Expansion and Adversity

When Lloyd says, “We can’t move in the warehouse!” or “There’s no room to put new inventory at the shop!”, I tell him we need to sell the things that have been around for a while to make room.

Lloyd has other ideas. He would rather buy another warehouse, in addition to the existing space, to make more room for inventory. While our customers may collect jukeboxes, video games or advertising, I think Lloyd wants to collect buildings. In the past year, he has started a small collection, and I think he’s picking up steam.

It has been an adventure and an education. I am his partner, although a cautious, and sometimes reluctant, one. I wasn’t thrilled about the purchase of 339 West Antietam Street. It had been vacant for years and needed a lot of work, although it was immediately usable. It needed so much done and was not very attractive, even a little creepy, in the beginning. Still, the cost per foot was so much less than the warehouse space that we were renting in Gaithersburg at the time that the move made sense. I thought then that it would take years to fill that place up. It only took months.

The first time Lloyd walked me through it, it was dusk. The electricity was not on and it was dark. There were puddles on the floor here and there from leaks in the roof and a snake skin hanging from a water pipe. There are stone walls on the underground level from the days when the building was a bakery at the turn of the the last century.

Before we purchased 339 W. Antietam St., the Colbys had been running a pirate themed store in the building until Mr. Colby became ill. Before that it was R.D. McKee Hardware. Before that it was Castle Bakery, all the way back to the days of horses and carriages. The old place has history.

At this point, it has been improved considerably but is hardly finished. After a new roof, new front porch and railing, repaved driveway, many new windows, new lights, security, wiring, fencing, carpet, and concrete for structural concerns, it is like a new place, almost.

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We rolled on some red paint to see how we liked the color before hiring professional painters to point the masonry and prime the building properly before painting.

We tested our the red paint on the yellow brick before hiring professional painters to do the job right.

The painters are in the process of priming the building for a final red coat of paint here.

Here is 339 West Antietam Street after the painting was finished in September of 2013.

Still, Antietam Street is bursting at the seams with inventory. Last year, Lloyd had his eye on a vacant warehouse on Franklin Street. He loved that it was about 37,000 square feet, on one level, still in Hagerstown and not too far from the shop on Antietam. Our warehouse on Antietam is three stories with stairs, ramps and a freight elevator. Each level is chopped up into many rooms. Lloyd wishes for more ease in moving inventory in and out than Antietam offers. He also wanted to get all of our valuable inventory out of the lower level of Antietam Street and have more parking for trailers and trucks.

As we learned in June of 2014, the city of Hagerstown has an old sewer and storm water system that can not handle a very sudden and heavy rainstorm. On June 24, 2014, a storm hit Hagerstown that overwhelmed those old pipes. There was so much runoff in such a short period of time that the manhole cover blew off in the street in front of our building and a geyser of water rushed out onto the street and down onto our property.

 

Here is the water bubbling up from the pipes on our street in June 2014.

Here is the water bubbling up from the pipes on our street in June 2014.

The flood filled the backyard of the property to 6 feet deep.

The flood filled the backyard of the property to 6 feet deep.

The flood was all the way up to our loading dock.

The flood was all the way up to our loading dock.

In that flood, we had 2 vehicles parked out back. Our 2 month old Isuzu box truck was submerged and totaled. A pickup truck that was paid for was totaled. Inches of water seeped in and filled the lowest level of the building, causing damage to inventory. Lloyd had to get the building dry again. He had back doors that we did not use sealed up permanently with cinderblock. Unbelievably, it happened again a week later!

The building is not near a stream and not in a flood zone. It was purely a city issue as a result of pipes underground that were too small to handle the amount of stormwater runoff. The City of Hagerstown agreed that they needed to take action to remedy the situation. They put in a new 24 inch drain pipe and a backflow diverter at the end of the pipe, which helped dramatically. However, Lloyd has been unwilling to risk further losses by leaving trailers or trucks behind this building since then. He watches the security cameras nervously each time a strong summer storm is predicted. Lloyd was looking for a solution to these problems.

The owners of the Franklin Street property wanted more than I really wanted to spend for a building that would require a couple hundred thousand dollars in additional work after purchase. In short, it was clearly going to be a project, like Antietam was. My husband likes a diamond in the rough. It is fair to say that he has adopted this old city, believes in the future potential of it, and wants to be part of making it better.

Lloyd is determined and persistent. He took all of the kids to see the Franklin Street building. He took photos of it. He took me to see it. He talked to the realtor and the city and started negotiating to purchase it. There were multiple owners. Two wealthy brothers had owned the building. Half was owned by the estate of one brother who was no longer living. The other half was owned by an elderly man who did not make negotiations easy. When Lloyd would ask me if I was excited about the building, my answer was negative. I explained that I would not get excited about a building that I wasn’t sure we would actually buy. The seller was slow to respond to any inquiry and did not reveal information about environmental issues on the property. The process dragged on for a good six months. We had a contract to buy the building.  However, we finally cancelled the contract because of fuel storage tanks buried on the property that would cost a substantial sum to dig up and then get a closure letter from the Maryland Department of the Environment to the satisfaction of the lender, which Lloyd didn’t know about when he first put a contract on the property.

I felt relief. But Lloyd still needed space. He learned of another nearby building on Baltimore Street that the owners were willing to sell. It had 20,000 square feet of commercial space and a second story residential floor with two apartments. The apartments had been leased for the previous seven years by a sober house. The rent from the apartments was enough to cover a mortgage on the entire building, giving us all that commercial space for close to free. The building needed some renovation, but was immediately usable for storage, and the owners were willing to let us start moving in before settlement. The purchase was incredibly quick and easy. This was a deal I felt great about from the beginning. It made sense. We settled on the property in January 2016.

125 East Baltimore Street as it appeared when we purchased it in January 2016

I began to learn about being a landlord for the apartments. I registered the apartments with the city and state and followed the required procedures for lead paint compliance. Lloyd quickly began filling the commercial space with inventory and consulting with an architect about plans to renovate.

We had only owned the building two months when we received a call one evening while out to dinner. Lloyd said, “It’s Ben. I should take this.” He listened and then said into his cell phone, “You’re joking!” When he hung up, he explained that the apartments at the new building were on fire. The fire department was on the scene and everyone had got out of the building safely.

The blaze on Baltimore Street

The blaze on Baltimore Street

By morning, the apartments were utterly destroyed and the other two floors were drenched in water and reeked of smoke. Fortunately for us, the original use of the building had been as a car dealership and the street level and basement level were made of concrete and steel. Although structurally sound, we were facing the need for new wiring, drywall, roof, ceiling tiles, floor tiles, and lighting. We had hundreds of machines in storage on both levels with smoke and water damage.

Burned out apartments on Baltimore Street

Burned out apartments on Baltimore Street

There was an investigation by the Fire Marshal into the cause of the fire. In short, the wiring was old and too many things had been plugged into outlets in the apartment. There were power strips plugged into power strips, which we learned about after the fire.  The Fire Marshal said it had smoldered in the wall until it was too late. We recovered what we could of the remaining possessions of our tenants and returned those items to them, sifting through the rubble. Surprisingly, some closets contained clothes untouched by the fire, but damp and smelling of smoke. I have never seen anything like it! The Wells House tenants were relocated, and we began to deal with the restoration of our damaged building.

To view a news story about the fire, click on this link:

Hagerstown Fire T.V. News Report

Image of smoking building after fire

We were happy that we carried good insurance on the building and our business, but it has been a lot of work for Lloyd to meet with contractors, insurance adjusters, getting city permits for renovation, learning how to bring an old downtown building up to code, and of course discussion with the lender about whether or not to rebuild the apartments. It is still very much a work in progress. Erie Insurance was fair, giving us a year’s worth of rent from the lost apartments and a fair price for the equipment that we had in storage there. Of course they also paid for demolition of the apartments that we decided not to rebuild, and a portion of the new roof where the fire had damaged the old one.  Further repairs are under way for the damage cause by smoke and water.

Most of the equipment stored there was unsold. Lloyd had to find replacements for those items that had already been sold or offer refunds.

The aftermath of the fire.

The aftermath of the fire.

 

Baltimore Street under repair, after the apartments have been demolished

Baltimore Street under repair, after the apartments have been demolished

On the roof of Baltimore Street as the workers demolished the apartments

On the roof of Baltimore Street as the workers demolished the apartments

We are making progress on the renovations. They should be done in the next few months.

We are making progress on the renovations. They should be done in the next few months.

We could no longer use that building on Baltimore Street for storing new inventory, since it had been condemned by the city. Completion of repairs is still months away. Lloyd still needed space. He had never given up on the Franklin Street warehouse. He learned that the underground tanks had been pulled by the owners since we cancelled our contract, and they had received the necessary closure letter from MDE. In addition, the one living owner of the property had died and the property was now owned by his estate and the estate of the brother.

Negotiations began again for the Franklin Street property. Once more this proved to be a very long process. Lloyd could not wait to get into the building and to start putting equipment inside. The owners agreed to negotiate occupancy prior to settlement but never followed through. We had to wait until we finally settled on the Franklin Street property on September 15, 2016. The great thing about this contract, compared with the original contract, was that we acquired the adjacent empty lot this time, at no additional cost. It is in the process of being surveyed for a parking lot and landscaping. Already, the lot has been cleared. Already, power washing in preparation for painting the building has begun. Already, windows and lights for the outside of the building have been ordered. Electrical and plumbing work have been arranged. My husband is on a mission to make this building a showplace, ready for a grand opening by spring 2017.

Inside Franklin Street, Sept 15, 2016

Inside Franklin Street, Sept 15, 2016

View 2 of the Franklin Street interior

View 2 of the Franklin Street interior

Exterior side view of Franklin Street

Exterior side view of Franklin Street

Front exterior view of Franklin Street

Front exterior view of Franklin Street

This location is going to be retail, unlike the warehouse on Antietam Street. Inventory will have price tags! The public will be welcome, where currently an appointment is needed or the good luck to find someone at the warehouse to let you in. In fact, the doors to our warehouse are currently kept locked. It is not a retail store. Franklin Street will be a store!

We don’t currently repair anything, but we expect to have a repair shop on the premises of our new store. There will be a nice-sized landscaped parking lot for our customers with loading docks for sea containers or pickup trucks.

This is the vacant lot, just cleared of brush, with the new building in the distance.

This is the vacant lot, just cleared of brush, with the new building in the distance.

Clearing the lot to prepare for paving a parking lot

Clearing the lot to prepare for paving a parking lot

The life of a business owner is full of opportunities and obstacles. We have endured flood, fire, and a significant employee theft loss in the past 3 years, yet we have continued to prosper in spite of these setbacks. The theft is another story, as much about betrayal as about financial loss. Lloyd has been steady and strong through it all, just working through the issues one day at a time. We have learned that if it can go wrong, it will. Just prepare as best you can and keep moving forward. Has he had sleepless nights? Sure! But we are excited about the future!

Would you believe that Lloyd already has his eye on another building!? It’s true! Stay tuned for further developments!

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