Back in the heyday of the early 2000s, big box retailers were the name of the game in real estate. Kmart, JC Penny’s, Toys ‘R Us, and a long line of other companies who used to be the kings of dominating malls and other prominent spaces in high-traffic areas. In the past few years, however, the laws of physics have gone into effect and their good fortune has taken a staggering turn for the worst.
In 2017 alone, major retailers such as Macy’s, Sears, Kmart and J.C. Penney (among others) announced the closure of more than 5,000 stores. These Goliaths have been forced to move their business online by the little David known as Amazon. Maybe you’ve heard of them?
With times changing like they are, these suddenly-empty big box stores are ready to get some new inhabitants: specifically, self-storage tenants. Converting an empty retail space into a cutting edge, modern storage facility is one of most financially savvy investments you can make. Aside from cutting the process time significantly from a traditional ground-up facility building process, you also get to sidestep a lot of paperwork and headache. You’re also most likely going to already have the benefit of roadside visibility with this new conversion location. After all, big stores are usually not hiding off the main path.
Let’s take an empty Kmart for example: you buy it for a song and a dance, then turn around and take out a construction loan to fund the renovations. Our team of R3 experts at Janus will work with you to analyze the current layout of your space, and then create a game plan to get the most rentable space out of your investment. Once you speak to a financial institution familiar with construction loans (like our partners at Live Oak Bank) and the financing is ready to go, you can go ahead and get his show on the road. Within roughly 8 weeks, you can have a full conversion done from top to bottom and ready to fill with new tenants.
So you’ve got a converted facility under your belt. What now? How do you keep the momentum going on the money end? One quick and easy way to get your rental rates up is to take a stab at improving your facility’s security. If you install the SecurGuard Wireless Smart Entry system, you can get an increase on your rental rates immediately after implementing the new technology. You can pass on the cost of the unit improvements onto your tenants; up to $10 per unit per month. Just think about how you’ll be able to recoup the cost of this technologically savvy investment in no time. Your bottom line will never be the same!
The mistake a lot of people make is being afraid of renovation costs, and having little to no faith that their investment will pay off. If you’re one of these people, I really encourage you to step back and take a look at the self-storage market. This is truly a recession-proof business model – people will always need a place to store their extra items in good times, bad times, whether they’re large young families or aging baby boomers.
But, don’t just take our word for it. Click here to watch our new video white paper where Dave King of Wentworth properties tells us about his R3 experiences with Janus.