A big box to self storage conversion works because you are buying finished infrastructure at a discount. David Pelusio, who runs Stor It and has been developing real estate for 55 years, puts new ground-up construction at roughly $300 per square foot once site work and infrastructure are in, and buys vacant boxes at $30 to $90 per square foot with sprinklers, bathrooms, asphalt, electrical and HVAC already installed.
That spread is only real if you buy right, and “buying right” in this model is a screening problem, not a construction problem. The retrofit itself is close to a commodity — Janus International ships the doors, walls, ceilings, lighting and security, crews bolt it together in about 60 days, and a third-party manager takes the keys.
What follows is the actual buy box: the supply-per-capita threshold Pelusio gates every deal on, the building sizes national buyers will and won’t take, how outparcels change the math, and the cap rate he underwrites his exit at.
Key takeaways
- Screen supply per capita first. National average storage supply runs about 8.9 sq ft per person; Pelusio targets markets at 50% or less of that. A market at 5.56 still works because adding 1,000 units only pushes it to roughly 6.2.
- Buy for the exit buyer’s size requirement: 100,000+ sq ft is preferred, 75,000 sq ft is acceptable, 60,000 sq ft is hard to sell. National operators moved their model from 45,000 sq ft to 100,000+.
- The retrofit is roughly 60 days from material delivery — Janus supplies doors, walls, ceilings and lighting, Nokē handles locks, and local trades only touch outparcel site work, a few fixtures and sprinkler adjustments.
- Split the outparcels. A land lease, fast food pad or urgent care can be worth around $1.5M on its own, and the plaza sells for more in pieces than as one asset.
- Underwrite the exit below market — a 6.5 cap when comparables trade near 5.5 — and list day one at tiered prices: as-is, as-built, at CO, and three months into lease-up.
From the Real Estate Pros Show
This article draws on an interview with David Pelusio of Stor It on the Real Estate Pros Show, hosted by Joseph Meacham.
Why Vacant Big Boxes Pencil as Storage Conversions
The arbitrage is straightforward. Building a climate-controlled storage facility from dirt runs about $300 per square foot once you account for site work and infrastructure. Vacant big boxes trade between $30 and $90 per square foot, and they arrive with sprinkler systems, bathrooms, asphalt parking, electrical service and HVAC already installed.
The critical point is why these buildings are empty. They are not empty because the corner failed. They are empty because of Amazon and internet retail. The traffic count is still there, the household income is still there, and the feasibility study around the parcel still reads well. Pelusio’s current project sits next door to a Super Walmart.
That is a very different risk profile from a distressed location. You are inheriting a retail site that was underwritten by a national tenant’s site-selection team, then abandoned for reasons that have nothing to do with the demographics of the trade area.
You also inherit physical features that traditional storage doesn’t have. Most big boxes came with loading docks. Most conventional storage facilities are built ground-to-ground with a wall of roll-up doors and no dock at all. Drive-through, climate-controlled product with dock access commands higher rent because tenants aren’t unloading in the heat or the snow.
Pelusio puts the window on this inventory at four to five years. Vacant shopping centers and malls are sitting available across the Northeast and Midwest right now — he names upstate New York as his warmest market, with Ohio and Kentucky next. Once that inventory gets absorbed, the entry basis that makes the model work disappears with it.
The Five Screening Criteria Before You Make an Offer
Supply per capita is the gate. Everything else is secondary.
The national average for self storage supply is about 8.9 square feet per person, and Pelusio treats that number as the oversupply line. His target is a market at 50% or less of national average. The project he is building now sits at 2.2 square feet per person, which he describes as unheard of.
The more useful number for most investors is 5.56. A market at that level is still a good buy, because adding 1,000 units only brings it to roughly 6.2 — comfortably under the national average, and low enough that exit buyers will still underwrite it. That’s the practical ceiling on your screen.
The remaining criteria, in the order he applies them:
- Traffic count. Retail-grade counts are already there on most of these sites.
- Housing. Rooftops in the trade area that generate storage demand.
- Income. The demographic that pays a climate-controlled premium.
- Achievable rent. You have to be in a market where you can charge enough. Drive-through climate control supports a higher rate than ground-to-ground doors, but only if the market can carry it.
The discipline behind the list matters more than the list. Pelusio’s rule:
I don’t have to make the property work. The property has to make me work.
If a market has heavy competition, he walks. He won’t buy in Florida because he can’t buy right there. Geography is irrelevant — Utah works if the criteria clear. What kills these deals is forcing a marginal site through the screen because you already flew out to see it.
I don’t have to make the property work. The property has to make me work.
— David Pelusio, Stor It
Building Size and Unit Count: What the Exit Buyer Requires
Your buy box is set by whoever buys the finished facility, not by what you think you can fill.
Pelusio wants 100,000 square feet or larger. He will take 75,000. At 60,000 square feet it gets difficult, because the national operators who pay the best prices want a lot of units in one asset. Thirty years ago their model was 45,000 square feet. Today it is 100,000-plus.
Unit counts on his own deals show how much zoning drives the outcome. One building converted to 713 units, and the national buyer who took it plans to expand to 1,000 by using the parking lot in addition to the building. A second site is capped at 432 units because zoning prohibits exterior units — everything has to stay inside the shell.
That difference determines which buyer tier you are selling into:
- Tier one — national operators. Public Storage, U-Haul, large national owners. They want maximum unit count and will pay for scale.
- Tier two — regional and smaller public owners. Their business plan is to acquire and manage facilities of 500 units or fewer. There are plenty of them, and they are the natural home for a 432-unit asset.
Check the zoning on exterior units before you underwrite unit count. Where the ordinance allows it, two or three acres of surplus parking behind the building takes prefabricated units that bolt straight to the concrete or asphalt — a cheap way to move a deal from tier two into tier one. Where it doesn’t, cap your projection at what fits inside the walls.
How the Retrofit Actually Gets Done in 60 Days
Treat the buildout as a purchased product, not a construction project. Janus International supplies the doors, walls, ceilings, lighting system and security system. Nokē provides the lock system. Their crews come into the cleared shell and assemble the interior — Pelusio’s word is “like Legos” — and the facility is open in about 60 days from the day material arrives.
Local contractors handle a short list of items only:
- Site work associated with separating the outparcels
- Relocating a few electrical fixtures (these buildings already have plenty of light, it usually just needs repositioning)
- Adjusting the existing sprinkler system to the new layout
Nothing on that list is major. The bulk of the capital and the bulk of the schedule is the storage system itself, which is why the timeline is predictable enough to underwrite.
The product you end up with is climate-controlled, drive-through, and usually dock-served. That combination is what supports the rent premium. Conventional facilities are built ground-to-ground with rows of exterior roll-ups and no protection from the weather. Tenants pay more not to load in the rain.
One timing caveat from Pelusio’s most recent deal: the reported cycle was 90 to 120 days, but that was a flip. He sold the building without completing the buildout, because the buyer wanted to finish it themselves. That happens more than he’d like — he has two offers on the second property from buyers who don’t want him to build it. Good sites with good data attract buyers faster than the construction can run.
Exit Pricing, Outparcels and the Flip Timeline
The property goes on the market day one, at four different prices.
- As-is — shell, before any work
- As-built — buildout complete
- At CO — certificate of occupancy in hand
- Three months into lease-up — with revenue on the books
The price rises at each stage because the revenue does. A buyer who wants to skip risk pays for the later stage; a buyer who wants the development spread takes it earlier.
Pelusio underwrites his exit deliberately below market. He models a 6.5 cap when comparable facilities are trading near 5.5, and says a 7 cap still works fine. The point is to leave meat on the bone so the next owner makes money and comes back for the next one. On the first deal, that math was an $8M purchase and a $10.1M sale, contributing to roughly $10M of first-year volume.
The outparcels are where a good deal becomes a better one. If the plaza includes a land lease, a fast food pad or an urgent care, split them off and sell them separately. The assets are worth more apart than together, and a single land lease can be worth around $1.5M depending on the tenant. On one current project, converting excess parking into an additional outparcel added value while reducing the parking field to what the storage use actually needs.
The outparcel income also supports cash flow while the back building is under conversion. Stated business plan hold is one year to a year and a half.
The Real Constraint: Equity, Not Deals
Pelusio can run two projects at a time, and the limiting factor is not sites or debt. It is investors. He has the financing lined up, he can find the locations, and the team is built. Throughput is capped by how much equity he can raise.
He is candid that this is the part of the business he likes least. After 55 years of finding, fixing and flipping real estate, he spent the last year and a half learning to build pitch decks and data rooms and to run a capital raise — and he still calls it his least favorite job.
What he did instead of becoming a great fundraiser was assemble a team that makes each project repeatable. He calls it the silver platter, and moves it from deal to deal:
- An analyst who handles underwriting, site selection, construction costs and construction supervision
- Virtual assistants running pitch decks and data rooms
- SEC attorneys and SEC accountants
- An architect who is strong on codes and zoning, and an established engineering firm
- A third-party management company ranked sixth in the country, running 300 facilities — they take the keys at completion and fill the building
The cash flow reality underneath all of it: he is carrying mortgage payments on real estate that won’t close for 60 days. Cash flow is always an issue, at every stage of a career, and nobody should be told otherwise.
His two hardest-won rules are worth more than the rest of the operating detail. Know when to walk away — don’t try to make something a winner that isn’t, and don’t get into a deal without several exits, one of which is getting out. And never fall in love with a piece of real estate.
Frequently asked questions
What is the minimum building size for a big box to self storage conversion?
Practically, 75,000 square feet is the floor if you want a clean exit, and 100,000 square feet or larger is preferred. At 60,000 square feet the sale gets difficult, because the national operators who pay the strongest prices want high unit counts in a single asset.
The buyer requirement has moved over time. National operators built to a 45,000-square-foot model 30 years ago; today they are looking for 100,000-plus. If you buy a smaller box, you are selling to the second tier of buyers whose business plan tops out around 500 units.
How do you tell if a market is already oversupplied with self storage?
Use square feet of storage per person. The national average is roughly 8.9 sq ft per capita, and that is the level at which a market is considered to have enough. Pelusio’s rule is to buy only at 50% or less of national average.
Run the math forward, not just backward. A market sitting at 5.56 sq ft per person is still a buy, because adding 1,000 units typically only moves it to about 6.2 — still well under the national number, and still supportable for the next owner.
How long does it take to retrofit a vacant big box store into storage units?
About 60 days from the day the material arrives. Janus International supplies the doors, walls, ceilings, lighting and security, Nokē supplies the lock system, and their crews assemble the interior in the open shell.
Local trades handle only the peripheral work: outparcel site work, relocating a handful of electrical fixtures, and adjusting the existing sprinkler system. Add time on the front end for closing, permits and clearing the shell — Pelusio’s most recent transaction ran 90 to 120 days, but that was a flip where the buyer completed the buildout.
Who buys converted big box self storage facilities, and at what cap rate?
Two tiers of buyer. National operators — Public Storage, U-Haul and similar large owners — want maximum unit count and prefer 100,000-plus square foot assets. Below them sits a deep bench of regional and public owners whose model is to acquire and manage facilities of 500 units or fewer.
On pricing, Pelusio underwrites his exit at a 6.5 cap while comparable facilities trade closer to 5.5, and says a 7 cap still works. Underwriting conservatively leaves margin for the buyer and makes the asset easier to move quickly.
Is it better to sell the whole shopping center or split off the outparcels?
Split them. The assets are worth more separated than together. A pad occupied by a land lease, fast food operator or urgent care attracts a different buyer pool than the storage building and prices on its own metrics — a single land lease can be worth around $1.5M depending on the tenant.
There is a cash flow benefit too. Outparcel income helps carry the project while the main building is being converted, which matters when you are making mortgage payments on real estate that won’t close for 60 days.
The bottom line
Before you look at another vacant box, pull the storage square feet per capita for its trade area and compare it to 8.9. If the market isn’t at or below half that number, the rest of the analysis doesn’t matter — and the four-to-five-year window on this inventory means the time spent on marginal sites is time you don’t get back.
