Brisk business for storage condo developers

October 13, 2015 0
Brisk business for storage condo developers

As a small niche within the self-storage sector, the developers of storage condos continue to find success building units for sale instead of for rent.

Also known as garage condos, these spaces sell individually for a minimum of $70,000 and can accommodate vehicles, motor homes, motorcycles, boats, jet skis, small business inventories, household goods, hobby collections, Christmas decorations and more. Some facilities also have a clubhouse for event rentals and as a gathering spot.  Some unit owners buy multiple units, use one and rent out the others.

The success of the business model is attracting new developers to jump in on the action.

“I don’t think we’ve even scratched the surface of this,” said Aaron Freeman, owner of Out of Space Storage in Pleasant Grove, Utah. “We’re at the forefront of this [industry].”

 The planned Out of Space facility will offer 40 storage units for sale at about $80,000 a pop.

The planned Out of Space facility will offer 40 storage units for sale at about $80,000 a pop.

Man cave appeal

Freeman and his brother Ryan own Forge Companies, a real estate firm that focuses on development, acquisition and management of retail, multifamily housing, office and industrial properties.

Pending city approval, Forge will build the Out of Space Storage facility on an L-shaped parcel it owns in an industrial part of town. The facility will have about 800 units of traditional self-storage for rent. Forge also will put up 40 garage condos, 20-by-50-feet each, selling the basic model for $80,000 and offering various upgrade packages.

“It’s more of a man cave,” Freeman said. “You can do a two-story mezzanine in the back of the unit, have a desk, a light and Internet access. We’re envisioning the RV people going up there and charting their course for a trip.”

Strong demand

Freeman said he’s also trying to attract a retail piece –- perhaps a Starbucks store or a FedEx location – to satisfy city officials that would like to see a storefront in the heavily commercial area.

The Freemans are eyeing the future.

“Because of the demand and the positive feedback we’ve received here, we want to enter the next storage condo concept, have a clubhouse, have bathrooms,” Freeman said, who added that he already has five or six people ready to give him a deposit.

 A peak inside an empty unit at the Garage Town in Highlands Ranch, CO

A peek inside an empty unit at the Garage Town in Highlands Ranch, CO

Building continues

One state to the east, Glenn McWilliams formed Garage Condos LLC -– he’s the sole owner –- as well as the Garage Condos Developers Association, which has helped him to connect with peers and work with them on projects.

He’s about to break ground on two garage condo projects in Colorado. One is in Littleton, south of Denver, on 3.2 acres, and will have three buildings with a total of 49 units. The doors will be 14 feet high, and the widths will vary.

The second project is planned in Castle Rock, further south of Denver, on 7.5 acres. It will have around 115 units.

“All the units have power, light, heat, water and are very accessible and usable for all kinds of things,” McWilliams said, “A lot of time, people like me fill up the garage with stuff and there’s no room to put the car.”

Increasing interest

McWilliams said the nation’s first garage condo was built in Wheat Ridge, which is near Denver.

McWilliams also has worked with Garage Town, which is based in Coeur d’Alene, ID, as a joint venture partner with Mike Ard. They have built Garage Town projects in Colorado in Longmont, Highlands Ranch and Ken Caryl. Garage Town also has built projects in Anchorage, Phoenix, Houston, Idaho and Washington state (pictured at top).

McWilliams also is consulting with people who want to build garage condos in Oklahoma City and Napa, CA, and who are building a facility in Dallas.

Garage condos tend to attract higher-income clients than those who rent regular self-storage units.

“Typically the investors and people that own traditional self-storage are doing that for long-term income,” McWilliams said. “Since we sell our units, the income is a short-term gain, then I’m off to start the next project.”

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