Overall, during the past few years the self storage market has proven to be recession-resilient and this has led to many acquisitions for investment. There is a bubble of safety around the storage business because of a constant growing demand. Just this week in a major purchase, Virtus, an Austin, Texas, based real estate private equity firm purchased 20 self storage facilities throughout the southeastern U.S., totaling 1,000,000 sq. ft. of space at a cost of $50 million.
The company feels self storage is an asset class that offers investors a good return despite the economic climate. Virtus Real Estate is driven by demographic trends rather than speculation. And after each investment goes through, Virtus is dedicated to improving the management and marketing, repairing facilities, and adjusting rental rates based on the competition and location. The company is tuned into key demographic trends within the national economy and bases all of its purchases off acquired information. The self storage industry has adjusted to market fluctuations and avoided the devastating declines of other commercial real estate areas. Virtus has a strategy for its investors.
“In times of fiscal decline, the self-storage market has demonstrated resilience, while also posting solid gains throughout economic resurgence,” said Terell Gates, CEO and founder of Virtus real Estate. “Even is this slowly emerging economy, the team at Virtus is very excited about the opportunities that lay ahead in 2011.”
Key trends the company focuses on are the aging and numbers of the Baby Boomer Generation, the coming-of-age of the Millennial Generation, the growth of the Hispanic market, and the job loss and relocation of a growing number of Americans. Its latest self-storage investment fund purchases have focused on acquiring, adding value and disposing of primarily second and third generation cash flowing self-storage assets in major metropolitan areas, including Montgomery, Memphis, Nashville, Knoxville, Shreveport and Baton Rouge, La.; Hattiesburg, Miss.; and Atlanta. One of the recent acquisitions is a 35,692 sq. ft. Amesbury Mini-Storage in Montgomery.
Virtus started a $100 million fund for next year focusing on student housing projects. This is in addition to the $150 million it plans to spend on investments on storage properties next year. In 2012, Virtus plans to raise a $500 million fund. That fund, Gates said, “will be diversified with all four recession resistant asset classes we target, such as self-storage, student housing, senior housing and medical office properties.” Sources Used: “Virtus Real Estate Purchases 20 Self Storage Properties in 2010.”
“Virtus Real Estate Purchases 20 Self Storage Properties in 2010.” docstoc. 2010.
“Texas Firm Buys Montgomery Facility.” Burmingham Business Journal. Dec. 29, 2010.