1950s Industrial Building Converted to 393 Climate-Controlled Storage Units

THE PROPERTY

A Vacant, 24,000 SF Four-Story Industrial Building Built in 1950, Fully Converted to a Climate-Controlled Self-Storage Facility in Paterson, New Jersey

The property at 204 College Boulevard in Paterson, New Jersey is a four-story masonry brick building totaling 24,000 rentable square feet on a 0.15-acre parcel, constructed in 1950 and historically used for industrial and warehouse purposes. The building was acquired vacant, with conversion to self-storage beginning immediately following close. The sponsor's plan called for the installation of 393 climate-controlled self-storage units across the building's four floors, along with a dedicated leasing office established at the front of the building to support the customer experience from initial inquiry through lease execution. A freight elevator and loading dock were preserved as part of the conversion, providing operational infrastructure for customers moving items in and out of the facility. The building also carries an existing rooftop cell tower lease with T-Mobile Northeast, in place since 2001, generating approximately $32,000 per year in supplemental income during the loan term.

The converted facility offers a range of unit sizes designed to serve both residential and small business storage customers. All units are climate-controlled, a product standard that commands premium rental rates relative to non-climate storage and addresses the needs of the dense renter-occupied population surrounding the property. A Phase II environmental assessment completed in April 2021 identified no soil contaminants above New Jersey Department of Environmental Protection limits, clearing the site for conversion without remediation obligations.

THE RRA SOLUTION

$3,074,000 First-Position Loan Funding the Acquisition, Full $1,070,000 Conversion Budget, and Reserves Through Lease-Up

RRA provided a $3,074,000 first-position loan closing November 15, 2021, structured to fund every component of the sponsor's business plan: acquisition, the full capital expenditure budget, and reserves to sustain the property through conversion and lease-up.

The appraisal established a going-in value of $2,950,000 and a stabilized value of $6,590,000, reflecting the full conversion and lease-up. The interest reserve structure, combined with the holdback facility, ensured the sponsor had sufficient liquidity to execute the conversion without interruption. The loan was repaid in full in February 2025, approximately 39 months after origination.

THE CONVERSION

Ten Months of Rezoning, Eight Months of Construction: From Vacant Industrial Shell to Fully Operational Climate-Controlled Facility

The path to conversion began well before the loan closed. The sponsor first placed the property under contract in November 2020 and spent the following ten months negotiating with the City of Paterson Planning and Zoning Department to obtain approval for the conversion project. The city's approval required the property to be rezoned, a process that the sponsor navigated to completion before the acquisition transaction closed. This pre-closing permitting work represented a significant operational commitment by the sponsor and was central to the underwriting, as it demonstrated both the viability of the conversion and the sponsor's ability to execute a complex municipal approval process.

Once the acquisition closed in November 2021, conversion began immediately. The $1,070,000 capital expenditure budget covered $794,650 in interior renovation and conversion work, including the purchase and installation of storage units across all four floors, interior climate control systems, LED lighting, framing and insulation, access control, fire sprinkler systems, elevator upgrades, and the buildout of the customer leasing office. The remaining $155,350 was allocated to deferred maintenance and exterior improvements, including new exterior signage, roof repairs, security cameras, and exterior masonry and brick repair. A contingency and construction manager fee budget of approximately $120,000 rounded out the total. The full conversion was completed within an eight-month timeframe, within the range projected at underwriting.

THE LOCATION

Downtown Paterson, Within One Mile of Interstate 80, Serving a Dense Urban Population That Is 83% Renter-Occupied Within One Mile of the Property

The property is located in downtown Paterson, New Jersey, at the intersection of College Boulevard and Van Houten Street. Paterson is New Jersey's third-largest city and one of the most densely populated urban centers in the New York metropolitan area. The property sits near the intersection of Memorial Drive and Broadway, two of downtown Paterson's primary corridors, and is within one mile of Interstate 80, a major east-west freeway that connects northern New Jersey to the George Washington Bridge and the broader tri-state area. Proximity to New Jersey Route 19, also known as the Paterson Peripheral, provides additional connectivity to US Route 46 and the broader regional highway network.

The population within one mile of the property totals approximately 70,400 people as of 2021, growing at 0.4 percent annually since 2010 with further growth of 0.6 percent per year projected over the following five years. Of total households within one mile, 83 percent are renter-occupied, a figure that more than doubles the national renter-occupied rate of 30.9 percent. Within three miles, renter-occupied households represent 54 percent of the total. Dense renter populations are the primary driver of self-storage demand, as renters typically occupy smaller units with less on-site storage capacity and generate higher rates of storage unit turnover. The surrounding demographic profile represents one of the most favorable demand conditions for self-storage in the region.

THE MARKET

Paterson Self-Storage Market: 4.06 SF Per Capita Supply Density vs. 5.9 SF National Average, with 11 Competitors in the 2-Mile Trade Area

RRA's underwriting identified 11 competing self-storage properties within a two-mile radius of the property, the standard trade area used to define a self-storage facility's competitive market. Those 11 properties represent a combined 6,005 units across 685,079 rentable square feet. Despite this existing competition, the market's self-storage supply density at the time of underwriting was just 4.06 rentable square feet per capita, well below the national average of 5.9 square feet per capita. This shortfall relative to the national benchmark indicated that the trade area was structurally undersupplied relative to the demand its population would be expected to generate.

Among stabilized self-storage properties in the trade area, the weighted vacancy rate was 8.4 percent, a healthy figure suggesting that existing supply was being absorbed without meaningful disruption. Three additional properties, representing approximately 300,000 square feet, were proposed or in initial lease-up at the time of underwriting, and were identified as future competitive supply. The presence of inbound competition was factored into the stabilization assumptions without materially changing the thesis: the area's combination of high renter density, limited on-site storage among residents, and persistent supply shortfall relative to national norms created conditions in which a well-located, well-operated climate-controlled facility could reach stabilized occupancy within the loan term.

THE SPONSOR

A Northern New Jersey-Based Self-Storage Operator with Five Stabilized Properties in the Region, Bringing Established Infrastructure and Local Expertise to the Conversion

The sponsor is a northern New Jersey-based self-storage company with five stabilized self-storage properties operating in the region at the time of underwriting. The firm's existing portfolio provided operational infrastructure, a management platform, and direct familiarity with northern New Jersey's self-storage demand dynamics that informed the underwriting of the Paterson conversion. The sponsor's decision to pursue the property began in November 2020, over a year before the acquisition closed, and included leading the successful rezoning effort with the City of Paterson on their own, before any loan had been committed.

The sponsor's local presence and regional reputation were also relevant to lease-up projections. Self-storage customers in the New York metropolitan area often choose storage operators they recognize, and an operator with an established footprint in the market is better positioned to generate early lease-up momentum than an out-of-market entrant. The combination of a known regional brand, an in-place management platform, and a strong understanding of northern New Jersey rental demand made the Paterson conversion a logical extension of the sponsor's existing business, rather than a speculative entry into a new market.

The building sat vacant for years. Ten months of zoning approvals. Eight months of construction. Then 393 storage units in downtown Paterson, serving the densest renter market in New Jersey.