Jordan also attests to the importance of aesthetics as a significant consideration for any conversion. A warehouse that looks like a warehouse will be at a competitive disadvantage to a nice, new aesthetically pleasing facility.
The Developer’s POV
Our self-storage conversion story would not be complete without the perspective of a developer. I checked in with Neil and Nitesh Sapra of the Atlanta-based investment firm NitNeil Partners LLC. In 2012, NitNeil acquired the former A.C. White Transfer & Storage Co. building in an established in-town neighborhood of Atlanta with plans for self-storage conversion. The development involved converting an existing two-level, 40,000-square-foot building and the addition of a four-story building on a 0.86-acre parcel. Having completed a facility that required both conversion and new construction, Nitesh had these pros and cons to share:
Timing. From start to finish, the conversion phase of the project took approximately four months, while the ground-up construction phase took approximately nine months. With conversions of shell buildings, there’s no site work, foundation work or erection of buildings involved. In this municipality, the permitting process was much simpler, as conversions can often be conducted under a renovation permit rather than a land disturbance and building permit.
No site-development risk. Under normal development projects, much exposure for the developer exists during the site work phase. Soil compaction and environmental conditions are often unpredictable. Furthermore, this phase of the project is heavily dependent on dry weather or risk-delayed projects, driving up costs.
Hard-cost savings. Assuming the conversion project does not require anything out of the ordinary, typical conversion “hard costs” currently range from $15 to $20 per square foot compared to $40 per square foot on a ground-up development.
Rentable square-foot constraints. When working with a shell with predefined column-grid spacing and load-bearing walls, the developer is limited in his layout. This results in higher than normal square-foot loss factors. Even with a simple column grid and minimal load-bearing walls, this particular conversion yielded a loss factor of close to 30 percent of gross square foot.
Unknown building conditions. With the conversion of structures, the developer should conduct full building inspections to uncover any unknowns. Some common pitfalls are the occurrence of lead asbestos, foundational concerns with the change in use/load requirements, and routine deferred maintenance (i.e., roof leaks, defective mechanical and HVAC systems, etc.)
- Access limitations. From an operational perspective, access is critical. To ensure the best customer experience possible, access needs to be easy and plentiful. With conversions, the existing building already has natural predefined points of access, and the developer is often limited to having to work with existing exterior doors, internal stairwells and elevator shafts. Relocating these points of access can be difficult, costly and sometimes impossible.
Everett Downtown Storage interior before (left) and after.
From three different perspectives, there are many similarities in the perceived values and concerns regarding self-storage conversions. In closing, it’s important to do your homework and consider all the major design issues carefully. Overall, it’s completely feasible that a conversion can be as successful as a new, ground-up facility, if not more so.
Ramey Jackson is vice president of sales for Janus International, a Temple, Ga.- based manufacturer of self-storage doors and hallway systems. For more information, visit www.janusintl.com .