SafeHouse Storage, a self-storage operator with three locations in the Philippines, expects to open a fourth facility this year and eventually expand to at least 20 locations in the Manila metropolitan area. The company is owned by brothers Carlo and Mark Coronel, who believe the rise in condominium development across the region will continue to drive self-storage demand, according to the source.

Residential-condo development is expected to grow from 91,000 units last year to about 140,000 by 2020, the source reported. With some properties smaller than 19 square meters and almost no residential storage space, the Coronels believe they can capitalize on the construction boom. “Condominium developers are slowly expanding, and it has a strict correlation to the market we want to capture,” Carlo told the source.

SafeHouse currently operates one facility in Taguig and two locations in Quezon City. Its portfolio comprises about 800 units. Its fourth property is under development in Makati. “I’d like to think we can build at least a total of 20 branches around Metro Manila,” Carlo said. “There have also been invitations to bring it to Cebu.”

SafeHouse properties typically feature “roaming security” and offer moving services and 24-hour access, the source reported.

Founded in 2010, SafeHouse has been credited with being the first self-storage operator to open in the Philippines. It operates under the umbrella of CCMC Development Corp., a real estate company that offers warehousing services, according to the SafeHouse website.

Update 9/29/17 – The Ridgecrest Planning Commission on Tuesday was scheduled to discuss the site plan submitted by A-American Self-Storage for its Norma Street facility expansion. The project is expected to add four new structures comprising 18,316 square feet and 54,462 square feet designated for the vehicle-parking area, according to the source.

The 3.6-acre parcel is owned by KBM Properties LLC and Norma-Ridgecrest Storage Partners LLC of Los Angeles, the source reported.

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8/28/17 – The Ridgecrest, CA, Planning Commission on Tuesday unanimously approved an expansion for A-American Self-Storage at 1430 Norma St. The operator plans to add 107 new storage units and a large central area for vehicle parking.

In his application, A-American Vice President Josh Paterson requested to complete the facility’s third phase, according to Gary Parsons, the outgoing city planner. The property is zoned commercial.

Prior to the vote, chairman Warren Cox asked about dust mitigation. A representative for A-American who attended the public meeting was unable to provide an answer, the source reported. Cox also said he wanted to ensure the conditions for approval were met.

The city council requested that planning commissioner Solomon Rajaratnam abstain from the discussion because he works in the building adjacent to the site. No one from the public commented on the proposal.

Founded in 1973 by owner Edmund C. Olson, A-American operates 19 properties in California, Hawaii, Missouri and Nevada.

Smart Storage, which operates six self-storage facilities in Northwest England, will complete a £3 million expansion next month of its property in Altrincham, a town in Trafford, England. The 25,000-square-foot addition will double the amount of rentable space at 31 Craven Road, the company’s flagship location, according to a press release. Once complete, the property will contain more than 45,000 square feet of storage space in 450 units. It’ll also include 20 office spaces and three trade counters for personal and business use. 

“We’re really excited to open the extension to our store in Altrincham. It’s going to provide a much-needed boost to the lettable space we have. Our main aim is to provide high-quality, competitively priced self-storage services to both domestic and commercial users,” said CEO Mike Wilson.

Smart Storage is seeking to capitalize on the increased demand for self-storage in the country. “We have seen a huge upturn in demand for self-storage over the past 12 months in the U.K.,” Wilson said. “A lot of our customers have been using our storage facilities for over two years now, and there is more emphasis on long-term storage solutions. The new units are perfect for both domestic and commercial use, as we can offer a wide range of small and large units.”

Smart Storage was founded in 2004. In addition to traditional storage, its properties provide rentable office space for businesses.

Real estate developer and property owner Rosenblum Cos. this week opened ValuSpace in Albany, N.Y., the company’s first self-storage facility. More than 50 people, including community members and local government officials, attended a grand opening on Tuesday. The $7M property at  40 N. Russell Road will be managed by Storage Asset Management Inc. (SAM), a property-management and consulting company specializing in self-storage. Camila D’Orazio-Diaz, who previously worked in guest relations for the Hilton Albany, is the property manager.

Located between The Home Depot and Westgate Plaza Price Chopper, the three-story facility comprises 88,000 square feet of storage space in 630 units. It includes a retail office that sells moving and packing supplies as well as code-controlled gate access, individually alarmed unit doors and video cameras.

Rosenblum purchased the property in June 2016. The project included removal of a blighted single-story building from the 1950s. The existing easement road was also repaired and repaved, the website stated.

“While ‘class-A’ is a description typically associated with office space, the high quality of condition, location and client experience it connotes is the goal for all of our properties,” said CEO Seth Rosenblum. “We created ValuSpace to provide a class-A self-storage experience at a competitive price that benefits our customers while contributing to the city’s positive momentum.”

The company chose the site due to the multi-family residences that have been recently developed or are under construction within three miles of the property. “With the growth of new residential development across the city, especially in Downtown Albany, the need for personal storage space has increased,” said Albany Mayor Kathy Sheehan. “This added amenity is a prime example of how underutilized spaces can be repurposed to fit the needs of our community.”

Rosenblum Cos. began construction this month on a second ValuSpace facility at 850 Hoosick Road in Brunswick, N.Y. Founded in 1979, the firm develops, manages and owns commercial real estate properties in the Capital Region of New York. Its portfolio includes industrial, retail, self-storage, mixed-use and commercial office properties totaling more than 1 million square feet of space. It also provides property-management and related services.

 

Founded in 2010 and based in York, Pa., SAM oversees more than 90 self-storage facilities as well as three UPS Stores in 18 states, primarily along the East Coast.

 

By Michelle Gigowski

Now more than ever, self-storage operators are stretching themselves to offer as many add-on products and services as possible, with the intent of generating additional income. However, I would recommend against investing in any amenities without sufficient data to support the decision.

To achieve a competitive advantage, you must fully understand your markets and the requirements of potential tenants. Before you integrate ancillary products or services, it’s imperative to understand the dynamics of the surrounding area and how they’re likely to impact your business goals. Whether your market spans a quarter-mile radius in Manhattan, N.Y., or a three- to five-mile radius in a rural town, understanding its undercurrents will help you build a balanced investment plan to meet and exceed the needs of your customer base while limiting your exposure to unnecessary risk.

Mining Your Market

Following are several metrics and questions to help you gather market intelligence and grow more comfortable with the particulars of your area. Together, these items form a great starting point for analyzing your market. In self-storage, this is typically a three- to five-mile radius surrounding a facility, where potential tenants live or work.

• Population: This is the total number of people present within your market.
• Tenant mix: Though the typical self-storage base is dominated by residential customers, it also includes businesses, students and military employees. If your facility is near commercial businesses, a military base or university, you can tailor your marketing to these audiences.
• Basic demographics: What’s the average age of customers in your market? Are they mostly male or female? What’s the average level of education? What’s the average home value and level of household income? This type of statistical data can easily be found via a Web search or U.S. census data for the surrounding city.
• Rent vs. own ratio: Using online search tools, identify the city’s ratio of apartment and home renters to owners.
• Crime rate: What is it in your area, and how does it compare to state and national averages?
• Microeconomy: Is the community expanding, contracting or constant? Your advertising and move-in promotions may vary depending on demand and how the market is performing.
• Available supply: Is the area undersupplied, oversupplied or at a comfortable equilibrium? A common way to understand this is to quantify the average rentable square footage per person in the area. The national average is roughly 8 rentable square feet per person.
• Real estate and construction outlook: Is your facility in an urban area with lots of building? Will it soon be surrounded by housing developments or assisted-living communities? Knowing the outlook for expansion can help you develop attractive promotions and tailor amenities to your new tenant base.
• Competition: Who and where are your competitors?
• Rate-increase tolerance: Think about your current tenants. Do they visit the facility often? Is their billing address within your target market? If the answer is no, they’ll likely tolerate a 1 percent to 3 percent rate increase every three to nine months.
• Permits and zoning: Are you legally able to lease space for cellphone towers or signage and billboards?

After completing this thorough market assessment, identify or revisit your business goals. Once you understand the market, you can evaluate potential amenities to add at your facility.

Weighing Risk vs. Opportunity

Because it’s generally easy to enter the self-storage industry, market research and due diligence are necessary to justify facility improvements. Make decisions based on the requirements of your specific area, not on general information from the real estate investment trusts. Know what your business and customer base requires, and then look for ways to give your facility a competitive edge.

The goal should be to generate additional revenue, build customer loyalty or support increased occupancy without the need for move-in promotions and concessions. Your most profitable idea may not be innovative or glamorous, and that’s OK.

Every investment in add-on products and services comes with risks and opportunities. The trick is to determine what works for your market and customers. For example, you might want to install state-of-the art wine-storage solutions complete with wine-tasting and meeting space. It’s an exciting idea. However, if you live in a rural area where there’s little interest in buying and collecting wine, it may not work for your business. Conversely, a leading-edge wine-storage offering may be just the ticket in a metropolitan or affluent market.

Any added amenities should increase your facility value, either by generating revenue or stabilizing cash flow. Value is a derivative of the future benefits your business will provide minus the riskiness of the operation. For example, consider this exercise in which we weigh two investment options:

• Investment 1: We’re 95 percent certain it will pay for itself within six months and then provide a stable revenue stream for the following three years.
• Investment 2: It’s trendy, but we’re only 60 percent confident it will generate sufficient cash flow to cover upfront costs. It’ll generate twice the monthly income of the investment above, but not until three years of continuous operation.

While attractive on the surface, that second investment clearly carries more risk. It’s going to take two and a half years longer to recoup our investment dollars, and we’re less certain it’s going to be a viable three years from now. If both options would benefit our current and potential tenants and require the same upfront costs to implement, we should choose the first option 100 percent of the time because risk-adjusted returns matter. Regardless of how fashionable the second investment may appear, there’s significantly less risk with the first option and greater certainty it’ll provide a profitable, stable revenue stream in much less time.

New business ideas are exciting, but they won’t necessarily provide the required cash flow to justify the upfront costs. At the end of the day, you’ll sleep better knowing you’ve invested wisely because you understand the requirements of your market, have validated your anticipated cash flow, and are satisfied with the overall risk profile. Regardless of how glamorous an add-on product or service may appear, making choices that support the needs of your tenant base at an acceptable risk level will help you drive greater long-term revenue.

Michelle Gigowski writes, participates in speaking and training events, and consults on self-storage valuation and entrepreneurship. Her focus is on business development and value creation. She’s a senior financial analyst at Thermo Fisher Scientific Inc. and the senior consultant at Stratford Valuation Advisors LLC. She’s also the co-author of the “What’s It Worth?” valuation series. For more information, e-mail michelle@valueitpress.com; visit www.valueitpress.com.

The Nashua, N.H., Planning Board unanimously approved the site plan for Burke Street Self Storage, submitted by developer Brian Kelly of 131 Burke St. LLC. Kelly intends to convert an existing structure at the former site of Improved Paper Machinery Co. to self-storage and build eight new buildings. The 6-acre project will comprise about 93,000 square feet, with the existing structure providing about 53,000 square feet of climate-controlled space and 40,000 square feet designated for new construction, according to the source.

The converted building will also include office space and warehousing, according to Paul Chisolm, a civil engineer with Keach-Nordstrom Associates Inc., which is working on the project. The plan also includes space for equipment and machine reseller Lewis and Clark to continue to lease a portion of the site, he told planners.

Though one employee will be hired to help with property maintenance, the facility will rely on an automated kiosk for unit rentals.

Chisolm described the site as “heavy industrial” and informed the board that a portion of the site is contaminated with chromium, a hard and brittle metal, in the subsoil. The contamination is believed to stem from historical use on the property, possibly by industrial manufacturer Ingersoll Rand. An environmental firm is already working with Ingersoll to mitigate the contamination, though the development will not encroach that portion of the property, the source reported.

Planners approved the site plan contingent to Kelly working with city staff on an easement to allow access to a public trail nearby. The property is next to Salmon Brook and the Merrimack River. Though the state has already granted a shoreline permit, it must still authorize an alteration-of-terrain permit for Kelly to move forward.

Final determination on a controversial self-storage proposal in Kitsap County, Wash., could be near after more than 10 years of debate and stalemates. At issue for the All Secure Self Storage project targeted for a 3-acre parcel that borders the 500-acre Illahee Preserve is the potential effects the development could have on the wetlands and wildlife habitat, according to the source. The building site is behind a former auto-wrecking yard.

Reinout van Beynum, who owns the land at 6014 State Highway 303, filed for development permits for the storage project in 2005. The proposal called for a facility comprising 88,000 square feet in 610 units, according to county documents. The plan was strongly opposed by preservation groups, sparking debate.

The land was cleared in 2006 without permits, revealing a “class-four” wetland at the northeast corner of the property. The county issued a “determination of non-significance” in its 2007 environmental review, which would have allowed Beynum to fill in the wetland and mitigate the environmental impact on the property by paying for habitat restoration on land elsewhere, but a local environmental group, Illahee Forest Preserve, appealed the county’s decision, the source reported.

The preservation group argued the project could damage the habitat and would violate the county’s critical-areas ordinance. A county-hearing examiner opened the debate to public record while more information on the wetland could be obtained, effectively stalling momentum on either side until now.

Though several assessments have been issued in the last 10 years, state and federal experts finally toured the area last Thursday to see the wetland in person, gather information and collect soil samples. Beynum, county officials and members of the preservation group were joined by representatives from the Washington Department of Ecology, U.S. Army Corps of Engineers and the Suquamish Tribe for the three-hour fact-finding expedition. “This has been our big goal the whole time,” county environmental planner Steve Heacock told the source.

Officials from the Illahee Forest Preserve group believe the wetland at the building site is connected to a broader wetland complex within the preserve that drains toward the corner of Highway 303 and McWilliams Road. The nonprofit is hopeful the information gathered at the site is enough to reclassify the wetland to a class one or two, which would require more extensive offsite mitigation and development buffers at the site, according to the source.

The ecology department and Army Corps of Engineers are expected to submit separate reports on their findings from the tour. The reports will be used by the county to make future decisions on the All Secure proposal, Heacock said.

Update 9/28/17 – Self Storage Associates (SSA) has been attempting to build a storage facility on the S.W. 8th Street property since at least October 2015. The company submitted a development proposal nearly two years ago in connection with real estate firm Gables Edge Parks Co. to build a 73,244-square-foot facility that was expected to be branded under the CubeSmart name. That project was earmarked for a 0.8-acre portion of the former trailer park.

Gables Storage Builders LLC (GSB), an affiliate of SSA, bought 2.3 acres at the 8th Street address in March for $4.9 million, according to the source. GSB is led by Richard Beavers, owner of SSA parent company Beaver Realty LLC, based in Winter Garden, Fla.

A previous application submitted by Gables Edge proposed a five-story self-storage facility comprising 86,337 square feet in 1,139 units, the source reported.

Gables Edge is owned by Zaedy R. Pozo, Andres F. Rodriguez and Andres J. Rodriguez. Beavers is also listed as an agent for Cubebuilders LLC and Cubepartners LLC, according to sources.

Several Jernigan Capital co-investment projects have tapped CubeSmart as their third-party management company.

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9/22/17 – Jernigan Capital Inc., a merchant bank and advisory firm serving the self-storage industry, has committed $14.7 million toward a proposed 69,175-square-foot self-storage facility in the Little Gables neighborhood of Miami. If approved, the multi-story, climate-controlled facility would be built at 4250 S.W. 8th St. Construction is expected to begin during the first quarter next year, with completion scheduled for the second quarter of 2019, according to a press release.

Ocoee, Fla.-based Self Storage Associates Inc. will serve as the project’s developer. This will be the fifth project on which the two companies have co-invested.

The target site is along U.S. Route 41, with visibility to about 35,000 cars per day. It’s in a “high-growth submarket largely occupied by renters,” the release stated. The property is approximately one mile from the central business district of Coral Gables, Fla., which features luxury hotels, “gourmet” shops and international retailers. It’s also about two miles from the University of Miami.

Since Jan. 1, Jernigan has closed 23 self-storage investments totaling $296.4 million. The lender typically holds a 49.9 percent profit interest in its joint-venture transactions, according to company officials.

Jernigan Capital is a commercial real estate finance company that provides financing to private developers, operators and owners of self-storage facilities. It offers financing for acquisition, ground-up construction, major redevelopment or refinancing. The firm intends to be taxed as a real estate investment trust and is externally managed by JCap Advisors LLC.

Self-storage properties are constantly changing hands, and Inside Self-Storage is regularly notified of these market transactions. Many are covered in detail on the ISS website and available for viewing on the “Real Estate” topics page. Following are additional acquisitions and sales that weren’t covered.

The three-property A Storage Closet portfolio in Ada, Okla., was sold to an out-of-state private investor. The properties comprise 42,943 rentable square feet of storage space. The seller was represented in the transaction by Jared Jones, director of Tulsa, Okla.-based Porthaven Partners, who’s the broker affiliate in Oklahoma for the Argus Self Storage Sales Network.

A-Secured RV & Vehicle Storage in Gilbert, Ariz., was sold for $5.8 million. The property at 105 E. Baseline Road spans more than 11 acres and contains 500-plus vehicle-storage units. The sale involved a 1031 exchange, according to Argus, which brokered the deal. The seller was represented in the transaction by Jeff Gorden, vice president of Eagle Commercial Realty Services, who’s the Argus broker affiliate in Arizona.

A-Storage Inn in Fort Worth, Texas, was sold to Bargain Storage. The 2.87-acre property at 7812 Camp Bowie W. comprises 51,040 square feet of storage in 362 units. The seller was represented in the transaction by Richard D. Minker, senior vice president, and Chad Snyder, senior associate, for Colliers International, and who are both Argus broker affiliates.

AC Self Storage in Bossier City, La., was sold to an out-of-state investor for $2.3 million. The property at 2205 Barksdale Blvd. comprises 59,360 rentable square feet in 402 units and eight vehicle-parking spaces. The seller was represented in the transaction by Shannon Barnes, Bill Barnhill and Stuart P. LaGroue Sr. of Omega Properties Inc. They’re all Argus broker affiliates for the Gulf Coast.

The two-property Apache Junction Self-Storage portfolio in Apache Junction, Ariz., was sold to a private investor. The properties are just over a mile from one another at 1678 Superstition Blvd. and 1735 W. Apache Trail. The Superstition facility sits on 4.8 acres and comprises 60,442 rentable square feet of storage space in 398 units. It also contains 13 offices and 40 vehicle-parking spaces. The Apache Trail site comprises 26,522 rentable square feet of storage space in 210 units. It also contains seven office spaces. Both sites were built in 1997.

The seller, also a private investor, was represented in the transaction by Devin Beasley, Luke Elliott, Daniel Kuchugurny and Michael A. Mele, investment specialists for real estate firm Marcus & Millichap (M&M). Kuchugurny and fellow broker Edward J. Nelson represented the buyer. Brian Tranetzki also assisted.

The eight-property Attic Self Storage portfolio in Metro Atlanta was sold. The properties comprise more than 652,000 square feet of storage space in 3,428 units. The seller was represented in the transaction by David Spencer of Keller Williams and an affiliate agent for The Storage Acquisition Group (TSAG), a division of Mid-Atlantic Commercial Realty. He was assisted by TSAG Director Monty Spencer.

Clute Affordable Storage in Clute, Texas, was sold to a limited-liability company (LLC). The property at 508 E. Main St. contains 452 units. The buyer was represented in the transaction by M&M investment specialists Evan Griffith and Tony Pepdjonovic, while the seller, a partnership, was represented by M&M broker Nicholas Ling.

FM 439 Self Storage in Killeen, Texas, was sold. The 3.5-acre property at 16969 FM-439 was built in 1998. It comprises 21,050 square feet of storage space in 121 units and 10 vehicle-storage spaces. The seller was represented in the transaction by Minker and Snyder.

Lost Valley Mini Storage in Bandera, Texas, was sold. The property at 3383 Highway 16 S. sits on 4.6 acres and was built in phases. It comprises 38,475 rentable square feet of storage space and includes 1.5 acres for expansion. The seller, a private investor, was represented in the transaction by Jon Danklefs, senior associate in the San Antonio office of M&M.

The 14-property Planet Self Storage portfolio was sold. Together, the facilities in Connecticut, Massachusetts, New Jersey and Pennsylvania comprise more than 635,000 square feet of storage space in 6,272 units. The seller was represented in the transaction by Bill Sitar Jr., vice president of Sitar Realty Co. and a TSAG affiliate agent. He was assisted by Spencer.

Spare Room Storage in Springfield, Tenn., was sold to an out-of-state investor. Formerly the site of the Springfield Drive-In Movie Theatre, the property at 3356 Highway 41 S. sits on nearly 12 acres. It comprises 37,400 rentable square feet of storage space and has room for expansion. The sellers, Ross and Donna Swann, were represented in the transaction by James Ashley Compton, national director of The Colliers International Self Storage Group.

Stockton Self Storage in Stockton, Calif., was sold to an out-of-state private investor. The property at 1880 W. Charter Way sits on 6.6 acres and comprises 53,425 square feet of space in 409 units. It also contains 225 covered vehicle-parking spaces. The buyer and the seller, a private investor, were represented in the transaction by Beasley, Elliott, Kuchugurny and Mele. Fellow M&M broker James Markel assisted.

Stor Rite Self Storage in Vancouver, Wash., was sold to a Pacific Northwest-based self-storage investor for more than its initial list price of $2.7 million. Built in 2006, the property at 5515 N.E. 121 Ave. sits on less than an acre and comprises 23,515 square feet of storage space in 209 units. The buyer and the seller, an LLC, were represented in the transaction by Christopher R. Secreto, an M&M investment specialist in Seattle.

Susquehanna Valley Self Storage in Lewisberry, Pa., was sold for $1.87 million to a private investor using a 1031 exchange, according to Investment Real Estate LLC (IRE), the firm that brokered the transaction. The property at 625 Lowther Road sits on more than 2.5 acres and was built in two phases in 1980 and 1985. It includes five buildings containing more than 160 drive-up storage units, two apartments and a rental office.

Van’s Storage in Fountain Hills, Ariz., was sold in an off-market trade to an affiliate of Irvine, Calif-based Guardian Storage Centers LLC, a participating regional operator for National Storage Affiliates Trust, a real estate investment trust specializing in self-storage. Built in 1978, the property at 16701 E. Laser Drive sits on more than 5 acres. It contains more than 315 drive-up storage units, 200-plus vehicle-storage parking spaces and a cell tower. The seller, a private party, was represented in the transaction by Gorden.

An industrial building at 4515 Eighth Ave. N.W. in Seattle was sold for $2.57 million to 4514 8th Ave NW LLC, which plans to convert the structure to self-storage. The buyer is associated with the Rudd Co. Inc. and Alan M. Park. Based in Seattle, Rudd is a family-owned business that manufactures professional coatings. The seller, Skills Inc., acquired the property in 1988 for $205,000.

Tucson Steam Pump Self Storage Partners LLC purchased 70,036 square feet of land at Steam Pump Village in Oro Valley, Ariz., for $525,000 to build a storage facility. It was represented in the transaction by Denise Nunez, senior vice president of NAI Horizon, a Phoenix-based commercial real estate brokerage and management firm. The seller, Evergreen-Steam Pump LLC, was represented by Dave Hammack and Brenna Lacey, broker with Volk Co., a commercial real estate firm.

Ziff Properties Inc. has sold its self-storage facility in Rock Hill, S.C., for $11 million. The property on Big Oak Lane comprises 87,350 square feet of storage space and includes room for expansion.

Argus is a Denver-based network of real estate brokers who specialize in storage properties. Formed in 1994, the company has 36 broker affiliates covering nearly 40 markets.

Colliers is a global commercial real estate services firm employing more than 16,000 professionals who operate out of 554 offices in 66 countries. The company offers a variety of services for investors, business owners and developers.

Since its inception in 1998, IRE has provided brokerage, construction, development and management services to self-storage owners and investors.

Founded in 1971, M&M is a commercial-property investment firm with more than 1,500 investment professionals in offices throughout Canada and the United States.

A member of NAI Global, NAI Horizon is a managed network of independently owned commercial real estate brokerage firms. It assists corporations with negotiating leases, sales, business brokerage, investments, relocation, site selection and development.

Based in Yorktown, Va., TSAG represents a private real estate investment fund that's solely focused on acquiring self-storage facilities. Sellers deal directly with the purchaser with no intermediaries and pay no sales commission.

Based in Mount Pleasant, S.C., Ziff specializes in the acquisition, development and management of commercial properties in the Southeast. Founded by Stephen Ziff in 1992 and Tim Walter, its portfolio comprises 3 million square feet of space and includes shopping centers, office buildings and self-storage facilities.