Shadowed Anchored Retail Centers, Space gone dark, Empty Boxes, See Through…
Whatever name we choose to call it, it still all means the same bad news: commercial real estate vacancy. Whether the cause was overbuilding in a given market, overleveraging a property or just plain bad economic timing; the resulting cascade has today left literally hundreds of once full, retail and industrial buildings sitting vacant throughout the United States with little or no hope of improved occupancy in the near or even distant future.
However, a unique alternative use for vacant retail space or even an office building may be a self-storage conversion. A straight forward concept, it involves converting the interior of commercial space by partitioning it into numerous self storage units and installing a small rental office while altering the exterior of the building to promote awareness. In several cases, a self-storage conversion has proven to be the only viable alternative use for vacant commercial space in past down real estate cycles.
Why it Makes Sense
- Much of the same core demographics used for retail and office development are applicable for a self-storage use.
- Many conversion opportunities are in fully developed areas, thus practically eliminating future competition and creating a niche opportunity for a self-storage use.
- Depending on the situation, self-storage conversions are often cost effective build outs that can be phased over time as the units lease up.
- A self-storage conversion may be the only alternative to making large anchor retail spaces or even vacate single user buildings economically viable in oversupplied markets.
The Prime Ingredients
To determine whether a particular location is appropriate for a self-storage conversion, the three primary factors to consider:
Does the vacant retail space have sufficient area to make the numbers work?
If required, can a single storey building’s area be expanded by adding a second floor?
Does the surrounding market area have sufficient demand for a self storage facility?
Anchored Retail Center Space
Depending on the market area, the proto-typical self-storage facility can be anywhere between 50,000-to-80,000 square feet. This size of footprint fits well with most vacant anchored retail center spaces and their large open configuration facilitates the addition of a second floor with the ceiling heights required for a self-storage. Additionally, the rear loading dock and high clearance roll up doors in most grocery anchor spaces is conducive to a self-storage use that often has an interior RV, boat and car drive-in storage component.
Additionally, self-storage facilities are usually built on off corner locations with limited signage and street exposure. Being located on a major corner in a retail or office project, with enhanced monument and marquee signage, greatly enhances a self storage facilities exposure, marketing and customer convenience.
Another advantage, unlike typical rigid multi-storey structural framing systems, a self-storage framing system allows the floor load to be spread throughout the existing slab. As a result a second floor mezzanine and even an entire second floor can be constructed utilizing a typical slab thicknesses used in single storey retail and office construction.
Other construction considerations include:
- Sprinkler/fire system additions or new installation
- Existing HVAC systems versus requirements for self-storage
- Installation requirements of Elevators or Lifts
- Self Storage Operational layout and logistics
- Local Code and Zoning Use Restrictions
Although not a universal cure-all to commercial real estate vacancy and overbuilding, a self-storage conversion can offer a viable cost-effective alternative use that can turn a vacant commercial property from being an economic loser into a winner.