Self Storage - Your next investment?

Begun as a niche of multifamily, self-storage has developed its own identity as a highly profitable investment. While many mom-and-pop businesses still operate in the self-storage arena, real estate investment trusts and institutional investors from universities to pension funds to the Blackstone Group are snatching up multiple deals in self-storage facilities, usually for the high end, larger facilities in urban centers. 

For example, in December 2015, Storage Pros Management sold 37 properties for $242.5 million to a joint venture led by an institutional investment rm. In another mega-deal, Morningstar Properties and Harrison Street Real Estate Capital sold 43 of its self-storage facilities for $315 million to the self-storage REIT Public Storage in October 2013. Annually, $2 billion of transactions in self-storage take place. 


“Self-storage is the best performing sector of commercial real estate,” says C. William Barnhill, CCIM, owner of Omega Properties in Mobile, Ala. “Whether a CCIM is involved in brokering, building, managing, or owning self-storage facilities, it’s a great business.” 

Since he entered the self-storage marketplace in 1993, Barnhill has managed, brokered, and sold these facilities. Currently, he owns about 3,500 units in the Mobile area and manages the brokerage for self-storage facilities in Alabama, Mississippi, and the panhandle of Florida. 

Evolving Marketplace 
Self-storage has returned 101 percent to investors from early 2008 to 2011, outperforming all other REIT categories, according to data compiled by Bloomberg. Every year at least 11 million people in the U.S. stash some of their possessions into storage units. 

“People own a lot of things and inherit things that they don’t want to lose,” Barnhill says. “ rough the years, we have had both population growth and more people learning how to use storage.” 

For instance, major life events o en involve greater demand for self-storage, such as birth, death, marriage, divorce, building a home, renovating a home, or downsizing a home. 

“ The self-storage market is constructed like a pyramid with mom-and-pop owners of one to five properties at the bottom half and the top 12 percent is owned by REITs,” says William Brown field, CCIM, CRE, of Brown field & Associates, LLC, in Houston. “In the middle, regional players are building new properties and buying the best mom and-pop properties. They fi x up the properties, standardize them, and may eventually sell them to REITs.” As storage has evolved, many of the facilities have changed from bare-bones, concrete and corrugated aluminum shells into more attractive, climate-controlled facilities with LED lighting, which blend into good neighborhoods and off er tenant insurance.

NAI Norwood Group is part of the Argus Self Storage Network. Joe Mendola, Senior Advisor, has spent the last two decades immersed in this type of real estate. He would be happy to answer your questions, help you locate an investment, or assist you in divesting assets in your current portfolio.  

For the full article or more information please contact our offices at: 603-668-7000 or 603-431-3001 or visit us at www.nainorwoodgroup.com. 

Content provided by Sara S. Patterson is executive editor of Commercial Investment Real Estate.