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Renovation Like Childbirth

April 1, 1998

7 Min Read
Renovation Like Childbirth

By Cecile Blaine

When Jeff Silesky and Pat Reilly discovered thatthe Brodie/Dorhmann Building on 15th Avenue in Seattle was forsale, the two-story, 62,000-square-foot structure with 200 feetof frontage spoke to them. "Self-storage," it screamed.A few months and $2 million later, the gigantic warehouse thathoused restaurant supply equipment for years was transformed intoMagnolia Bridge Self Storage, a 1,000-unit, three-story,climate-controlled self-storage facility less than two miles fromdowntown Seattle and 300 feet from its nearest competitor.

Renovation Like Childbirth

Silesky, a principal with Seattle real-estate investmentservices Davis & Silesky, and Reilly, vice president ofSeattle-based Urban Self Storage, shook hands on a deal torenovate the warehouse. They hired local Calderwood Constructionto handle the project, which Silesky compares to the physicalpain of having a baby.

"It's almost like childbirth," he says. "We'veforgotten about all the pain, because we are done with theproject. But believe me, it was a tremendous undertaking."

While this was the first self-storage project for Davis andSilesky, Urban Self Storage already had 13 facilities and 675,000square feet of storage property under its belt. Despite theircombined experience, both knew that there would be a lack ofpredictability in such a conversion. But the rewards were far tooappealing not to gamble on.

"This type of project has the highest risk, because youdon't really know what you are getting yourself into," saysReilly. "On a conversion like this, there is a lot ofrisk."

Treasure Hunt for Funds

One of the first challenges was getting constructionfinancing, due to the fact that neither partner had ownershiprights to the building. They had entered into a lease with theoption to purchase, an agreement that was crucial to the deal."We wouldn't have done this deal unless we had an option topurchase it," says Silesky. "The way our agreements aredone has to be based on the building and warehouse before we madeall the changes. What we were not willing to do was pay theowners for the upside that we've created. So, it will not beappraised in any way as a storage facility or with anyimprovements that went into that building for that purpose."

Finally, after a lengthy search, a company called InterWestagreed to fund the project. "It was a tremendous challengeto get a lender here to agree to this kind of financing andunderstand the kind of value we are trying to create,"Silesky continues. "The legal and political negotiations wewent through to get the deal off the ground wereextraordinary."

However, the rewards of the project made it worthwhile. Thechance to develop such a large facility, with nearly a third ofthe units accessible from street level and a built-in dockingarea, was an attractive business venture they would not passup--especially one with a daily traffic count of 45,000 to50,000.

"The physical characteristics of the building lendthemselves ideally to storage because of the ease of which peoplecan load and unload, and with the number of docks both in thefront of the building and dock-high loading to the second floor,which you access from the back of the building."

What's Up Dock?

What had been a small dock set up exclusively for semi-tractortrailers is now a dock with varying heights to accommodate fourdifferent kinds of vehicles: cars, pick-up trucks, low-docktrucks and high-dock trucks, such as semis. "It was verysmall," Reilly remembers. "It was built to accommodateone or two semis at a time. It was way too high for a rentaltruck, of course. We had to do some major site work to actuallyraise the parking lot to a different level. We had to change theconfiguration."

Set in rainy Seattle, the renovated facility's docking area iscovered and offers a staging area with handcarts. Larger unitsare positioned closer to the dock, with smaller ones furtheraway. "We wanted to make it so that they were never furtherthan about 30 feet from the units," says Reilly.

Fifteen-foot ceilings on the first floor lent themselves totall units whose walls go all the way up to the ceiling. Those,in particular, appeal to the commercial tenants. "So, theyoffer the commercial tenant the ability to store shelving and allkinds of things that wouldn't fit in a traditional self-storagefacility," Reilly continues.

Transforming a two-story building into a three-story buildingwas no small feat either, but in the process, the developerscreated an extra 286 units or 21,000 square feet. "The realmaster stroke of this whole deal was pouring an additional flooron top of what was the second floor of the building," saysSilesky.

The engineering challenges involved in the addition wereformidable because of the weight they'd be adding to thefoundation of the building. One way they were able to addstructural quality to the third floor was by using pan decking,but it was still touch and go at times, says Silesky. "Therewere moments when we were holding our breath with the cityengineering department and our engineers to make sure we couldpull it off," he says.

Another element of the renovation was re-roofing the buildingand making it strong enough structurally to handle an earthquake.That involved punching a hole through the top of the roof andjacking it up a couple of inches in order to install a parapet.As a result of that work, the cost of development rosesignificantly. Silesky says, "We spent a whole lot more thanwhat we thought we'd have to spend because of seismicconsiderations and fire separations."

"People are worried about earthquakes in our part of thecountry," he continues. "So, there was some need to dosome reinforcement of the building."

The Seattle warehouse had a cargo elevator before it wasrenovated, but that wasn't going to be adequate to accommodateall the customers. To combat the problem, the developers added asecond elevator, this one a 5,500-pound Dover passenger/cargoelevator that stands 10-feet high. "That's one thing we arereally proud of," says Reilly. "When people bring incouches and stuff, it's no problem."

Safety in the City

Considering the huge number of first-floor units that Magnoliaoffers in an urban setting, the facility needed a top-notchsecurity system. "We sat down and designed astate-of-the-art security system and decided which vendors weregoing to provide what components," says Reilly. Silesky andReilly combined a number of components to create the facility'scustom system: Wham's individual door alarms and access key pads;Security Link's motion detectors, burglar alarms, glass breaksand fire system monitors; and other miscellaneous vendors.

The result is an office that, according to Reilly, looks alittle like the Starship Enterprise. A 32-inch color monitorhangs from the ceiling with diagrams indicating which units areopen and which are closed and secured. Five other monitorsreflect the activity on the loading docks and other strategiclocations. "People get a tremendous sense of security whenthey walk in there, which is critical, particularly for an urbanfacility and the kinds of things people store," saysSilesky, who adds, "They pay more for this."

One of the biggest challenges of the renovation project, saysSilesky, was getting all the contractors--construction, security,metal providers and others--to communicate effectively with eachother. "It's very important to get all three of those peoplematched up, because everybody's measurements are dependent on thenext guy," he notes. "It is like putting together ajigsaw puzzle in three different parts of the world and bringingit together in one place. You are doing a lot of schucking andjiving to make it fit properly."

By Aug. 1, 1997, Magnolia Self Storage opened part of itsfacility, bringing in revenue while construction continued. Inthe first 30 days, 12 percent of the facility's units leased up.By the end of November, construction was finished and all threefloors were opened to customers. By the beginning of February,the occupancy rate had reached nearly 40 percent. Magnolia BridgeSelf Storage is a member of Washington Self Storage Associationas well as the Self Storage Association.

Silesky and Reilly had to have a great deal of faith in theirproject in order to renovate a warehouse just 300 feet from hisnearest competitor and charge some of the highest rents in town.But they seemed to know that this side of the Magnolia Bridge waspaved with success.

"One of the things that we feel confident is that, interms of the market share, we don't have to wait for thespill-over from another facility," says Reilly. "Giventhe attractiveness that we have to offer, we can get the centerof pie."

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