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August 19, 2018
There is a shopping center near my house that used to have a grocery store in it. They moved to a more prominent location, and the building was left empty for two years.
Eventually, the building was sold and converted into a modern self storage facility.
Converting an old building into a storage facility can be faster, easier to go through the zoning process, and the building might already meet zoning codes or grandfathered into more lenient standards.
Converting a large building or warehouse into a storage facility can save you time and money. That's not to say that is always the case, below we analyze some pros and cons of a self storage conversion.
There many reason to choose a conversion over ground-up construction for your self storage investment. Here are three advantages to consider.
Most of the time converting an existing building into a storage facility will be faster than new construction, but banks may be more open to conversions as well.
According to Terry Campbell of Live Oak Bank, a bank may be more willing to lend money in these situations since the borrower will typically be able to open, enter the market, and break even with less ramp up time.
Self storage construction developers such as Miller Buildings value the ability to “phase in” the construction of the self storage units, reducing vacancies and decreasing time from inception to open.
By opening a first phase, you can start building up occupancy sooner.
Building a new storage facility on the outskirts of town means fewer customers and more money spent on marketing.
However, when converting an existing building in an established area, you will get more drive-by traffic and accelerate your ability to rent out units.
Learn Self Storage suggests conversions as a solution to not being able to find empty land in a viable location.
On the Self Storage Blog, Northwest Self Storage - a conversion of an old skating rink, had a 100×240-foot sign that was grandfathered into rules allowing them to use
basically the entire side of their building as a sign. It makes their facility hard to miss when driving by.
Investors and business owners love to save money just as much as they like to invest it. According to the SBOA, Numerous storage facility owners have revealed savings of up to 30% when converting existing buildings.
However, it's important to be thorough in your search, and your inspections of potential sites must be complete. If there are unforeseen issues with a conversion site, the time and money benefits go out the window.
Although there are many upsides to conversions, there are potential problems that you need to be aware of.
Old structures are prone to roof and HVAC issues, as well as problems with access points and fire code standards.
Along with infrastructure issues, old buildings are often subject to environmental problems like asbestos, leaks, and mold. While leaks and mold are relatively easy to fix, asbestos is challenging and expensive to remedy without cutting holes in every wall in the building.
Sometimes a building can be perfect but sits in a bad location with a poor parking layout. If the site is not on a busy road, you may find that you need to adjust your marketing plan to accommodate for the limited amount of drivers passing by.
Feedback from senior members on Self Storage Talk suggests two things to keep in mind in terms of layout:
After considering the pros and cons of conversions, keep them in mind as you are looking for sites for your new storage facility.
If you find an existing building that is a good conversion candidate, consider if it is in a location you would choose if it was an empty lot.
Trachte Building Systems has a handy conversion investment calculator that is also a helpful resource.
Finally, in some cases, it’s cheaper just to raze the existing building and start fresh with new construction rather than try to convert the existing facility for self-storage.
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