Despite your reluctance to pull out the checkbook, you’d better be prepared to commit to at least $35,000 to determine the feasibility of your retrofit. Always keep in mind that while these upfront expenditures mount, they’ll dictate whether your multi-million-dollar bet can be retrofitted to self-storage at the pro forma budget you devise. Most will also be necessary for both engineering and plans, and for bank financing should you need it.
Physical Integrity of the Site
Congratulations! I’m assuming you’ve placed your dream conversion under contract and the clock has begun ticking for due diligence. You should prepare your budget to withstand problems from any of the following components, all of which I’ve encountered at one time or another and are not uncommon when looking at an older building with an eye to converting the pumpkin into a coach.
The slab. The “as built” plans you inherit (if there are any) may indicate your dream retro has a solid 6-inch concrete slab. After all, it was permitted and inspected during original construction. Don’t believe it! Have core samples taken by a structural engineer to ensure the slab will support storage use or a mezzanine, if that’s in your plan.
Soils analysis. Another possible issue is the underlying soil composition. There are many areas of the Southeast with horrible soils that will need expensive added fill brought in.
Lighting audit. New federal energy-efficiency standards in lighting took effect in July. It’s likely your building has older, inefficient bulbs and ballasts. Lighting audits are usually provided free of charge by companies that specialize in this. At the end of the process, you should receive a written proposal for bringing the lighting up to current code. Fold this into your pro forma as a capital-expenditure improvement. Estimated cost would be $40,000 to $60,000 for a typical 50,000-square-foot building. In the event your state is deregulated, there may even be rebates available.
HVAC. Determine the age of the HVAC systems. Older buildings have units that most likely require recharging with R-22 refrigerant gas. Since production of R-22 has been banned, the cost of recharging older units using what’s left of the diminishing stock of R-22 has skyrocketed. Recharging an obsolete HVAC unit can easily cost more than replacing the unit with a new energy-efficient one. We always include replacement of existing non-compliant units, even if they’re in working order.
Roof. On older buildings, such as your dream facility, a potentially big-ticket item will be the repair or replacement of a failing roof. Before making any repairs, or even when having it inspected, be certain to read any existing warranty. It could very well be the roof is still under warranty. Merely reading the procedure on making a claim on an older roof could save you a bundle should you move forward. Ignoring the exact instructions for making a warranty claim, or even having the roof inspected by a non-approved contractor, could cost you the warranty, so follow instructions to the letter.
Asbestos. It may be that your older bargain building was constructed with asbestos insulation or flooring. In a recent project, we discovered this when we cut a hole in the concrete roof. The job was red-tagged for three weeks while we spent $50,000 to remediate the problem. This is probably something we couldn’t have avoided. Nevertheless, it put us back almost a month. So, while one cannot predict every contingency, a line item that over predicts issues such as asbestos remediation is an excellent idea. Be certain to add a month to the construction schedule, exclusive of weather delays.