Renovation Like Childbirth

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By Cecile Blaine

When Jeff Silesky and Pat Reilly discovered that the Brodie/Dorhmann Building on 15th Avenue in Seattle was for sale, the two-story, 62,000-square-foot structure with 200 feet of frontage spoke to them. "Self-storage," it screamed. A few months and $2 million later, the gigantic warehouse that housed restaurant supply equipment for years was transformed into Magnolia Bridge Self Storage, a 1,000-unit, three-story, climate-controlled self-storage facility less than two miles from downtown Seattle and 300 feet from its nearest competitor.

Renovation Like Childbirth

Silesky, a principal with Seattle real-estate investment services Davis & Silesky, and Reilly, vice president of Seattle-based Urban Self Storage, shook hands on a deal to renovate the warehouse. They hired local Calderwood Construction to handle the project, which Silesky compares to the physical pain of having a baby.

"It's almost like childbirth," he says. "We've forgotten about all the pain, because we are done with the project. But believe me, it was a tremendous undertaking."

While this was the first self-storage project for Davis and Silesky, Urban Self Storage already had 13 facilities and 675,000 square feet of storage property under its belt. Despite their combined experience, both knew that there would be a lack of predictability in such a conversion. But the rewards were far too appealing not to gamble on.

"This type of project has the highest risk, because you don't really know what you are getting yourself into," says Reilly. "On a conversion like this, there is a lot of risk."

Treasure Hunt for Funds

One of the first challenges was getting construction financing, due to the fact that neither partner had ownership rights to the building. They had entered into a lease with the option to purchase, an agreement that was crucial to the deal. "We wouldn't have done this deal unless we had an option to purchase it," says Silesky. "The way our agreements are done has to be based on the building and warehouse before we made all the changes. What we were not willing to do was pay the owners for the upside that we've created. So, it will not be appraised in any way as a storage facility or with any improvements that went into that building for that purpose."

Finally, after a lengthy search, a company called InterWest agreed to fund the project. "It was a tremendous challenge to get a lender here to agree to this kind of financing and understand the kind of value we are trying to create," Silesky continues. "The legal and political negotiations we went through to get the deal off the ground were extraordinary."

However, the rewards of the project made it worthwhile. The chance to develop such a large facility, with nearly a third of the units accessible from street level and a built-in docking area, was an attractive business venture they would not pass up--especially one with a daily traffic count of 45,000 to 50,000.

"The physical characteristics of the building lend themselves ideally to storage because of the ease of which people can load and unload, and with the number of docks both in the front of the building and dock-high loading to the second floor, which you access from the back of the building."

What's Up Dock?

What had been a small dock set up exclusively for semi-tractor trailers is now a dock with varying heights to accommodate four different kinds of vehicles: cars, pick-up trucks, low-dock trucks and high-dock trucks, such as semis. "It was very small," Reilly remembers. "It was built to accommodate one or two semis at a time. It was way too high for a rental truck, of course. We had to do some major site work to actually raise the parking lot to a different level. We had to change the configuration."

Set in rainy Seattle, the renovated facility's docking area is covered and offers a staging area with handcarts. Larger units are positioned closer to the dock, with smaller ones further away. "We wanted to make it so that they were never further than about 30 feet from the units," says Reilly.

Fifteen-foot ceilings on the first floor lent themselves to tall units whose walls go all the way up to the ceiling. Those, in particular, appeal to the commercial tenants. "So, they offer the commercial tenant the ability to store shelving and all kinds of things that wouldn't fit in a traditional self-storage facility," Reilly continues.

Transforming a two-story building into a three-story building was no small feat either, but in the process, the developers created an extra 286 units or 21,000 square feet. "The real master stroke of this whole deal was pouring an additional floor on top of what was the second floor of the building," says Silesky.

The engineering challenges involved in the addition were formidable because of the weight they'd be adding to the foundation of the building. One way they were able to add structural quality to the third floor was by using pan decking, but it was still touch and go at times, says Silesky. "There were moments when we were holding our breath with the city engineering department and our engineers to make sure we could pull it off," he says.

Another element of the renovation was re-roofing the building and making it strong enough structurally to handle an earthquake. That involved punching a hole through the top of the roof and jacking it up a couple of inches in order to install a parapet. As a result of that work, the cost of development rose significantly. Silesky says, "We spent a whole lot more than what we thought we'd have to spend because of seismic considerations and fire separations."

"People are worried about earthquakes in our part of the country," he continues. "So, there was some need to do some reinforcement of the building."

The Seattle warehouse had a cargo elevator before it was renovated, but that wasn't going to be adequate to accommodate all the customers. To combat the problem, the developers added a second elevator, this one a 5,500-pound Dover passenger/cargo elevator that stands 10-feet high. "That's one thing we are really proud of," says Reilly. "When people bring in couches and stuff, it's no problem."

Safety in the City

Considering the huge number of first-floor units that Magnolia offers in an urban setting, the facility needed a top-notch security system. "We sat down and designed a state-of-the-art security system and decided which vendors were going to provide what components," says Reilly. Silesky and Reilly combined a number of components to create the facility's custom system: Wham's individual door alarms and access key pads; Security Link's motion detectors, burglar alarms, glass breaks and fire system monitors; and other miscellaneous vendors.

The result is an office that, according to Reilly, looks a little like the Starship Enterprise. A 32-inch color monitor hangs from the ceiling with diagrams indicating which units are open and which are closed and secured. Five other monitors reflect the activity on the loading docks and other strategic locations. "People get a tremendous sense of security when they walk in there, which is critical, particularly for an urban facility and the kinds of things people store," says Silesky, who adds, "They pay more for this."

One of the biggest challenges of the renovation project, says Silesky, was getting all the contractors--construction, security, metal providers and others--to communicate effectively with each other. "It's very important to get all three of those people matched up, because everybody's measurements are dependent on the next guy," he notes. "It is like putting together a jigsaw puzzle in three different parts of the world and bringing it together in one place. You are doing a lot of schucking and jiving to make it fit properly."

By Aug. 1, 1997, Magnolia Self Storage opened part of its facility, bringing in revenue while construction continued. In the first 30 days, 12 percent of the facility's units leased up. By the end of November, construction was finished and all three floors were opened to customers. By the beginning of February, the occupancy rate had reached nearly 40 percent. Magnolia Bridge Self Storage is a member of Washington Self Storage Association as well as the Self Storage Association.

Silesky and Reilly had to have a great deal of faith in their project in order to renovate a warehouse just 300 feet from his nearest competitor and charge some of the highest rents in town. But they seemed to know that this side of the Magnolia Bridge was paved with success.

"One of the things that we feel confident is that, in terms of the market share, we don't have to wait for the spill-over from another facility," says Reilly. "Given the attractiveness that we have to offer, we can get the center of pie."

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