The Cost-Effectiveness of Conversions vs. New Construction

Executive Summary

Converting an existing building often costs significantly less than constructing a new storage facility from the ground up. This can lead to shorter project schedules and a higher return on investment.

Article Key Points:

• Infrastructure Savings: Existing utilities, parking lots, and foundational site work minimize costs for site preparation and structural erection.
• Reduced Construction Costs: Mechanical, electrical, and plumbing systems are often already in place, reducing expenditures by 30% to 50% of the overall budget.
• Efficient Adaptation: Large retail spaces can be easily converted to storage facilities with minimal structural changes, leveraging existing column spacing and concrete flooring.
• Lower Utility Requirements: Storage facilities typically require less water and HVAC usage compared to other commercial buildings, further reducing operational costs.
• Simplified Zoning and Permitting: Conversions often bypass complex rezoning processes by utilizing already zoned properties, expediting project timelines.
• Community Benefits: Repurposing vacant buildings revitalizes neighborhoods, enhances aesthetics, and may qualify for incentives or favorable tax treatments.
• Additional Revenue Opportunities: Extra land parcels from converted sites can be sold or developed, increasing project returns for investors.

Introduction

Conversion of an existing building for public storage can present a cost-effective alternative to new construction.  Several factors contribute to this economic advantage. Existing conditions such as utilities and existing parking lots make site planning easier and less costly. Crucial interior construction divisions such as mechanical, electrical, and plumbing are already in place and may be in good condition depending on the age of the building.  Cost savings can range from 30% to 50% of the overall budget. If additional land is available to divide into extra parcels, presold land sales can deliver additional project proceeds for greater investor returns.

Base Infrastructure and Cost Savings

While conversions can offer cost savings, it is crucial to conduct thorough due diligence to assess the condition of the existing building and its infrastructure. A good existing structure and site can provide a foundational framework, significantly reducing expenses associated with site preparation, foundation laying, and structural erection. These are typically substantial costs in new construction.

As upgrades or modifications may be necessary, the base infrastructure is typically already in place. Existing buildings often possess pre-existing utilities, such as HVAC, fire suppression, electrical wiring and plumbing, which can be adapted and upgraded rather than be newly installed. Condition of pre-existing utilities plays a crucial role in Global Storage Partners’ selection of buildings to determine if building candidates are worthy for conversion.

Existing buildings typically already have foundational site work completed.  Grading and leveling has already been done so major earthwork divisions can have minimal cost to the project.  Paved parking lots and access roads can be already in place. Asphalt is typically an expensive aspect of construction so significant project costs can be saved if the asphalt is in good condition.  Existing utility connections are typically already in place which significantly reduces the need for extensive site preparation and running new lines -- another major expense in new construction.

Building interior construction divisions such as HVAC units, thermal controls and air distribution systems are typically in place. Units may be new, or they could be aged and need to be replaced. However, if replacement is required, roof curbs and electrical requirements are often in place making unit replacement relatively cost effective. Existing electrical service panels can be reused if in good condition. Integral wiring and breaker conditions are professionally evaluated to determine replacement if needed. However, conduit lines can typically be reused making cost to this division economical.

Plumbing, including water distribution to fire suppression and restrooms, is typically in place. Depending on the previous building use, water for public storage is comparatively minimal to supply restrooms and fire suppression systems. Condition of fire suppression systems are professionally evaluated and replace if necessary.  Fire pumps and distribution lines may need to be replaced but typically require low cost of modification depending on age of the building.  Sanitary sewer lines within the concrete building slab floor are professionally tested and reused if possible. Location of restrooms within reasonable distance of sanitary lines plays a role in initial floor plan design.

Elevators for multi-floor buildings are typically in place and usually operational. Professional evaluation of elevators is employed by Global Storage Partners for load capacity and operational suitability. If elevators need to be replaced, shafts and structural components are already in place so mechanical aspects of elevators can easily be professionally installed to ensure high life and safety standards for conveying equipment.  Elevator enclosures also typically have control locations already established making replacement easy.

Easy Adaptation and Lower Utility Usage

Adaption from a building’s previous use to public storge is a major consideration for renovation since adapting existing utility systems to the needs of a storage facility is often less expensive than installing entirely new systems.

Large box retail buildings for example, make for easy conversion to wide open space required for placement of storage units.  Structural column distances are considered in the initial floor plan but can usually be incorporated easily within unit walls. Floors are stripped and ground down to the raw concrete slab. Slab is polished and high traffic paint is applied to unit floor aisle areas, so carpeting and tile is limited to the office area and restrooms. The need for higher cost floor covering is therefore greatly reduced for public storage and the existing concrete slab is treated as flooring within units and aisles.

Lighting and fire suppression systems are easily adapted to storage, particularly if the ceiling height is greater than typical office. Existing spread pattern of sprinklers can often remain “as is” to cover 8-foot-tall units if overhead spray heads are high enough.  The same benefit of high ceilings applies to lighting. Fixtures may need to be upgraded and moved to aisles but wiring and conduit systems are generally left in place to serve fixtures.  Because storage units are planned in advance and “kit built” on site, layout of units can easily follow existing building floor conditions, stairwell locations and elevator shafts. Storage units employ an open cage system for their ceilings allowing lighting and fire suppression to come from above the units. This results in no interior sprinkler or systems required within units keeping cost for these construction division low.  

Storage facilities can be adapted to various sizes of units. Global Storage Partners carefully considers market conditions to determine unit sizes and market demand. Flexibility of unit sizes is established in advance in plan and can easily be constructed in accordance with existing building conditions.

Compared to a retail store or office building, storage facilities may have lower water and HVAC usage. For example, standard self-storage units often require minimal electricity for lighting and security. Temperature for public storage can be set to remain at wide ranges. Low range can be set at 55 degrees to allow for public comfort and for preventing water pipes from freezing. High range is typically 79 degrees for comfort and humidity control keeping electric utility low.  Water usage is limited to restrooms and office breakroom limiting monthly cost for water utility.

In essence, utilizing an existing building’s infrastructure leads to potential savings in both construction costs in major divisions and utility expenses.

Architecture, Engineering and Site Parcels

Location is a strong sustainability consideration when Global Storage Partners evaluates potential storage buildings.  Many vacant buildings, like former retail stores for example, are situated in prime locations with high visibility and accessibility. This is crucial for attracting storage customers. These locations are often in established communities, providing a ready customer base. Architecture and civil engineering play important roles in master planning and creating patron appeal and highest value to a developed plaza. Global Storage Partners employs competent professionals for building design and master planning of its site.

Architectural features of existing buildings are already known and may be enhanced through skillful design. Color schemes for branding, signage design and other forms of exterior improvements may be employed in new ways to renovate a building, often better than its previous condition.  Cost of architectural design is typically reduced given the base design of the existing building has already been established. High curb appeal to attract storage patrons is always the objective.  Strong branding colors and signage play a large role in creating curb appeal. A strong positive customer experience, from arrival to leasing units, is established through skillful branding, exterior architectural appeal, and interior design excellence.  

Site planning for conversions is generally less complicated. Curb, gutter, flatwork, landscaping and other sitework is typically already established making civil engineering limited to changes required for building access and parking related to storage. Storage buildings require a low parking duty, often leaving large portions of the site for parcel subdivision. Global Storage Partners engages professional engineers to create master planning to provide for additional parcel circulation and parking for future use making parcels very marketable to prospective buyers.   Additional parcel sites may either be improved or sold “as is” depending on the buyer and their intended use.  Sale of additional parcels adds revenue to positively impact the project’s internal rate of return.  Compatible uses can also be controlled by Global Storage Partners to improve the value of the plaza and market value of the storage building itself.    

Zoning and Permitting

Repurposing an existing building can expedite the project timeline. City jurisdictions vary on obtaining permits in a timely manner, however, obtaining permits for renovations is generally less complex and time-consuming compared to approval processes for new construction.  Depending on the existing building's previous use, zoning and permitting processes might be simpler and less costly than for new construction. In many cases, existing buildings may already be zoned for commercial or industrial use so converting an existing building can streamline the planning and zoning approval process by leveraging existing zoning, infrastructure, and minimizing environmental impact. If the existing building is already zoned appropriately for a storage facility, this can significantly reduce or eliminate the need for rezoning which is often a lengthy and complex process. Moreover, even if rezoning is required, the fact that the building already exists can demonstrate that the location is suitable for commercial activity. Storage facilities generally have a lower impact on surrounding areas compared to other commercial developments. Public Storage buildings typically generate less traffic, noise, and pollution. Converting an existing building can minimize further disruption to the neighborhood, which can be a key factor in gaining approval from planning and zoning boards. Planning and zoning boards often favor projects that utilize existing infrastructure, as it minimizes environmental impact and reduces the burden on public services.

Finally, since revitalization of underutilized buildings or converting a vacant can revitalize a property and improve the aesthetics of the neighborhood. This can be a positive factor in gaining approval from planning and zoning boards, as it demonstrates a commitment to community improvement. Global Storage Partner may present officials with renderings to convey the finished product, as necessary. If the exterior of the building requires minimal changes, then there will be less requirements from planning and zoning boards as well.  Zoning and permitting time can often be reduced by several months, playing a key role in total return on investment.

Community improvement plays an important role in renovation. Communities benefit by repurposing vacant buildings and giving them new life.  City jurisdictions may offer incentives and favorable tax treatment for building renovation.

Conclusion

In summary, conversions can offer cost savings.  Global Storage Partners employs skillful strategy and design professionals to conduct crucial due diligence to assess the condition of existing buildings, their infrastructure, and additional site opportunities. With prudent execution, renovations offer a fiscally sound strategy by leveraging existing resources, reducing construction time, minimizing regulatory timelines, and can provide a significant positive impact to communities.

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