Conversion Winner - Extra Space Storage, Birmingham, Ala.

2019 Facility of the Year If one looks at any major metropolitan area in the country, they will typically find some part of the urban core currently undergoing a revitalization. Birmingham, Ala., is no exception.

At the same time, many print newspapers are being consolidated or going out of business, which has left a real estate hole in many downtown urban areas. Such was the case when The Birmingham News abandoned the building it used for its printing presses in 2013.

The building sat as a sad reminder of the end of the print newspaper era until long-time associates and partners Brent Fields and Hamp Greene began the negotiations on the building in late 2017 with the idea of converting the building to self-storage.

The result is a $4.5 million conversion project that fits the needs of the city and the immediate surrounding urban area. The building, which is located at 417 22^nd St. North in Birmingham, opened in April 2019 under the third-party management of Extra Space Storage. 

Once both phases are complete, there is expected to be a total of 55,875 rentable square feet, with an additional 25,000 square feet available on the third floor for either mixed use or more storage. It will have a total of 808 units.

Phase I opened with approximately 200 units in April and, according to Extra Space, another 290 units were added to the mix in October.

A Long History In Storage
Fields managed self-storage facilities for eight years; when he decided in 2015 that he’d like to open his own facility, he began looking for properties. The partners had completed a feasibility study for the downtown area and realized it was primed for a Class-A storage facility.

“We chased a number of properties and just couldn’t get to closing on any of them,” says Fields. “My wife found this property, and when we did the walk-through, I was very excited. We got Hamp down there and submitted our letter of intent in December 2017.”

What drew the partners to this particular location was that it took up one half of a city block. Although there were a number of challenges inside, the partners felt it could lay out well for self-storage. A public/private collaborative $20 million apartment complex was also being planned across the street.

Although the building had been sitting vacant for years, the negotiation process was arduous, says Fields. “We had to negotiate with the parent company of the newspaper, which still owned the building,” says Fields. The listing price was $2 million, and the partners negotiated the building for $1.5 million. “Given what’s going on in Birmingham with real estate right now, we didn’t feel we were going to be able to do much better,” says Fields.

An Additional Opportunity
Fields knew they wanted to hang onto the property, which made it a prime candidate for the fact the building also sat in an Opportunity Zone.

The Opportunity Zone program was created last year when the Tax Cuts and Jobs Act was put into place. Its goal is to incentivize private investment in blighted and underserved communities across the United States by providing a hefty tax break to investors.

States created lists of possible Opportunity Zones, those which fell in low income or otherwise blighted areas, and submitted their lists to the federal government. There are now more than 8,700 census tracks that have been classified as Opportunity Zones.

Many of the projects currently in planning or under construction are multi-family housing. While there hasn’t been much development to date in the self-storage industry, many are still looking into the possibilities it could bring.

The basics of the program include having sold a qualifying asset that is subject to a capital gains tax. The asset could be in real estate or in stock. The portion subject to the capital gains must be invested within 180 days of the sale. After investing 51 percent more than the property was worth, the investor must then hold onto the investment for five, seven, or 10 years, which presents different reductions in tax liability.

“We hired accountants and tax lawyers to help us through this process,” says Fields.

Drawing Up The Plans  
Once the building was purchased and the tax foundation for the Opportunity Zone was laid, the real work began. The building, which housed very large printing presses for the paper, as well as the extra space that was reserved for possible expansion, was covered in layers upon layers of printing ink.

“The printing presses were gone, but it was just a building full of black muck,” says Fields, adding that it took plenty of time an elbow grease to clean what was left behind from the printing operations.

What’s more, homeless persons in the area had, at different times, set up camp in the building; a considerable number of remnants from wildlife also remained, says Micah Martin, graduate architect and project manager for Birchfield Penuel & Associates in Birmingham.

The firm doesn’t specialize in self-storage, but it knows the city and felt it could take the unique layout of the building and make it compatible for the self-storage facility Fields was seeking.

“There were still remnants of equipment lines, conveyor belts, and electrical lines, and we had to determine what was dangerous and had to come out and what could be used,” says Martin, of the process of drawing up the plans for the building.

The other challenge this building presented, says Martin, was that in most buildings, levels are clearly defined. However, this building had large open spaces to accommodate the very large printing presses, as well as mezzanines.

“It was really a Frankenstein of spaces,” says Martin. “We had to get everything in alignment to pour slabs, create a well-defined entry, and adhere to all of the handicapped accessible regulations.”

The resulting plan was to use the main existing floor while creating two completely new floors, as well as adding an elevator, which would require digging for an extra shaft in the subfloor basement.

The other challenge presented was the exterior of the building, which boasted an outdated late 1970s vibe. “It had that 1970s-stark look, and you really can’t change the size and the character,” says Martin. “So, we tried to get the original aesthetic restored rather than strip it down.”

The result was creating a look in which passersby could see the lobby from the street, adding new coats of paint and lighting to brighten the building. The question remained whether to leave the sign indicating the site was the former building of The Birmingham News on the retaining wall outside, but the decision was ultimately to remove it.

Demolition Begins
Once the plans were in place, clean up, remediation, and demolition to the building could begin. Construction officially got underway in October 2018.

David Acton, president of David Acton Building in Birmingham, was hired as the general contractor for the huge task. He has over 50 years of experience in the construction industry, although had not worked on self-storage prior to this project. Acton is Fields’ father in law, and Fields knew he was up to the task.

The first job was to remove decades of ink from the surfaces in the building. “You would go in with clean clothes and no matter what, you came out at the end of the day very dirty,” Acton says.

The next step was deciding which of the multitude of electrical lines and plumping could stay and which had to go. “The building was equipped with large electrical lines and most weren’t compatible with what we needed,” says Acton. “The electrical engineers had to determine what could be used and what had to be removed. It was the same with the plumbing. We had to be careful not to tear out part of a main line.”

Unfortunately, they were unable to use most of the fire and sprinkler system as they had hoped. And the clean-up and demolition process took much longer than they anticipated. “There was just miles and miles of conduit and prepping,” says Fields. “The walls weren’t really a problem; most of that was just partitions.”

Acton adds, “We had two large dumpsters on site all the way through the construction process and filled them up and had them emptied each day.”

On the outside of the building, Fields hired Highland Technical Services, an environmental consulting firm, to work with the Alabama Department of Environmental Management (ADEM) to remediate some elevated chemical toxin levels found in the groundwater on the site. “This had nothing to do with the newspaper or ink but of industries that were located on the property in the 1940s,” says Fields. “We didn’t have to perform any additional remediation on the property but did have to place environmental covenants on the property saying it wouldn’t be used for residential, only commercial use.”

Old-Fashioned Labor
Although a lot of concrete had to be poured to create the additional floors, the bearing capacity of the existing floors was good. “Thankfully, only a small portion of the existing floors needed to be shored to achieve the required live load requirement for self-storage,” says Acton. “However, for the area that did need to be shored up, it was a tenuous process to get the large beams into the building and welded into place.”

The main challenge was adding the new passenger elevator. “We encountered limestone at roughly half of the depth that we needed on about half of the area for the six-foot-deep pit,” says Acton. “We were able to get a small elevator into the basement and a rock buster.”

However, getting the old limestone and extra dirt out required some “old school methods”. They used wheelbarrows to haul the dirt to the elevator, take it up, and dump it. 

“We could get six wheelbarrows on the elevator at a time,” says Acton. “The men had to push the wheelbarrows anywhere from 60 to 200 feet to the elevator.”

Fields wanted to use the best security system available, so they hired PTI Security Systems to install the gate and keyless entry systems. The facility has the latest PTI security gate systems installed throughout the property. “It was great to see them put in the best access possible,” says David Minton, regional manager with Anchor Parking & Perimeter in Birmingham. “It was also a fun project; working on this historic building, we got to see some things we don’t normally see in other projects.”

Fields says they hired their electrician to put in their camera system. “We have about 36 cameras on the facility, it is a very safe and secure area,” he says.

The finishing touches were put on the building at the first of 2019 and the first 200 units opened on schedule in April. They wanted to pay homage to the great history of the city and had a wooden sign sculpted for the lobby of the skyline. Fields has toyed with the idea of reprinting some news headlines of the city for the lobby, but they’ve yet to do that.

While there were cost overruns, as there are on any project, some were factored in and others were not. Some of those were due to getting caught up in the tariff issues.

Fields adds that the city of Birmingham was great to work with, allowing them to permit as they went along, which kept them to their schedule.

Extra Space Management
Extra Space Storage was chosen early on as the third-party management company. “We engaged them and two other management companies in talks, and the more we looked at them, the more we felt they were the best fit for us,” says Fields.

Extra Space uses their own software and mandates the design of some of the offices. “What makes this site really stand out to the customers is that the site is the former Birmingham News building,” says Amanda Miniard, district manager for Extra Space. “Our customers have made a lot of comments saying that they’re just in awe of how an iconic building with such a rich local history has been repurposed.”

At the third quarter mark, before the additional phase was opened, the facility was 42 percent occupied. “We have an intricate lease-up approach here at Extra Space that is based on the data we’ve collected from running 1,700 stores across the country,” says Noah Springer, senior vice president of asset and third-party management for Salt Lake City-based Extra Space Storage.

The company has a full-scale customer acquisitions marketing team that includes nearly 50 internal team members and over 50 consultants. As well, the company utilizes Google advertising, SEO and web optimization, and other digital marketing approaches. “This store is leasing up well with this tested approach in place,” says Springer.

Fields would not give an exact date for a projected break-even point, but says the store is performing on schedule.

As for his part, Acton says all his construction projects are challenging and this one was no different for various reasons. As for it being a success, he only considers his projects a success if his customers are fully realizing their dream. “I’ll consider this one a full success when it is completely leased up and I’m sure that will happen,” says Acton.

Kerri Fivecoat-Campbell is a freelance journalist based in the Ozark Mountains. She is a regular contributor to MiniCo’s publications. Her business articles have also appeared in Entrepreneur, Aol.com, MSN.com, and The Kansas City Star.