Magellan Storage Los Angeles
In 2011, Magellan acquired a 167,217 SF self-storage portfolio composed of two properties in Downtown and South Los Angeles located at 801 E Commercial St and 700 E Slauson Ave, respectively.
The properties had gone through a conversion process some seven years before but were suffering from significant maintenance, operational and marketing issues with occupancies languishing in the mid-60% range for the downtown property and in the mid-50% range for the Slauson property. This favorable buying opportunity was augmented by Magellan’s confidence in its proven brand, operational strengths and redevelopment expertise. When these considerations were combined with the improving market and demographic conditions in downtown Los Angeles, the enormous population density surrounding both properties, the significant barriers to entry and the seller’s timing pressures given the impending expiration of a fund, Magellan believed it had found an investment opportunity with excellent potential.
In order to elevate the assets to the standards for which Magellan Storage is recognized and effectively communicate that message to the market, Magellan overhauled the properties’ physical, operational and marketing structures.
Physically, Magellan initiated a $1.5 million redevelopment plan, adding a Business Center, increased security with additional cameras and alarms, upgraded offices, exterior finishes and signage. The exterior additions included Magellan’s signature brick, signage and lighting design to capitalize on both the 400,000 cars per day driving by the 101 freeway in downtown and the significant local traffic on Slauson Avenue.
In addition, both facilities had unique conditions that needed to be addressed. For the downtown facility, which was comprised of three buildings cobbled together over a period ranging from 1906 to 1941, Magellan implemented a required seismic retrofit, added an exterior lift to improve access, and creatively reconfigured an entire section within the facility that had previously been converted from office use.
For the Magellan Storage - Slauson facility, security was materially improved by adding gates and electronic keypads on interior hallways just inside the loading area and access was improved to the back by adding a new loading ramp.
Operationally, Magellan increased staff at both locations by providing part-time sales and customer service assistance along with a full-time maintenance employee to ensure that the facility managers could focus on supervising all business areas. To further improve operations, Magellan converted the management software to sitelink for dynamic pricing, lease monitoring, and improved reporting. New amenities included free Internet access and shipping for business tenants, interior music throughout, and complimentary drinks and snacks for all customers. To effectively communicate its message, Magellan more than doubled the marketing and advertising budgets of each property, targeting residential and commercial customers within a 3-5 mile radius through print and digital advertisements, direct mail and social media.
These physical, operational and marketing improvements resulted in significant increases in the occupancy levels of both properties, with occupancy at Magellan Storage - Downtown rising from 67% in 2011 to 94% in 2015, while Magellan Storage - Slauson experienced a similar increase in occupancy from 59% in 2011 to 91% in 2015. The increases in occupancy levels allowed Magellan to elevate rents and ultimately resulted in a substantial income improvement at both facilities.
The combination of a successful rehabilitation plan and a well – structured and timed sales program allowed Magellan to optimize the exit opportunity in January 2016.