By Lewis Pollack
The following words of advice are for those of you who’ve passed that dark Circuit City or the closed Winn Dixie every day on the way to your office and mused about the possibilities of stealing it for a song and converting it into a self-storage facility. As one of those intrepid souls, along with my partners who’ve chosen to follow the muse, I welcome you, pilgrim!
In this article, I will not unravel the secrets of the universe, but I will attempt to offer my opinions on retrofit selection. I will not address issues which would be common to any other asset class or type of storage development or straight purchase such as financing. The goal is to focus your attention on how to steer clear of making some avoidable stumbles and think about retrofitting in a more critical way than you might now.
Without exception, a commercial zone 2 (C-2) location is the most desirable in a market area. It will typically have a large and destination-bound traffic count and great visibility. Experience has taught us that facilities in C-2 rent up faster than those in light industrial 1 (I-1). Go figure!
It used to be a fairly hard and fast rule that self-storage properties were not going to be permitted in any C-2 area. However, many jurisdictions are now willing to swallow hard and allow a class-A storage product in a C-2 area to mitigate the problems of vacant and vandalized buildings in what’s typically a heavily trafficked retail-shopping corridor. While this window of opportunity exists, search in C-2.
You should also eliminate any potential site that cannot accommodate a minimum of 50,000 net rentable feet. This isn’t a hard and fast rule but a sweet spot for cost-efficient management.
While a single-story building is preferable, many older, dark retail boxes seem to contain no more than 40,000 square feet. Oddly enough, with a clear span of 19 feet at the low eave, a smaller building might be an appropriate candidate for an interior mezzanine level, which can essentially double the net rentable square feet. Bring your tape measure!
Many retrofits are within existing shopping plazas and are self-contained buildings that must, by the restrictions of the footprint and design, be climate-controlled. However, it’s always prudent to enhance a climate-controlled facility with a goodly number of drive-up conventional storage units, for several reasons. First, conventional units typically rent up more quickly than climate-controlled ones, thereby minimizing the shortfall inherent in leaseup. Also, such an addition will also advertise the facility in the most graphic way, offering terrific visibility.
Traffic Counts and Visibility
While it’s always better to see a high traffic count, in the case of a retrofit, it seems that many older potential sites are on secondary streets with few vehicles passing by. Whatever the reason (and because a newly renovated facility in a shopping center is typically far back from the main road), look for a site with great traffic counts. This would be in the range of 35,000 vehicles per day.
Many jurisdictions have severe restrictions on what we most want: visibility, read as “big signage and no bushes or trees” to obscure visual recognition. Don’t be surprised if current code restricts signage to a small unlit “pedestal” sign and camouflages the building from public view by a hedge row and trees designed for this purpose. This penchant for obscurity will be a hurdle for you.