The Great Recession, which our domestic economy is slowly recovering from, has caused many facility owners and would-be owners to adjust their business strategies. The primary reason for the adjustment has been lack of adequate financing, which has delayed a lot new construction. For an existing owner, this situation has opened the door for an alternative strategy: Use this time to refurbish your facilities. Here are points that might help you decide if refurbishing is right for you.
Why Refurbishing is a Good Idea
Refurbishing will not only revitalize your buildings and surroundings, it can also improve your bottom line. If your facility is getting some age on it and you look around your market and see that your competitors’ facilities are newer and more attractive, it may mean that the time is right for you to consider a facelift. It can help level the playing field with your competitors and allow you to maintain or grow your share of market. It can lead to higher rents and higher occupancy and can increase the value of your facility. All of which will translate to an improved financial situation for the owner.
The Importance of Appearance and Curb Appeal
One of the most important facets of your facility’s appearance is the condition of your buildings. Even if your landscaping is relatively attractive, the curb appeal of your buildings is important. It’s a known fact that 60 to 70 percent of those who make the final decision on which self-storage facility is chosen are women. They insist on a clean and attractive environment because experience has shown that it makes them feel safer. And if they feel safer, the better the chances are that they will rent from you. On the other hand, if they don’t like the looks of your facility, chances are they won’t even bother to visit.
Why Refurbish Now?
Because of the economy and the fact that new construction is down, labor is more available and the cost will be lower. These days, construction workers are willing to work for less.
What to Look For
It will be fairly obvious what your immediate priorities will be. One of the fastest ways to spruce up your curb appeal is to update and maintain your landscaping. For example, trim the bushes and plant colorful flowers. These are things that will be pleasing to the eye of discriminating tenants and prospects. Damaged building parts such as bollards, columns, headers, trims or downspouts are signs to look for, as well as faded and chipped painted surfaces. Check your roll-up doors to see if they are operating properly and make sure door paint isn’t chalking, which can rub off on customers’ hands and goods. If you have exterior wood components or field-painted metal surfaces, you may want to consider covering them with pre-painted metal panels and trim. Outdated and leaky roof panels should be replaced with standing seam panels.
Less Obvious Concerns
There will be areas around your facility that may need attention, but don’t seem as critical as others. For example, your lighting may be inadequate and not illuminating some areas as well as others. You may want to examine your office parking areas to make sure the stripes and curbs are properly painted. Is the pavement around the buildings smooth, uncluttered and without potholes? Make sure there is proper drainage within the facility proper so standing water doesn’t become a problem. Are the security cameras, alarm systems, gate/entry access and intercom systems in good working order? What about your unit mix? Have market demands changed? Have the demographics of your tenants changed? If so, you may want to consider adjusting the sizes of some of your units. How about climate controlled units? When you originally built, was there any demand then? Do you need to add any now? If so, can you remodel an existing building or should you consider adding another building for climate control units?
You may want to rethink your office setup. Are your retail supplies adequate? New and improved software can help with rental bookkeeping, and free-standing kiosks make it convenient for tenants to conduct business when your office is closed. Some facilities are now installing solar as an alternative source of energy or to create a revenue stream. You may want to revisit your exterior signage. Depending on your location, it may be your most attention-getting device to passing motorists. In fact, with the popularity of today’s animated digital signs, your sign can not only be attractive and compelling, it can bring prospects to your door.
Items to be Addressed Before Starting Refurbishing
Before you make the final decision to refurbish, here are a few issues you need to investigate. Find out if you will be required to secure any special permits to refurbish. Will you need any additional insurance while the renovation is underway to offset any risks not already covered? Make sure you understand exactly what materials and labor will be provided by the company doing the work. Inquire as to who will be responsible for any “hidden” problems that might be uncovered during the project? For instance, if some renovations involve wooden structures and termite damage is discovered, who will be responsible for the necessary repairs? More than likely, any extra costs for hidden damages will probably fall back on the owner. And what about possible business interruptions while refurbishing work is being done? Make sure your tenants are not inconvenienced during the process.
Timing and Expense
Once you have determined what needs to be done to improve your facility and operations. Remember, the work can be done in phases. Everything doesn’t have to be done at one time. You may want to take care of the more obvious and visible needs first and make other improvements overtime. This can ease the expense you will face by prorating costs. Speaking of expense, refurbishing, more often than not, can be considered a repair/maintenance issue and in some cases there can be tax advantages if reported within the year that the expense is incurred. It would pay to check with your accountant to see if you qualify for a write-off.
Like any business that includes physical structures of any kind, self-storage facilities will eventually need refurbishing whether it is due to normal aging or accidental occurrence. It’s simply a part of doing business. That’s why every owner needs to handle the process with as much information as possible and make sure in the long run it means not only improving your facility, but improving your balance sheet, as well.
One final note: Now is a good time to refurbish. Don’t wait until you’re forced to react and catch up because of new competition in your market. Be proactive and do it now before it’s too late.
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