What Makes Self-Storage Sexy
With its direct correlation to the sizzling multifamily and housing markets, self-storage is moving full-steam ahead in Chicago. (Where else will your tchotchkes go when you move into a microunit?)
SVN|Chicago Commercial SVP Wayne Caplan (snapped with the family in NYC) recently completed two distressed land deals for self-storage companies, which he notices are flocking to dense urban neighborhoods. NY-based Safeguard Self Storage purchased a 14k SF site at 5026 N Sheridan in Uptown, where it can build an approximately 70k SF facility, he tells us, and local firm Banner Development (a recent entrant on the self-storage scene) purchased a 26k SF site at 1809 W Devon in Rogers Park, which allows for a 100k SF-plus facility. As the housing market gets healthier and people move into smaller urban apartments and condos, storage companies will follow, raising their rates and making deals more profitable, Wayne says.
The storage business is dominated by large national firms and REITs, he tells us, but you’re also seeing local players around Chicago. Investors or developers generally operate the facility as well, but you do see self-storage trading on the investment sales market as income-producing real estate. As the market continues to heat up, the challenge for well-located sites will be price, Wayne says. Whether they’re building ground-up or adaptive reuse, self-storage operators are competing with developers that are looking to build huge multifamily projects and can pay much more for the land.
It’s a timing issue, he tells us, and operators will definitely have slimmer pickings in the near term. Other issues on self-storage projects include zoning and community support (some people don’t want them as a neighbor), Wayne says. But our dwellings continue to shrink (while increasing amounts of hoarders are outed on reality TV), so it's unlikely the business will slow anytime soon. Wayne had fun taking his family to NYC, his hometown, over the summer. They hit up the Statue of Liberty (above), Ellis Island, Coney Island, and also hung out around NYU, Wayne’s alma mater, in Greenwich Village.