Warehouse Conversion Project -- Self Storage

[Michael Wagner]

I have a property with 2 warehouses on it.  I am currently converting the larger one (45K sq. ft) to self storage.  The other one is 25K sq. ft. and my plan is to rent that out to a single tenant for 2-4 years.  At that time I will re-assess the demand for additional self storage in the market and will either convert it as a phase 2 or leave it as is.  My question is:  How much work should I do to the 25K warehouse before listing it for lease? My plan is to button up the shell (roof and soffit repairs) and give the exterior a face lift and then get it to a "presentable" level of functionality (HVAC, electric, plumbing etc all working) but stop there until securing a tenant.  As it sits, the 3000 square foot of office space needs paint and flooring and minor repairs but my thought is a tenant for this type of space would appreciate being able to choose flooring and paint and won't be deterred by the "unfinished look"  Anyone have experience with this type of leasing strategy?  Is this a good idea or should I do the paint and flooring...?  Any other suggestions for how to proceed or things I should consider?  

[Greg Dickerson]

This sounds like a great plan. You definitely do not want to make any significant improvements until you land a tenant. The office space needs to be presentable but not updated. I would get rid of the carpet if it’s old and smelly. Maybe a light off white paint on the interior walls if they are bad but as long as it’s clean and free of any stains or smells I wouldn’t worry too much with it. Commercial and office warehouse users do not expect pristine conditions but they will ask for TI allowance to suit there needs.