Converting Buildings to Self-Storage Facilities Podcast Transcription
Lexi: Hello everyone. And welcome to another episode of Metal Minutes by Cornerstone Building Brands. My name is Lexi Edwards, and I will be your host today. With me, I have Steve Thorley representing DBCI. Hi Steve.
Steve: Hi Lexi. Thank you for having me.
Lexi: Of course, I cannot wait to hear all about your expertise on converting existing buildings into self-storage facilities. So I think it goes without saying that the self-storage industry has been in high demand and has grown exponentially over the past few years.
Steve: Yes, it's gone pretty crazy. And it still is, for at least six straight years now, and hopefully it just continues.
Lexi: Right. So I know that people are really eager to get those self-storage facilities built and constructed, but I know that sometimes finding the right place to build can be tricky. So the point of our conversation today is talking about converting an existing building into a self-storage facility and all of the considerations that need to go into that decision. So just a little background, what are some examples of some existing buildings that could be converted?
Steve: Well, we've taken warehouses say, Best Buy buildings, Toys-R-Us buildings, K-marts, things like that, and completely refurbished the inside of them. Probably done over a hundred of them at this point in time, but those are perfect buildings because they're square. We've also gone into warehouses where it might have been an old paint factory or car dealership where they have service bins and walls everywhere that you have to come in and try and figure out what's the best way to lay out a building interior. And there's a lot of things that go into that. To remodel a space, obviously it requires some sort of drawing whether we do it in AutoCAD or we get architects to send them to us, works either way, but there are things that you have to be aware of when you're going into these industrial buildings or these old abandoned warehouses.
Steve: It's nice to get a simple building, but that doesn't happen all the time. Maybe about 30% of the time, you're going to get a nice, clean building. Some of the things that people have to look for, obviously if you're in an abandoned building, what's the roof condition? You're going to have to re-do mechanicals and electric and build out an office. And you have to look for columns throughout the building, so you can hide them inside the units. You have to have exit ways and entrances and loading areas. So you have to fit all these things and maybe there's existing bathrooms, or maybe you have to put in bathrooms, but your goal in something like that is to get a usable space, maybe 75% rentable. And you have to take several times of laying it out to try and get there.
Steve: And while you're doing that, you have to think about who your renters are going to be, whether you're downtown in the city or you're out in a rural area, but you try to get some rentable square feet that makes it worth the money that you're investing into the building. Obviously you've beaten the system as far as having to go out and find land and buy it and get permitting. Some of that, sometimes that takes six months to a year before you can even get concrete in the ground. So it's a very viable option to look at these old buildings.
Lexi: Let's say that you do find a building that has great roof conditions. It's got bathrooms, let's say that it meets all of your checkpoints on the building side. Do these existing buildings usually have ... Do they usually meet the codes already that are required for building self-storage facilities? Or is that something that you have to also consider when converting these buildings?
Steve: Well, you have to consider obviously, fire codes, whether you have to sprinkle the building with sprinklers, what the spacing is for that. Some buildings already have it in them. When you go in to try and repurpose this building, you're typically going to have to go in front of some type of zoning board. A lot of times they're okay with it because it's an abandoned building and nobody's doing anything with it, but they might make you jump through some hoops as far as fire code, putting up firewalls, etcetera. Just make sure your egress, coming in and coming out doesn't exceed a certain amount of feet, maybe 180 feet for instance, but you can work through all that, pretty much, once you find a building that works for you.
Lexi: Right. Okay. So earlier you said something about, you're kind of beating the system because you've already got a build as opposed to having to pour the concrete, and that takes a lot of time. Does finding an existing building also save money along with time because you're not technically ... You're not footing the bill for the actual exterior structure.
Steve: Yeah. So again, that's why I mentioned, what is the roof like are we closing in walls. Are we painting walls. Typically, it's way less money to be able to take an abandoned building and flip it into storage. It takes probably less than half the time. Once you get approval, the demolition or construction might take a month or so to clean up the building, get rid of what you don't want in it, paint the walls, if you want to paint the walls, or you can do a metal liner panel, which we do in buildings to cover the walls. All these things come into play.
Lexi: Okay. So let's dive in to the actual considerations for converting it into the actual self-storage part of the facility. So we've got a building, it's an empty warehouse. It meets all codes. It's up to all standards. What's the first thing that we should take into consideration when starting this project of converting this building?
Steve: Well, I think before you do all that, a lot of times people will do a feasibility study. That's one thing that I would say maybe 50% of the people that I deal with will have already done some sort of a study to see what is needed in the area, what the average square foot usage is per capita or per person. So they know what's built, what's not built, where they can go, what sizes they're looking for. And obviously we lay these buildings out, typically, before a lot of this starts, or while it's going on, because you have to know what your numbers are. You have to know how many 5 x 5s there are, what you're charging for them. How many 10 x 30s. What you're charging for that.
Steve: So when you get the whole scheme of the building together and laid out, you can figure out your avenue when you're full. And from there, you can work on all the other costs, knowing what you're doing and which way you're heading. I mean, because you're probably going to be running into a 30% loss for having management, and an office and all the overhead, but there's ways around that as well. So there's a lot of factors.
Lexi: Okay. So the market feasibility study will kind of determine if a self-storage facility would prosper in that location with that audience, that kind of thing. I'm assuming correct?
Lexi: Okay. So then you mentioned figuring out how many units and what the sizes would be. How do we figure something like that out? Do we kind of do an assessment of that and make a decision based off of the feasibility study? Or is that something that we can figure out from somewhere else?
Steve: You can figure it out from somewhere else. I mean, feasibility studies are nice because you take an independent observer to come in and take a look. But what they're doing is they're looking at all of the facilities within a five mile radius. And they're seeing what they're doing, whether it's climate control, whether it's exterior access units. And what they're full, they'll make all the phone calls, finding out what their rates are, what would they like more of. What they've run out of, things like that. So that's why some people do feasibility studies. Now you can do that yourself as well, but it's a little time consuming. Again, it's your building and your job on the line as far as figuring out what you can do and can't do. It's not that hard though.
Lexi: Okay. Do you see a difference in the type of units that are needed for more commercial-based type of renter versus the more residential side of renters?
Steve: Yes. And that's across the board. I mean, if you're a residential area or apartments or urban, you're probably going to be going with smaller units, obviously 10 x 10s, 5 x 10s, 5 by 5s. Now, if you're further out in the country that doesn't have to be necessarily rural, but you're going to be looking at 10 x 15s and 10 x 20s. And a lot of times, now, if you're in a city and you know that you have contractors, you're going to build 10 x 30s and 10 x 25s, those type of units for specifically those people. But it's hard, I mean, a lot of people phase these because they'll know what ... They'll build a regular average unit mix, but you might run into where you have 30 contractors knocking down your door. You know what you're going to build in the second phase, you're going to build a lot of 10 x 30s. So that's one way to sort of look at it. But overall you want to figure out what the average is and build basically off of that.
Lexi: That makes sense. So we talked about, the market, the unit, the sizes. What about the actual design of the interior of the building? So that's something that I guess that you would have to consider. Is that something that you would have to bring in an architect or an engineer for?
Steve: No. Typically, not. The inside design we can do based off of the different wall types that we have, whether it's gloss white, flush, corrugated, whether it's Galvalume liner panels. We spruce it up so that if the people are looking to have a really nice looking facility, we've done enough of these, that we know you do wainscoting which is 48-inch diamond plate at all lobbies and entrances. You know that you're doing wainscoting around your elevators. You're doing kick plates down the hallway, which is diamond plate, as well, and corner guards. And it also makes sense because you're keeping people from banging up your walls, if you're doing diamond plate. You come in, whether you want to go with wire mesh or whether you want to go with Pergo bars above, depending on the height of the ceiling. And then you'll get the hey, there might be a ceiling height of 20 feet, you might want to do a mezzanine in there. So you get twice the size but that's something that you figure out early on in your decision-making.
Lexi: Okay. So those items that you mentioned earlier, the kick plates and the wainscoting, the corner guards, those are meant for protective purposes?
Steve: Yes. And it's also for appeal to your renters because it looks sharp when you're walking in and you see a nice bright diamond plate throughout the facility. And it's really sharp gloss white hallways, and it's lit up nicely. Again, you go back to electricity and you have to run those down the hallway, or however you want to do it, but a nice bright building inside is what is appealing to just about everybody out there.
Lexi: Right. So what about something like security or safety? I'm sure that, that's something that will be really important to renters whenever they're considering where to store their belongings.
Steve: Yes. And that's where you figure out, typically we're doing wire mesh over units, unless you're doing a mezzanine above and the wire mesh encloses the units, you have standard latches that you can use either a cylinder latch, which is a keyed latch or you'd use a padlock to lock your unit. The main thing, when you're talking about security though, is the camera systems and the motion detectors, which turn on the lights and the key pad entry to get into the building. So when you have all of that, they know who's in the building, they have cameras watching you down in the hallways. That all fits into security that people are looking for.
Lexi: So it sounds like a lot of this stuff would be the fine details that would really make or break someone's decision to purchase a unit with you.
Steve: Yes, there's a lot that goes into it. A lot of us that have been in the industry for a long time, myself for 20 years, that we've seeing everything developed from outside access units only to where climate control was, all of a sudden coming on strong. Now, you're getting into where it's been building and building for so many years that you're working yourself into six-story buildings or conversions, if you have an abandoned building. There's so much going on and it's just constantly keeping up with it, but there are certainly people out there like DBCI who know what they're doing and can tell you, hey, here's an option. Here's where you can save money. Here's where I think you should go with 48-inch wainscot here, or brighter lights here, LED lights, things like that. There's enough experts out there that can help anybody out.
Lexi: So that actually brings up another good point. You mentioned, good LED lighting and really nice diamond plates and the bright white of the walls. These are kind of things that really go towards more of curb appeal or some kind of appearance over just the functionality of it. Do you see that curb appeal will come into play whenever people are choosing where to purchase their units?
Steve: Well, yeah. It used to be back in the day it was location, location, location, and nowadays we've done these conversions out off of a dead end street. What's really nice is there's so many different ways to spruce up a building nowadays on the exterior, whether you want to do dummy doors and stucco, or whether you want to paint the building a certain color, whatever color your logo is, awnings. Obviously they make the loading area really nice. So when people drive by, they see your doors, whether they're dummy doors on the walls, or whether there's glass on the corner where you put in display dummy doors, or you have units there where you can see the doors as you drive by. And that's a really nice look. And a lot of people are moving towards that. Typically, you want somebody that drives by to know that, hey, that's our storage place, that's the object to spruce it up.
Lexi: Okay. So those are the main things that you would take into consideration when converting an existing building to a self-storage facility. Is there anything else that we're missing or that we did not talk about?
Steve: No. I mean, you've run into instances where you have columns in buildings and sometimes you can't hide all of the columns and do you want to cover those columns with metal, whether it's gloss white and diamond plate or in Galvalume, which is the aluminum. And whether you want to do that inside unit. Some people like to do that because it looks sharp, that every column is wrapped in steel. That goes with the same saying as, do you paint the walls, the interior walls, or do you do metal on them? There's a lot of factors that come into how much money you want to spend. And there's a limit to how much you might have, but those are instances where, hey, I'm going to paint the wall instead. Or I'm going to paint the column instead of doing column wraps, where you can go and save money here or save money there. Those are the types of things that kind of walk owners through and they can make their decision.
Lexi: Okay. That makes sense. All right, Steve, is there anything else that you would like our listeners to know about converting existing buildings to self-storage facilities or anything more about the self-storage facility industry?
Steve: Just that, it's a real simple thing to do. It's a great industry, obviously. It's just been expanding and pretty much everywhere people are doing this and finding that it's really a simple process if you're doing conversions, and it looks good when you're done. A lot of people are into it and multi-billion dollar business out there that a lot of people are capitalizing on. I wish I had the kind of money or the gumption to go and do something like this because it is very, very lucrative and easily done.
Lexi: I agree. So, one last question. When do you recommend, if someone is considering doing something like this, when do you recommend they bring in the manufacturer or their sales representative, like DBCI? Is that something that they should be talking to you all about before they even purchase the building? Or is that something that they should be doing after the building has been purchased and evaluated?
Steve: Well, that's funny. It works both ways. I mean, we can certainly walk them through. I go on walks with potential customers all the time and they're like, "Do you think this is a good fit for this area? And what would you do? And can you lay this out?" I think it's nice because I can give them an idea of how much revenue they're going to be turning, if we can get them a unit mix and we know what's going on around them. That then gives them the idea that, hey, is this something that ... How much can I spend and get my money in return in a couple of years, that sort of thing.
Steve: So we do a lot of that. We also, obviously it makes my job easier if they have already gone through some of this and done it. Obviously, it's shorter turnaround, if they've already done all this before we get there. Some people will just call me and say, "Hey, do you know somebody who will do a feasibility study?" So there's different ways to look at it, but ultimately somebody's got to know what they're doing to start you off at. And that's certainly where we can help.
Lexi: So you are able to provide guidance in that area then?
Steve: Absolutely. We do drawings for them, etcetera.
Lexi: Very good. Well, Steve, thank you so much for joining us today and letting us download all of your information about this topic.
Steve: Thank you for having me. I appreciate it.
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