by Mark Lusky
Self-storage is no longer limited to rentals. Along with development of higher-end properties for specialized storage, office/warehouse use and home-away-from-home options such as man caves, some owner/operators are selling units.
For Colorado-based developer GarageTown USA, it's a hybrid of a light industrial complex and self-storage units. In their own words, "We developed the GarageTown concept to meet the growing necessity of homeowners who needed to store items that would not fit in their homes and garages. We did this in a unique way: OWNERSHIP."
The company's newest offering, GT Select-Flex Suites, features units "specifically designed for offices, showrooms, light manufacturing and limited retail opportunities. These Suites come in two sizes (1,248sf and 1,560sf), feature great street level exposure, 200 amp electrical service, air conditioning, gas heat, and plumbing stub-ins. So whether you're looking for an office space close to home or your traditional GarageTown unit, the ideal showroom for [your] products, or even creating an upscale man cave, the all-new Select-Flex units pretty much have it all. And, best of all, you own it!"
Elsewhere, Hyde Park Storage Suites has opened in Daytona Beach, FL. The company's website notes that, "Hyde Park Storage Suites satisfies a wide variety of business and personal needs, such as...Motorhome, RV and Boat Storage...Storage and Warehouse Space...Mancave, Hobbyist and Personal Storage...Hyde Park Storage Suites are commercially zoned, deeded condominiums...Own or lease your own private upscale garage condo."
Whether or not you're ready to invest a bunch of money to gain more lucrative returns, expanding use offerings and ownership are two concepts worth thinking about. Following are some questions to ponder:
1. Given current zoning, property amenities (e.g., climate control), other legal issues such as liability, et al, what would you have to do to convert that strictly storage area into something more? For some, it can be as simple as promoting expanded uses by offering electricity and requesting liability waivers. At the other end of the spectrum are the GarageTown and Hyde Park models featuring substantially upgraded amenities.
2. What ownership options and issues come into play? Options to get rid of a troublesome tenant abound; it's more difficult with an owner. You might experiment with a rent-to-buy model, where a certain amount of monthly rental fees accrue toward buying the unit, should both parties choose to go that route. This offers an interesting promotional tool, if nothing else.
3. What are the plusses and pitfalls being experienced by operators with upgraded complexes and those selling self-storage units? Do some research to see how others are faring, being careful to monitor state-specific challenges. What works well in one state may prove problematic elsewhere.
4. What tax issues come into play with various upgrades and ownership models versus present structure? Compare and contrast to determine what options may merit more consideration, or to discover that staying put is your best choice.