Conversions: A Smart Alternative to Conventional Self-Storage
There is nothing new about self-storage conversions. Since the late 1980s and the early 1990s, conversions became a viable alternative to conventional construction. And in many cases, converting an existing building into self-storage actually constitutes a preferred investment over new construction.
Traditionally, there are two main factors that drive self-storage owners to consider conversions: Escalating land prices and scarcity of available real estate. Even with the Great Recession which has plagued the economy these two factors haven’t changed to any great extent.
Here are some of the important issues that make conversions attractive today:
Location — It’s no secret that the first priority for success in the self-storage business is location. That’s because self-storage is a retail business. Easy and convenient access is paramount. An advantage of conversions is that many existing structures, particularly those that housed retail businesses, are already strategically located for self-storage in heavily populated urban areas, which is ideal for self-storage use.
One positive wrinkle that should encourage conversion investors is that many of the empty retail buildings have been on the market long enough that sellers are ready to unload these properties at lower prices. Then, too, because urban locations are densely populated, the owner has already solved one of his biggest challenges – the need for good demographics and the ability to tap into a sufficient number of potential customers in his market area.
But urban locations are not the only opportunity for conversions. Some suburban areas are undergoing changes in zoning and in the retail landscape. For example, many department stores have abandoned smaller structures for the larger “big box” warehouse concept. This frees up more existing suburban buildings for self-storage use.
Zoning — Any conventional self-storage owner knows that zoning laws can become restrictive, complicated and costly. Plus, the approval process can be protracted and discouraging to an owner who has done all the right things yet sees his project delayed by zoning officials.
Fortunately, conversions many times bypass “normal” headaches because, in many cases, structural and site work is less involved – things like excavation and grading, foundation pours, landscaping, irrigation, electrical and HVAC systems may not be issues of concern. Why? Because they are already in place with an existing building. This will save the owner or investor time and money. Remember, faster occupancies mean a faster return on investment.
The final decision — While there are plenty of good reasons to convert, it is not a panacea by any means. There are caveats and concerns to be aware of before making a final decision – tough questions to be answered:
Is the roof in good condition? If it isn’t, it could be the single most unexpected expense an owner will face. Is there adequate room to add another level? If so, you may be able to double your rentable space. If it is a multi-story building, are the elevators in good working order and in the proper locations? What about the condition of the electrical system? Is the HVAC system operational and efficient? After all,
climate control is becoming more and more expected by customers, particularly those with valuables that
are humidity sensitive. How easy is access to the building? Is its location such that customers can easily drive to and from its
entrance? Since most converted buildings won’t typically have individual exterior units, can customers easily access
their units once they are inside the building? Sixty percent of all self-storage shoppers, are women and they want their valuables stored in an attractive
environment. This means the interior of the building must always be clean and attractive.
Finally, ask yourself this question: If the building I am considering were a vacant piece of land, would I build a conventional type of structure from the ground up? If the answer is no, then you may want to strongly reconsider and make the property a self-storage conversion.
What about cost? — Assuming there are no substantial structural or electrical issues, the cost of a typical conversion will fall on the interior build-out of doors and partitions. And it will vary according to unit mix and wall height. You may need to give the interior a facelift with paint or just a good cleaning.
One needs to consult a reputable manufacturer’s representative who will assess these costs and help determine the overall expense of the conversion. It will be time well spent.
As mentioned previously, conversions are becoming more and more popular because land suitable for self-storage is tougher to find and land costs continue to escalate in spite of the down economy. This means that in many cases conversions are a smart alternative.
Just make sure you do your homework.
Terry Campbell is Vice President of Sales & Marketing for BETCO, a single-source manufacturer of self-storage buildings and components. email@example.com