Climate controlled storage is in short supply in my market area of Sioux Falls, SD. I am already a self storage operator with 177 units between 2 sites (small facilities with no onsite management) , but looking to redevelop an existing building or build a new facility for climate controlled self storage. A few redevelopment opportunities have come up, but without a contact in the climate storage field I haven't been able to accurately gauge the feasibility of aconversion. So, I'm looking for recommendations on companies that specialize in building conversion packages or ground up new construction climate facilities. Thanks in advance for any help and I'd be happy to talk with anyone who wants to learn more about my existing storage ventures. (one was existing purchase, other is a new construction project)
Search for @Scott Meyers here on BP.
(I'm going to have Keith reach out to you soon.)
However, since this is a public forum, I wanted to answer your questions for your benefit, but also should anyone else be having those same questions.
Please note that we just had our third Developer's Academy a few weeks ago in Indianapolis where we discussed all of this plus more.
At our initial Developer's Academy last year we had Bob Copper speak on Feasibility Studies. You are going to need one if you decide to move forward. We recommend you do as much of the due diligence as you can on your own but to get it to the next level you're going to need a Feasibility Study especially if you bring in outside capital (whether that is a bank or capital investors).
We also had Buster Owens, president of Rabco, one of the leaders in building Self Storage who you should reach out to. (Not Buster personally, but a representative from Rabco.)
You may also want to reach out to Janus International and Mako Steel. Between these three (plus the Feasibility Study mentioned above) you should be able to get what you need in order to model it out to move forward.
(@Michael Wagner - thank you for the ping.)
@Scott Meyers Thanks for the follow up. I have spent substantial time researching my market for storage facilities and I also have the luxury of working for a bank and can look at appraisals and feasibility studies as they come in. So I know according to those items that the appraisers and researchers think there is demand for climate storage in certain areas. The industrial parks are already overbuilt but they are all 3-5miles from a majority of the population, where I would look to do a building conversion only has 3-4 facilities in 3 miles radius, with all but one being unheated storage. I am actually looking at a building currently for sale that can be converted into 2 floors with a mezzanine system, so I am working on getting pricing for mezzanines and the unit material and install from DBCI, but I'll reach out to Mako, Rabco and Janus. Based on my rough number estimates I figure after conversion the building will be worth about $3million based on 10% vacancy 37% expense ratio and 8% cap rate. that would leave me about $900k above the current asking price to convert the existing 22,000sf 1 story building into a 44,000sf - 2 story building (25-30,000sf of rentable space)
My interest is in investing in existing self-storage facilities, and my company (along with 42 investors) just did that to the tune of $2.8mm. I would be curious about the cost of ground-up climate-controlled storage, @Scott Meyers . I have heard numbers like $35-45 psf kicked around. What about the conversion of an empty building or warehouse? I have heard $7-10 psf. Do these seem in the ballpark?
@Paul Moore Hey Paul. Cost of storage obviously depends on the type of units and the cost of land and required zoning items. But just for example I’m about to break ground on a drive up access facility(steel frame and sides, asphalt between units, monolithic slab) and the all in cost for the facility is $42/sf of building area. On an appraisal I’ve read for a 3 story climate facility with $8/sf land cost the facility cost $80/sf of gross building area.
@Kenneth Ball Almost all of my answers are "it depends". That's not to be evasive as there are a handful of angles to approach.
1) That doesn't fit my criteria, but that's neither here nor there - does it fit yours?
2) Have you calculated the Market Supply Index or had a Feasibility Study completed (since you're bringing new storage online)?
3) Who would be managing the facility once it is complete? Is it local to you and you could do so? Or will you be wanting a 3rd Party Management company? There very well may be a threshold that the numbers above this work for hiring 3rd party and below do not - does 13,000 Sq Ft do that?
4) And perhaps most importantly, does that size turn a profit for you, specifically in the amount that you need to make it worthwhile?
Anyhow, those are a few of the things you'll need to answer to make that determination.
I am also considering a Climate-Controlled Self Storage facility in St Cloud, Minnesota. There is only one other in the area and it is 98% occupied and renting out for and average of $1.25/sq ft. In the middle of town we have our eye on a 50,000 sq ft building with the potential of converting half into self storage and keeping the other half as a retail and warehouse/ dock space. Two potential tenant/partners are seriously interested in the retail and office space and have approached us about it already. Right now I'm in process of gathering and running numbers on the storage side of things. We will need to basically nock down the existing office and break room walls, build all the units, and install a security and access system. Also, the property may have the lot space to build a smaller storage, accessible from the exterior. I haven't worked with storage facilities before and am curious what kind of input you good people would have and if anyone around the area could point me in the direction of a contractor and an experienced manager.
Take a look at Trachte and Janus international for conversion kits. You will be looking at roughly $8-10 per square foot to build out your space. You'll also want to plan on losing 20% of the footage to common areas/hallways. The price above is the cost to install the conversion kits into a clear span area. Price of getting the shell in shape and demo'ing the interior will be added of course as will HVAC systems and security. Make sure you size the HVAc correctly. Youre only keeping (or at least you should be) the space between 50-80...NOT at a steady 72 degrees like you would if it were habitational space. As such, your HVAC appliances wont need to be as robust!
Hope that helps some,
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