This is about the easiest decision—the closest thing to a no-brainer—a board of trustees will ever need to consider: what to do with vacant space.
Install storage lockers. If you already have storage lockers, install more storage 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-maker while making closet-space challenged residents very happy?
“The benefit to the condo owner is that they get a lot of the loose stuff out of their unit,” says Jason Kuberski, vice president of sales at ProQuip Inc. in Woburn, Massachusetts. “More often than not, these units are pretty tight with storage space to begin with. It keeps everything under lock and key, the homeowners can access their own locker at their own time and schedule, whenever they want. Versus [at a storage facility] to have someone open a door and wait until they are done,” he says.
Kuberski adds that having storage units installed by a professional company can increase the safety and security of the valuables that owners store within the units.
“A lot of the jobs that we do, they have like two-by-four storage units that aren't even locked or if they are, very rudimentary, not secure, and as a result people are hesitant to put in anything of value, which kind of defeats the purpose of having these units. I think from the owners’ perspective, they would prefer to provide a more secure unit,” he says.
For condo conversions of older buildings, which were not typically designed with built-in storage space, turning vacant basement or other 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 calculated based on variables such as the dimensions of the room and the projected demand for storage space among residents. Often the company will survey the potential space first.
“What we do is we’ll send someone out to the site who will measure up a room or a series of rooms and then we can take the number of units that they are looking to store and then calculate how much cubic yards that is per tenant, so they can decide if they are putting bikes in it, it may or may not be enough space,” Kuberski explains.
Initially, the building doesn’t even 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 Jamie Barnard, owner of New York-based Giant Industrial, a dealer for the national company, WireCrafters. “Start with 30, and when they are done we will come back and do 10 more for you.”
On the other hand, especially if the units will be rented or space is minimal, you want to make sure that your space is maximized.
“For it to make any sense cost-wise you really want a unit that is two feet wide by two feet deep because that is going to be able to house skis, boxes, and a Christmas tree but nor could an owner charge that much money for that space. The most common size is a three foot wide by five deep by seven foot tall, and with that seven foot height, you can either have a single door or you can divide it into two and have a double tier. The double tier allows you to have the same unit size but split up into two smaller units,” says Kuberski.
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.”
Rental rates for storage lockers, as with most fees on services to the shareholders or association members, are set with an eye to balancing profit with providing an amenity.
“Some buildings want to provide the amenity and keep the cost down,” observes Barnard. “They look at it as increasing values. The more amenities you have, the higher the property values.”
But in some cases it’s tempting to apply the law of supply and demand. “If you get a high-rise with 200 apartments and they’ll only be able to fit 30 or 40 storage units,” says Barnard, “they will kick the numbers up.” Plus, the board must be careful not to give owners who do not want extra storage space the idea that they are subsidizing the ones who do.
To serve a greater portion of the population and cut costs per unit, the building can offer half-size units at half cost. They might offer a 4’ x 4’ x 4’ bin, which still holds plenty of stuff, for about $30 a month.
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.
Giving the storage concession over to a private operator severely limits income to the condominium association over the long term—and for that reason, it is a choice boards rarely make these days. But it does have its advantages. It is by far the simplest way to go; most of the building’s labor is done after the phone call to the vendor. And it eliminates all start-up costs.
“We put in everything for free in a rental plan,” says Josh Goldman, president of the Long Island City, N.Y.-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. 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 in the Northeast, “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.
According to Kuberski, whose company simply installs and furnishes the storage units, associations shouldn’t expect to see revenue right away. “It takes about a year and half to pay for the job and after that, it is a positive revenue stream for the owners,” he says.
To See or Not to See
Wire mesh is the material of choice for storage bins today, and for many reasons.
“In costs much less than solid steel or if they were to build it out of wood. It's a very cheap yet secure product. It is visual. It conforms to fire codes, sprinklers. That is a major component of it. That's a main reason why units are made out of wire,” says Kuberski.
On the other hand, “people aren’t too happy with the idea of exposing what they have,” observes Ed Morgan, vice president of 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 association board 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 of Orsid Realty, a management company based in New York City. “A building pipe may break and flood your bin and destroy your property and you would need to have your own insurance to cover it. In other words, if you lose it, you lose it.”
Also, says Stein, “We recommend 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.”
Stein 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 unit, 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 New England Condominium. Editorial Assistant Maggie Puniewska contributed to this article.
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