Buy and expand - not as easy as I thought (fin)

[this is a continuation of https://perrys-newsletter.beehiiv.com/p/buy-and-expand-not-as-easy-as-i-thought-part-2 ]

The "demo party" was pleasant. I fired a shotgun inside a house (the old leasing office was in a ranch home on the property), among other antics. 

The proprietor of the hair salon occupying a building out front was crushed about the demolition plans and had her realtor friend call me so many times about coming up with an alternative that I had to block her. She threatened to lock herself in the building.

The slowness of the demolition and sitework guys drove me nuts. But they were the only game in town, which made their pricing unbeatable. And going out of town for that help would’ve cost me more – I knew because I tried, before construction started. Expanding two facilities miles apart also slowed us down; I couldn’t double up on labor so had to build them one at a time.

My GC became overly dependent on the sitework guy, who ended up serving as the superintendent for most of the project. I was told we would have a construction trailer we could lease out of, but the sitework guy brought a windowless “hauler.” I remember seeing my poor leasing personnel struggle with a tarp as the dumpy old trailer leaked on a rainy day. 

Around that time we lost a leasing manager – not the first. The first was before even taking ownership: Nancy, who’d been there for years and would’ve been perfect, left because the property management company did such a shitty job of onboarding her.

Once we got the new buildings constructed, the staff was able to move into an indoor storage unit – my GC didn’t want them in the leasing office until we had certificate of occupancy – still a depressing work environment. It’s a wonder we still have anybody left from that phase.

At some point during construction my sitework guy had a heart attack on-site, was technically dead for a minute or so, then was revived. Eventually my GC brought in a proper superintendent from another project in North Florida, had to fire an electrical subcontractor who just wasn’t giving it his all, and we finally applied for a C of O.

Unfortunately they dissed my detention pond, even though it was built exactly to the plans that they approved, because it was holding water. My civil engineer argued there was no indication from them beforehand that it was supposed to be a “dry pond,” but the county wasn’t having it.

We would have to build a way for the water to drain into the sandy material beneath the red clay. How far down was that sandy material? Well, to find out we’d have to get another geotech (i.e. more borings). And once that was clarified, we would build something ridiculous called a “sand chimney.”

Thank god I was able to open these facilities with a temporary CO and start leasing. Lease-up has been positive but nowhere near as fast as I would like, and the culprit is the lower-density location. 

The property manager who took over before “TCO,” who has crushed it for me on other projects and is very cost-focused, had planned to focus more on the higher-traffic location first, instead of spending a little more money to have full-time on-site leasing at both stores. I went with it, thinking a leaner model could hit profitability faster, but this was a mistake looking back. Once I realized that the lower-density location was leasing about ~50% as quickly as the other store, I told them to spend the money and do full-time hours at the lower-density store. 

They somehow found a woman with a British accent and military experience, and I am certain she will crush it.

Side note – I had mentioned a pharmacy that I left standing. The tenant, a national compounding chain, went bankrupt so I ended up offering it for lease or for sale. It was already subdivided, and we could get more for it by selling it separately than by including it in an exit to a storage operator. We are now under contract to sell it to a retail user.

Long story short: insanely slow to permit, insanely slow and expensive to build, and multiple cost overruns, some of which I didn’t even get to (but all covered by contingency).  We’re 63% full and the rents in the market remain strong/in line with pro forma. Wish us luck on the next few months and a possible sale!