16 May 2024
During the recent ISS Las Vegas World Expo, we had the opportunity to engage with industry experts, gaining insights into the current self-storage development landscape. Thaddeus Campbell of Safe Storage USA shared insights on navigating township regulations, fostering community relationships, and making conversions work.
James: We're here with Thaddeus, this guy is a big shot, he runs an amazing podcast where he talks to all the industry experts, so I'm very lucky to catch him here today at the trade show. So Thaddeus, with all the challenges to development, what are you seeing are some ways that you can work with the township and help them understand what self-storage is and get some entitlements approved?
Thaddeus: I think the biggest thing for us in the development projects when we're early on, we want to get a pre-op meeting with as many people from the city, county, whoever's in charge of zoning and planning and we want to have someone local on our team, a local civil engineer, a local might be a land use attorney, somebody that knows those people where we're not communicating as somebody they don't know, we're communicating through somebody that they have experience with. I think that's been a massive key that you want to have somebody who, the people that work for the road department, the water department, electric, all those people that are involved, and making sure that your project's going to get greenlit, they're speaking to somebody they already know.
James: Absolutely. I think that's gone a long way too for safe storage to sort of make waves in the market so you guys operate out of, to become a part of the community and work with the locals and just work with the community in order to lease up and be a successful business there. Any thoughts on that?
Thaddeus: Absolutely important that, look, it's a business that's servicing the community, right? So if you're not taking that pride and that time to know that you're now a part of that community, and listen, we're agnostic as far as location goes about where we're going to go and we're going to invest in self-storage development. We're going to go somewhere that we feel we can give a return to our investors. That's our primary goal. But the only way you give that return to your investors is if the people in that community embrace your product and store their stuff there. So you better act as a good holder of that community.
James: That's a tremendous point. To that next point, what are some ways you've seen conversions get deals over the goal line, making use out of distressed commercial real estate or otherwise abandoned space?
Thaddeus: Yeah, I think that we've kind of hit like a quadruple whammy in ground-up development right now. In 2020, 2021, as people were going crazy for new development, land prices skyrocketed. We saw some crazy prices, and that's taken a while to come down. There's still some landowners that are having a hard time coming to grips with, hey, my land was worth this two years ago. Why would I sell it to you for less now? So that's been a challenge. Conversion costs have risen. What might have cost $50, $55, $60, $65 in hard costs two, three, four years ago, we're now $75, $80, and some places $100, $120. Interest rates obviously are the big thing. So you have all three of those things hurting you. And as you guys at Radius know, street rates have come down. So four different factors that are ground-up developers looking at to try and be able to say, hey, can I make this deal work, all of them going in the wrong direction in a short period of time. Where conversions come in is all of a sudden I might be able to go get an abandoned building that would cost me $85 a square foot to build, and maybe I can buy it for $10 or $20 a square foot. Even if the conversion cost me $40 or $50z I'm in it for $60 or $70 a square foot instead of $85 to $100. All of a sudden I can deal with those other pressures that I have as far as interest rate costs, as far as the street rates that we're seeing in different markets. So that's where the real help has come with conversions. And why you're seeing some really big developers get into it is because your total all-in costs can be significantly lower.
James: Well, Thad, you have to be first, best, or different to succeed, am I right? So your creativity and what you apply to save storage I think is going to take you guys very far.
Thaddeus: I appreciate it so much. And listen, you know this, and on social media I talk about it all the time. The platform you guys have at Radius is such an amazing help for us in making very quick decisions. I'm going to continue to use it, and I'll continue to steal this guy for a half hour, a few weeks. When I watch him use it, I'm like, that looks really cool. And then I try and do it, and I'm like, how did he do what he did? So we'll be back on soon.
James: All right. Well, that sounds like a plan, Thad. Thank you so much.
Thaddeus: Appreciate it, James.
