A few months back, someone posted I hear about buying a property I believe that was in upstate New York, only to find out there was an underground storage tank which contained fuel oil for the furnace that was leaking. This would have to be cleaned up before escrow could close (or at least a commitment to clean it up)
If as a plumbing warehouse (which I doubt this happen but you never know) there was some sort of soil contamination by chemicals you would need to clean that up or go after the previous owner to clean it up. Having a contingency which allows you to get out of the contract under such a circumstance is what I meant by an environmental contingency.
I am looking to expand the space I use for my business. Currently I only have about 2400 sf.
I am looking at a 23,000 SF warehouse with offices in a somewhat of a depressed neighborhood. However there are no local business taxes either and I am not looking for walk in traffic for my business even though this property has a lot of frontage.
I am considering using the balance of the space (15,000sf)for self storage for business. There is a loading dock and drive in entrance which is appealing. The building is part Masonry and part insulated Steel building. There is also 9000 sf of fenced in paved lot that I could also rent out for outside storage.
I could probably get the building for $300K with 10K in taxes.
Comps in this area are:
6,000sf for $169K Office
12,000sf for $240K retail/warehouse
6,000 sf for $120K office/warehouse
6,500 sf for $177K office/warehouse
So the above are selling for $20-$28 per square foot. My prospect is $13/sf which seams like a deal.
However I don’t need that much space and want to capitalize on it by renting to other business. I see that self storage places are renting for about $6-$8 square foot per year. I wanted to offer storage for business for at least $4/sf. I do NOT want to rent to the general public.
Does this sound like a reasonable amount for business storage? I also have 1200 linear feet of security caging that I could set up customized space and I could offer pallet racks too. Having no experience in warehousing does this sound feasible? What types of business would need this extra storage space that I could market to?
Re: Business Use Self Storage feasibility - Posted by John B.
Posted by John B. on February 14, 2005 at 12:35:50:
Couple of things from a current self-storage owner (admittedly, a new
self-storage owner):
Why business only? FWIW, I have residential customers who pay their
bills every month no problem, and I have commercial customers who
get lien letters every month. Also, how are you going to decide who is
a “business”…require an employer identification number or business
license at contract? Most storage facilities draw from a 3-5 mile radius
of their facility, so look at what your population is around your site. I
think the stats on self storage usage (nationally) have commercial as
somewhere between 25 and 45% of overall usage.
Are you going to offer self-storage, or are you offering
warehousing? Laws vary by state, but if you are going to have access to
the space, do loading for the customer, or comingle customer
property, you’re probably a warehouse operation, and you will have to
be insured properly. Self storage basically offers exclusive space to
customers, and the customer is responsible for controlling access to
their unit and for the contents of the unit.
You could also look at offering a records storage business (probably
more labor intensive than what you had in mind), but I’d probably look
at cutting up the space into a couple of office/warehouse units and
leasing it to various small businesses (contractors and such).