drive to and from the entrance? Can they load and unload their valuables without difficulty? Once inside, can they find their units easily? Try and keep units no further than 100 feet from the nearest point of entry.
- Will renters need mechanical assistance? If so, have hand carts and flat carts available at entrances and docking areas, if your building includes these. Since docking areas are normally above ground level, think about installing ramps to meet handicap regulations.
Unless the building you convert is old and requires substantial foundation and structural improvements, the bulk of your spending will fall on the interior build-out of doors and partitions. Cost will vary according to unit mix and wall height and will include installing metal mesh over the tops of the units for security.
Before moving forward with a conversion, consult a reputable manufacturers representative who can assess potential costs and help to determine the overall expense of the project. This will be time well spent. Conversions are becoming increasingly popular because land suitable for self-storage is tougher to find and the cost of land continues to escalate. In many cases, conversions are a smart alternative. Just make sure you examine a potential site from all angles. If the advantages of converting outweigh the disadvantages, the decision becomes academic. Go for it.
Gayel Weaver is the sales coordinator for BDH Systems, a manufacturer of door and hallway systems for new construction and conversions. BDH is a subsidiary of BETCO Inc., a single-source manufacturer of metal self-storage buildings. For more information, visit www.bdhsystems.com.