Over the past three to four years, the Canadian self-storage industry has seen multi-story construction skyrocket. Several multi-story storage facilities have been built in and around the Greater Toronto area. In the Quebec area, one facility towers several stories.
An internal conversion of an existing building will generate a revenue stream much faster than a new build. This type of development puts high-priced, industrial properties within reach of the self-storage developer. This is especially effective when the price of land suitable for a self-storage facility could outweigh the return on investment.
Urban Multi-Story Mandate
Multi-use buildings are high in demand and often come with a hefty price tag that initially makes a self-storage conversion cost prohibitive. A multi-story internal conversion can put the project back in financial range. For these conversions, your investment will initially cost more per square foot than a single-story but your revenue could more than double.
Construction costs can increase because the first-floor conversion now becomes a structural design that requires a fire rating for the support members now holding up the new second level floor. The installation of elevators will also drive the overall square-foot costs above a comparable single-story construction. However, the final cost of this type of development does not double but your income potential may.
Double Your Revenue Streams
Let’s review the potential increased revenue stream of a two-story development versus single-story. In addition to rental units, there are required areas that take up valuable space on a single-story facility. These areas won’t be needed on the second floor. For example, it is normal to have covered or staging areas for your customers to offload. Also, the facility needs dedicated space for a government-mandated wheelchair washroom as well as retail. Administration and reception areas are becoming more elaborate in design and sophistication. Management office space is often designed to accommodate small meetings. Also, utility and electrical rooms all absorb rentable space.
These elements will not be required for the second floor where the space is converted into units designed solely to contribute to the revenue stream. By more than doubling your income by having the second floor available to rent, you can now look at buildings that were well outside your preset purchase range. This makes many locations available that you would have previously ignored.