This is about the easiest decision—the closest thing to a no-brainer—a co-op or condo board of directors will ever need to consider: what to do with vacant space.
Install storage lockers. If you already have storage lockers, install morestorage lockers.
What other building amenity pays back its initial investment in a year or two, turning a bleak, dark hovel in the basement into a perpetual money machine while making closet-space challenged residents very happy?
“It's a great advantage to either selling or renting a storage unit because most of the units really are designed so that every little corner is used,” says Judi Allen, PCAM, district manager at KW Property Management and Consulting in Clearwater. “They don't really build in a lot of storage, and when people move from homes and they move into condominiums, they realize they don't have an attic, they don't have a basement, where are they going to put their Christmas decorations, where are they going to put their bicycle? So, it's definitely a benefit to have a building that has storage facilities available.”
Most condos that Judi Allen manages have some sort of storage facility, depending on the layout and structure of the condominium and the needs of the residents.
“[The units] are usually something like a three by 3 x 5 x 6 foot-high cage area in one big storage room that they have. It depends on how the buildings were built. Some of the older ones had on their balconies a storage closet that would definitely belong to the unit. Some of the newer condos, if they had the space available, they built storage rooms with cages that either were sold with the unit or [the owners] can rent them,” she says.
For condo conversions of older buildings, which were not typically designed with built-in storage space, turning vacant space in the building into a storage room is a great way to bring in new revenue.
Planning the Storage Room
The number of lockers to install is figured based on such variables as the dimensions of the room and the projected demand for storage space among residents. For buildings that do not have vacant space to convert, constructing outside units is the best option.
John Allen, president of Treasure Chest Storage Condominiums in Fort Myers, explains that his company builds units that are designed to be like miniature condominiums themselves.
“What we do is we build a facility and we've got these in a few estates. But we build a facility that is actually with many garages. They're individual units that range in size particularly in the case of Florida, our units here range in size from 15’ x 35’ up to a 20’ x 50’ size unit, and it's similar to your garage at home but they have much larger doors inside the entry doors and they're designed to put large items in such as motor homes and boats. We have a wide variety of things that people use them for but they're like a big garage,” he says.
Changing a vacant space into storage units would mean altering a common space and would require the vote of the residents, says Judi Allen, adding, “It's not always an easy task to do that, there has to be a demand for units.”
Jamie Barnard, owner of New York-based Giant Industrial, which is affiliated with the national storage company Wirecrafters, says that to gauge interest in their storage bins, “most buildings do a simple survey. We can put a sample in the basement, along with the amount you will charge per month. You can tell them the square footage, but it helps if they can see it.”
The building doesn’t need to rush to fill every inch of the vacant space in a new storage area with lockers. “We don’t want you to put 100 units in if you’re not sure you can rent 100,” says Barnard. “Start with 30 and when they are done we will come back and do 10 more for you.”
The most common locker size is around 4’ x 4’ x 8’, but a building might go smaller to keep material cost and monthly fees low. Most buildings offer owners just one size to limit the administrative hassle, says Barnard. “We have done it every which way but the more popular way seems to be to give everyone the same size. If someone wants a bigger space, they take two or three small ones.”
To Rent or to Own
There are two distinct approaches to installing and maintaining a storage facility: outsource the entire operation to an outside vendor, which collects rent directly from the residents and remits a percentage to the association, or install and manage the facility yourself.
John Allen says that because of the real estate market in Florida, his storage units are for rental only. And when an association decides to rent, his company continues to maintain the units which eliminates that task for residents.
“If they rent it, certainly we maintain it a bit. But when you say maintain it; there really isn't any maintenance. They're set up like they're a condo association where the condo association would be responsible to take care of the roof or the exterior of the units and the interior would be taken care of by the owner,” he explains.
To rent, he says rates run from $350 to $700 a month, depending on the amenities included in the unit, such as whether or not it is air-conditioned.
Giving the storage concession over to a private operator severely limits income to the condominium corporation over the long term but it does have other advantages.
“We put in everything for free in a rental plan,” says Josh Goldman, president of the New York-based Bargold Storage Systems. “We put in state-of-the-art equipment, paint and light the room and we remit 25% of the rent we collect to the building.”
After the installation, says Goldman, “the key thing is we maintain their room throughout the term of the agreement,” which is typically 10 years. “If they get a water leak or somebody spills some laundry detergent, we will come back and clean that up and repaint the floor so it looks like new again.”
Beyond infrastructure maintenance, the company offers an independent insurance policy on the storage room that supersedes the building’s policy, “so the building’s policy is not touched if anything goes awry,” says Goldman—if, say, there is a slip-and-fall.
If the building does not have scrupulously detailed contracts with renters, he explains, it may be vulnerable to lawsuits resulting from any theft or damage to the contents of storage lockers. “If you get a lawsuit because someone feels wronged—there goes your whole profit margin.”
Do It Yourself
Still, most buildings prefer to keep the operation of the storage room in-house to enjoy the steady income stream. “If the association is renting the units out or if there's space available for rent, [the money] would go to the association. And what that does is then that helps to maintain the area, the cost of maintaining the storage areas,” says Judi Allen.
And while it does take extra effort to plan and maintain, the professional storage providers make it easy.
“Most calls,” says Barnard, whose company has installed some 80,000 bins, “we go out and do a survey, design the room and give you a sample five-year profit projection,” based on typical rents in the area. “In most cases,” he adds, “your payback for the cost of the units is inside of 12 months—and then they generate income for you forever.”
Often on first inspection of a building’s basement, says Barnard, “we see an overrun, cluttered fire trap. In many instances the fire department has gone through and written them up and told them to straighten it up.”
Any residents who might have stored some stuff down in the basement for years for free are not particularly happy to hear about the storage project, notes Barnard. “The building will ask people to go down and tag their items and remove them within a month or two.” Meanwhile the company orders the bins, custom-fitting stock sizes to fit the dimensions of the room. Once the building cleans, patches and paints the room, the installer can put in 20 to 40 bins a day depending on their sizes.
To See or Not to See
Wire mesh is the material of choice for storage bins today. Barnard estimates Giant does 90% wire to 10% solid walls. They are cheaper because units share common walls, while solid metal containers are self-contained—closed all around. But more than that, according to Eddie Murphy, president of national distributor SpaceGuard Products, “wire mesh makes it easier to manage what people are storing, to make sure they are not storing, say, combustible materials inside their units. It also allows fire suppressant systems to operate unimpaired.” Solid metal walls prevent water from sprinklers from getting inside the units.
On the other hand, “people aren’t too happy with the idea of exposing what they have,” observes Ed Morgan, vice president of the New York-based Able Steel Equipment. Furthermore, he adds, “mesh might provide a false sense of security because if somebody has something that’s not supposed to be in there they are going to hide it anyway, perhaps put up cardboard for privacy.” Still, he agrees “the wires are becoming more popular now. Some buildings require it.”
Put It in Writing
The corporation should make sure the rental contracts on the storage it provides are as solid as the bins themselves, clearly delineating the limits of its liability to renters.
“We have a four-page lease written to say that there is no exposure to the renter’s losses,” says Mitchell Stein, who is with New York-based Orsid Realty. “A building pipe may break and flood your bin and destroy your property and you would need to have your own insurance cover it. In other words, if you lose it, you lose it.”
Stein also recommends that “the board include a provision in the lease that says upon vacating your apartment you would need board approval to retain your bin. You often find that people who have moved out want to retain the bin.”
He advises residents to verify that their homeowner’s policy covers damage in storage lockers. Some policies treat a locker with the owner’s possessions in the same building in which they reside as if it were a closet within their apartment, while some want an extra premium for the coverage of stored possessions.
“You need to verify with your insurance company that your homeowner’s policy covers that,” he says. “It is not cut and dry.”
Steven Cutler is a freelance writer and a frequent contributor to The South Florida Cooperator. Editorial Assistant Maggie Puniewska contributed to this article.