Kicking The Tires
A Companion for Buying Self-Storage Properties
By John Wilson
Selling a property has often been referred to as a kind of courtship, with progressing steps from awareness to consummation. Long before the courtship reaches the stage of hiring professionals to evaluate the physical condition of the existing buildings and other improvements, it is necessary that a potential suitor be able to get a good idea of the condition and probable care that an installation has received over its life since construction. This article is designed to provide a checklist and explanation of the importance of each item to the prospective buyer or his representative who may not be experienced in building maintenance or construction.
This article does not attempt to address financial issues such as market, rents or returns, but addresses potential problems with the physical installation.
It is important to know the age of the property before beginning the inspection. This will give you a good idea of what to expect. If a property is fewer than 15 years old but is in dire need of repair in several areas, then you can expect that maintenance has not been performed in a timely manner, and that several other areas, such as supervision of accounts, is probably not in good shape either. In any case, once a facility has passed 12 to 15 years, you can expect to replace the HVAC systems, the asphalt paving, and the shingle or asphalt roofs.
It is critical to be aware of the surrounding businesses--are they likely to have a positive or negative impact on your business? If a concrete batch plant, for example, or a major distribution warehouse, or a new school are recent additions to your area, it is likely that you will experience problems from high traffic, street deterioration or vandalism.
Also be sure that the property is properly zoned. Many times, particularly with suburban properties, existing properties are "grandfathered" in with temporary zoning as a part of annexation, but when the property changes hands or an attempt at expansion is made, then the facility must be rezoned and/or brought up to city-code standards, which can be very expensive. The new owner may also be required to do an environmental investigation and pay for a cleanup.
The entry driveway is the pavement that gets the most wear. On many installations, it is also the point where storm water exits the site. Look closely at the condition of the pavement. It should be concrete at least from the street to the gate. Also, it is a good idea to look for dark silt deposits that indicate that water has stood on the paving. This will eventually destroy the paving, even if it is concrete. It is a very good idea to visit the site, or have a representative do so, after a rain, so the quality of drainage for the whole site may be determined.
Traffic at the entry is another problem. If the entry is on a busy street--and many of them are--you may be required to revise it, as part of your changing requirements, to provide stacking of two or three vehicles, either in your facility or on the street. Once again, check the city ordinances and zoning requirements.
Lighting at the entry is a liability issue. For this reason, the night is also a very good time to visit a prospective property. If the fixtures are clean, and the lamps are burning and in good repair, it is a good indication that the facility is well maintained. If the driveways, especially the entries and exits, are not well lit and an accident happens, you can expect to be a defendant. If you plan to have night-time hours, you must expect to provide good lighting and graphics.
Most new owners plan some change in signage to put their stamp on their acquisition. However, the same equipment with new graphics is the most commonly used approach. Again, a night visit is the best way to tell visibility and location. The signs should be lit from the inside with fluorescent lamps and show no damage or corrosion. The power for the signs should be controlled automatically with a combination photocell and time clock.
If there is to be a separate entry and exit, or a separation with an island, the entry and exit should be clearly marked with internally lit signage.
The office location and entry should be clearly marked with well lit graphics. There should be easy and convenient access, both standard and ADA-accessible. In general, most facilities only need one or two wheelchair-accessible spaces, along with ADA compliant walks and ramps, and four or five other types of spaces, but this varies greatly from location to location. Once again, someone may have "grandfathered" around rules, but it is likely that you will have to bring the office up to current accessibility standards, regardless of whether you plan other changes or not. It is also a problem if office parking is inside the gate, or if customers must cross traffic to get to the office from the parking areas. This parking is in addition to the employee parking, which should be near the office but can be inside the gate. You will also want parking for a golf cart to carry prospective customers around the property quickly.
Inside the office, it is necessary to provide a public rest room that is wheelchair accessible. Take note of the condition of the room and its fixtures. Ask how long since the restroom was updated. If it was more than five years, it is likely that you will need to have it renovated. Inspect the office for display and work space. The counter should have room for a computer, fax, printer, check and credit-card machines, and various displays. There should also be slots for standard forms, files and inventory of publications. There should be space for seating, display of locks, boxes, moving accessories and merchandise. It is likely that you will want to have a wall for security-system displays, so look for space behind the counter for this installation.
If the existing office does not have all these features, or at least space for them, then it is likely that remodeling will be required.
The apartment that is included with many facilities is not only an enhancement for the prospective managers, but actually required by city ordinance in many places. If there is not one on the prospective site, you can expect to have to add one, particularly if the site is over 30,000 rentable square feet. If it is smaller, you may get away with electronically controlling the site at night, but someone must be available at all times in case of emergency or you may be liable.
As in the case of the office, you may be required to provide an ADA-compliant apartment. Many facilities have two-story apartments, and cannot be ADA compliant. Check with local officials to determine your exposure. Remember, the instrument for ADA enforcement is the lawsuit, and anyone can be a self-appointed compliance officer.
Tour the apartment, and check for the same items that you would if you were buying a home: roof, evidence of leaks, caulking integrity, age of appliances, painting, plumbing fixtures, etc. Ask to inspect the attic. Look for evidence of leaks and the quality of insulation. Inspect the air-conditioning ducts. The underside of the roof deck should show no evidence of water staining, mildew or rot. The insulation should be at least 6-inches thick and cover the entire ceiling. The air-conditioning ducts should be neat and clean, and show no evidence of repair.
If the ducts are primarily made of flex ducts, then the system is questionable and should be expected to give problems. In general, flex ducts should be no longer than 10 feet, especially in a residence. Most systems will be made of fiberglass duct board. These should be tightly taped, neat and quiet. If the units are in the attic, most building codes require that a walkway of plywood be provided from the attic access to and around the units. Most building codes also require a light fixture in the attic.
Check to see if the toilets run continuously or the faucets drip. Look under the sinks for mildew and leaks. Turn on the faucets and the shower, and flush the toilets at the same time. If the water system makes noise, it probably is undersized and likely to generate complaints from the manager. Shut off the faucets quickly to check for water hammer.
Tour the outside of the office-apartment. Look for evidence of water entry, mildew, cracking and rot in the eaves, corners, windows and doors. All eaves should be guttered, all joints caulked. Look for cracks in masonry and foundation. Do not be overly concerned with cracks that are at least 4 feet apart and less than 1/32-inch wide. These are normal concrete or masonry shrinkage cracks. Patterned cracks, larger cracks or spalling likely indicates structural problems.
Sight along the surface of the roof. If there are sags or bumps in the decking, then the roof structure has problems. If the roof has shingles, the edges and corners should be crisp. If they are curled or rounded, the roof likely needs replacing. If the roof is covered with metal, check for hail dents, misaligned seams or missing trim.
Most facilities have asphalt-paved drives. When inspecting a facility, it is necessary to walk or drive down every one of them. If there is a problem, it is not usually in all areas, and the areas near the office have likely been repaired on a regular basis. Potholes and cracks are easy to find, but closer examination is necessary to find other types of tell-tale problem signs. Areas where silt or sand has collected is usually an indication of poor drainage and collection of standing water. As stated above, the best time to visit the site is within a day of a rain. Poor drainage and leaky guttering are easy to see then. One indicator of imminent problems is "alligatoring." The name comes from the grid-like pattern of the cracks that develops when the surface mastic layer has broken down and the water is penetrating the pavement and leaching out the fines. This allows water under the paving and is the precursor to breaking down the subgrade and the pavement. In cold climates or locations with expansive soils, the water will cause the pavement to heave up in big pieces. In other locations, it will take a little longer to just disintegrate.
In facilities with concrete drives, (especially if salt is used as a de-icer), or industrial areas with polluted air, standing water will penetrate the concrete (which is surprisingly porous) and cause the reinforcing to corrode. When this happens, the reinforcing expands and causes the concrete to break out in chunks called "spalling." Look for areas with either dark patches or silt accumulations, and you will see an area of standing water that cannot be permanently patched. Also, concrete drives, pattern cracks and/or areas where the pavement has obviously raised in relationship to surrounding structures indicates swelling-shrinking soils that will break the pavement.
In either type of pavement, areas that stay wet or seep moisture through cracks, even after the surrounding streets have dried, indicate wet weather springs or moisture accumulation that will require special extensive repairs. Moisture will always destroy pavement from the bottom.
No facility inspection can possibly be considered complete until every building roof has been inspected. Before a site is visited, arrange to bring along a ladder to see the roofs. Otherwise, it's not worth your time.
There are facilities with every type of roof imaginable. We will deal with the four most common:
Standing Seam Roofs. This type roof is the best all-around roof for self-storage buildings. It is the longest lasting, requires the least maintenance and is the most durable. It should never, however, be used in any application that includes rooftop air conditioners or other high-traffic roof applications.
When inspecting this type of roof, be aware of several types of problems. The most common is improper installation. The roof, when properly installed, includes long straight sections of metal, 26 gauge or heavier, with galvalume or equal coating that snap together over insulation and purlins, and are fastened with gasketed screws at the eaves. This roof must be flashed at the edges and guttered at the ends. It is important, in all but the driest climates, to insulate the underside of this roof so the insulation is between the purlins and the roof deck. If this is not done, the roof will sweat and drip on the contents. The screws at the ends must have gaskets that are covered with metal thimbles or they will deteriorate and leak.
When inspecting a metal roof, look for silt accumulations, especially around the screws at the eaves, which may require repair. The roof panels should be sloped at 1/4-inch per foot and overlap the edge of the building at least 3 inches to insure that there is no water backup under the eave. The roof should be guttered or rake trimmed on all edges, flashed and sealed. Any penetrations should be flashed and sealed to form a neat leak-proof construction.
Standard Metal Roofs. This type of roof, usually called a "screw-down roof" was the type originally developed for metal buildings. The screws are in a pattern across the entire sheet and penetrate the deck in numerous places. The sheeting is actually the same type as metal-building siding and depends on seal tape and screw gaskets for sealing. This type of roof is often improperly applied--like the standing seam roofs--with a shallow slope. The only application that is proper for this type of roof is with a steep slope, similar to an asphalt shingle roof (three on 12), and even then it can be expected to leak when the seals on the screw gaskets deteriorate. The roof screws should be the type that have thimbles over the gaskets to protect them from the weather, but they often just have a washer that accelerates the deterioration.
Built-Up Roofs. This type of roof, which is the most common type of commercial roof, often called a "gravel roof," is very common in facilities that were built before 1980. These roofs, if installed properly and of good materials, will last an average of 20 years. They are generally composed of a corrugated metal deck over joists or purlins, insulation board, felt sheets and a reinforcing sheet of fiberglass netting or other material, with a layer of pea gravel or other ballast to protect the mastic that goes between each layer from being destroyed by the sun.
When inspecting a facility with a built-up roof, it is necessary to walk the roof. The reason for this is that, when moisture begins to break down a roof of this type, it usually shows up as blisters or soft spots when the heat of the sun causes the moisture trapped between the layers to evaporate and expand. If the roof is in good shape, it will seem a solid unit. Another way to find leaks from the top is to use an infrared imaging camera in the late afternoon. The areas with trapped moisture will not cool as fast as the rest of the roof and will show up as bright yellow on the imaging screen.
When inspecting a built-up roof, inspect the eaves and penetrations for the condition of the flashing and sealing. In general, it is safe to assume that it will have to be replaced after 15 to 20 years at best, and replacing a built-up roof with a metal one is a very common upgrade. As in the case of the asphalt (which is essentially the same material), look for standing water or silting, and alligatoring.
Shingle Roofs. These are usually on wood buildings. As stated above for the apartment, look for sags, rot and deteriorating shingles. Also watch for too shallow a slope, which should be at least three on 12.
Skylights. The type of skylights (usually fiberglass roof panels) that are normally built into self-storage projects are not high quality enough to last the years. Expect to replace them as soon as possible.
As in the case of the roofs, there are self-storage buildings with every type of exterior and interior wall construction made. The general types are masonry and concrete, metal, wood or plastic.
Concrete or Masonry Walls. The concrete or masonry walls are the most durable and, naturally, the most expensive. Generally, problems with these types of walls show up with cracking or spalling. There have been cases where the mortar or concrete mix contained contaminated chemicals and the walls actually disintegrated in place, but generally the problems in this type of wall indicate the problem with foundation or other structure. When inspecting this type of wall, look inside for white or other discoloring stains. Both concrete (as stated above) and masonry are highly porous and must be sealed. This sealant, depending on the climate, must be redone every 10 years or so. Stains on the inside indicate that either the roof has been compromised, there is condensation or the walls need to be resealed. Unfortunately, once stained, the walls cannot be cleaned and must be painted to hide the stains.
Metal Walls. Metal walls are generally corrugated sheet metal secured to form light-gauge steel framing with self-drilling, sheet-metal screws. Interior walls are coated with galvalume or galvanizing, and the corrugations are run horizontally for strength. Exterior walls are usually galvanized and then coated with an enamel paint. The main problems with these walls are structural strength, which shows up as dents and tears, corrosion, which shows up as rust and paint deterioration, and sealing problems, due to their corrugations. Corrugated siding, even with the enameled colored siding, is generally considered to be less desirable in appearance than masonry or even wood siding and will not be accepted by many cities as a building exterior that is visible from the street. Screws that attach the siding to the building on the outside should be the thimble gasketed type as described above.
After reviewing for rust and physical damage, the best way to determine weather tightness is to go inside and look for water streaks down the walls and have the door closed with the lights off and look for light leaks. This will not work on climate-controlled spaces. The most common place that is left unsealed is at the bottom of the sheets next to the foundation, where the corrugated seal is left out.
Wood or Plastic Siding. This material is generally over wood studs in wood buildings. This should be inspected closely for caulking, rot and mildew. It is also good to push on it with your hands to insure that it is tight.
If there is one area where the industry has reached a consensus, it is doors. One veteran self-storage operator told me, "If you're in the mini-storage business, you're in the door-repair business." This statement is quite true. When inspecting a facility with the intention of purchasing or recommending it for purchase, you should immediately assume that any unit doors made of anything but steel should be marked for replacement. Masonite, wood or any other material will not stand up to the use. Also, sectional doors, which look like the average home's garage doors, should not be retained, as they contain too many parts to be maintained. Units less than 10-feet wide should have 3-feet metal swing doors, while those wider than 10 feet wide should have roll-up doors. In some cases, non-operable doors, called "dummy doors," are used in the place of walls to showcase the type of building on what would otherwise be a plain wall. There are now special contractors that do nothing but paint mini-storage doors. The inspector should open a few doors on each building to determine their condition, looking for loose bearings, poor-working latches and rusted parts.
Climate-Controlled Mechanical Systems
It does not require an air-conditioning technician to make at least a basic inspection of the building's mechanical systems if he knows a few important things to investigate. The first is the age of the units. This can be easily determined by looking on the unit, which has a "born-on" date. Most residential-grade split systems, depending on the climate, are only good for 12 to 15 years at best. Commercial-grade systems are good for up to 20 years, if maintained regularly by a commercial technician. It is easy to determine this by looking at the units. If a service company is taking regular looks at these units, they will have the service company label with a phone number on the units. One other quick way to tell is to slide the filter out. If it has recently been changed, then it is probably getting regular attention. Also find out how the condensate is drained out. If it is making a puddle on the roof or parking lot, that is a sign of future problems being created. The condensate should be drained to a dry well, the sanitary sewer or a landscaped area.
Interior Lighting Systems
As with the doors, the industry has come to a near-consensus on interior lighting: Use fluorescent strips along the walls or ceiling that shine into the units, reducing unit lighting requirements. These lights should be on either a twist timer, or better yet, motion sensors that will prevent them from being left on once the building is unoccupied. The larger units should have lights as well, but these should also be controlled as are the hall lights. Many existing facilities contain pull-chain lights in the units. These should be earmarked to be controlled with the hall lights and, for best results, replaced with fluorescent. Incandescent fixtures should be eliminated altogether from the halls, entries and building exterior.
Security-system requirements vary widely with facility age, location, company policy and budgets. At the very least, a modern facility should have CCTV cameras at the entry driveway and main drives, an automatic coded gate and intrusion alarms in the office.
The greatest potential source of information about the facility is the manager. Even if he has only been on staff for a short time, it is likely that he has heard stories about the construction or operation of the facility or its neighbors. It is always worthwhile to spend some time over coffee or lunch with the manager and his spouse, too, if available.
Attached is a checklist covering the items in this article. It is a good idea to carry a tablet and key notes from the list items to the tablet sheets that will allow longer descriptions.
John Wilson is a registered professional engineer with licenses to practice in 25 states. His architecture and engineering firm, John Wilson & Associates, has been designing self-storage projects since 1983. You may contact him at (210) 495-5736; fax (210)495-5967.