Is a self-storage conversion project right for you?

September 15, 2015 1
Is a self-storage conversion project right for you?

For those in the self-storage business, it is hard to pass by a vacant factory or skating rink and not picture it as the latest addition to your self-storage portfolio.

Done well, repurposing an existing building can cut costs by a third compared to building from scratch. The same goes for the amount of time between getting a permit to grand opening. But plenty of hurdles – not to mention the potential for very expensive surprises – await the developer who underestimates the nuances of a successful conversion.’

Candidates for conversion

According to the Self Storage Association, the ideal candidate for conversion would be a former warehouse, car dealership or other expansive business on 2.5 to 5 acres that could accommodate 40,000 to 80,000 square feet of rental space with conventional drive-up access and outside rentable parking for boats and RVs.

But urban locations, such as schools, factories and sports parks, can offer a more attractive return on investment by providing something that suburban locations may lack: population density.

We asked three industry veterans to share their experiences with storage conversions.

 Stadium Storage in Milwaukee was originally built as a metals factory supporting WW2.

Stadium Storage in Milwaukee was originally built as a metals factory supporting WW2.

From war plant to showcase

Tim Kallas, general manager of Stadium Self Storage in Milwaukee, WI, has converted everything from an 88,000-square-foot electronics plant to consulting on the conversion of his latest showpiece, a repurposed American Metals (AMPCO) factory, now renamed Stadium Self Storage to reference the nearby Millers Stadium. It reached maximum occupancy eight months after opening in August 2013.

Built in 1942 to support the World War II war effort, the AMPCO plant checked all three of the developer’s boxes: space (122,000 square feet), load-bearing capacity and population density.

“First, you have a structure that’s withstood the test of time. It was a heavy industrial machine complex, so weight loads weren’t even a concern on the second floor. And with nearby Miller Parkway moving 40,000 vehicles a day, anybody in town is no more than 15-20 minutes from our location,” said Kallas.

Not that Stadium needs the traffic; its surrounding neighbors number 230,000 and their homes lack both attics and cellars.

The city manufacturing plant afforded Stadium one additional luxury: room to move around.

“We have two extra-large loading/unloading areas that can accommodate two or three semis at a time,” Kallas said. “They had the same need back then.”

Stadium is on track to add 300 additional drive-up units this fall, bringing its total rental units to 1,000.

Old facilities present new possibilities

Steve Mitnick, president of Pittsburgh, PA-based STORExpress, never saw a conversion opportunity he didn’t like.

Among his six self-storage conversions is the former Duquesne Brewery, several office buildings and an old steel mill that he made second-floor accessible to vehicles via a specially-built steel ramp.

 Pittsburgh's Duquesne Brewery as it was before being converted into a STORExpress.

Pittsburgh’s Duquesne Brewery as it was before being converted into a STORExpress.

“Ramps are so awesome; it makes the second floor become the first floor,” he said. “You just drive right through the building.”

He’s currently converting a 200,000-square-foot Westinghouse air brake plant and has his eye on the old Overbrook School.

“I’m not sure its load limits are good enough, but the location is so good that even if I have to tear the building down, the property will be worth it,” he said.

 The former Duquesne Brewery is one of several conversion projects completed by STORExpress.

The former Duquesne Brewery is one of several conversion projects completed by STORExpress.

Pros and cons

Mitnick prefers the speed and stability of converting to the unknowns of new builds.

“With an existing building, you can develop it a little quicker; the permitting process isn’t as hard because the building is already there, and a whole bunch of stuff is grandfathered in,” he said.

“That being said, you can also run into environmental issues and structural problems you don’t expect. There definitely are tradeoffs.”

Roll with the unexpected

For contractor Tom Jones, owner of Capital Management in Wilsonville, OR, his recent conversion for Northwest Self Storage in neighboring Hillsboro really hit home.

“My wife skated there when she was in middle school,” he said of Skate World roller rink, a Hillsboro landmark for 33 years that reopened in July as Northwest Self Storage.

 Converting a building to self-storage may pose unforeseen challenges.

Converting a building to self-storage may pose unforeseen challenges.

If you think converting a skating rink to a storage facility is easy, think again. The demolition was no breeze. Then the building’s 51-inch glulams (glued laminated timbers), which spanned 76 feet across the 100 x 240-foot building, came up a little too short to allow for sprinkler pipes over the standard 10-foot rollup doors, forcing him to lower the ceiling height to 9 feet. While the support footings just squeaked by permitting, new seismic standards forced Jones to import special lightweight pumice-based concrete instead of the standard, cheaper 3,500 PSI variety to complete the structural work.

Built in benefits

But there were pleasant surprises as well.

“We reutilized the HVAC system; that was a first, and now it has air conditioning in it,” he said.

“We’ll pick up some revenue because the whole building is climate control, and with the R-19 interior walls, we haven’t had to turn the AC on yet on the first floor. It stays about 72 degrees in 100-degree weather.”

The biggest surprise was hiding in plain sight.

 Northwest Self Storage opened the converted skating rink facility in July 2015.

Northwest Self Storage opened the converted skating rink facility in July 2015.

“We were banking on the fact that people know where we’re at, but a railroad track interferes with normal access to our building. Fortunately, Skate World’s 100×240-foot sign on the side of the building was grandfathered, so we were able to use that. The painter who’s been doing signs in Portland for 30 years said these were the biggest letters he’s ever painted,” Jones said.

His tips for would-be converters?

“Make sure you have strong enough footings to where, structurally and seismically, you can support your building,” he advised. “And it’s nice to have a big parking lot. We can take a semi here at Skate World.”

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