There is nothing wrong with being safe and just doing what you know. You can’t be surprised. The outcome will always be predictable. When it comes to life what you see is what you get—and that’s all. However, if you want more you have to reach out and stretch your perceived boundaries and limitations. For some that has meant investing in the self storage industry.
Banner Apartments is a company that develops exactly what the name implies—apartments. One of the many things they have to do in order to do so is keep their figurative ear to the ground in regards to any possible enticing property acquisitions.
It stands to reason that they may have seen other properties of interest, but not ones suitable for apartments but self storage. So to take advantage of them the company forms a subsidiary, Banner Storage.
“As long as everyone is carefully looking at supply-and-demand dynamics, there is a limited window of opportunity to do self-storage development and there might be for a couple years more,” John Nikolich, executive vice president for Banner Storage, said.
The group formed last July and closed on its first site in April, a warehouse in Massachusetts 11 miles outside of Boston. They recently closed on another in Chicago, an 118,000 square foot place that will cost around $10 million.
Over the next couple of years the company aims to have five facilities in Boston and Chicago, and hope to find something in Miami as well.
After making the decision to get in to the business Banner Storage has clearly hit the ground running. It may have taken a few months to get moving after the company was formed. That could be because they wanted to make sure they had the right structure in place first—like hiring a person with experience in self storage acquisitions like former development manager for Shurgard Storage Centers Gary Delaney as president.
Finding and developing properties is one thing. Managing and operating them is a whole other thing. That’s where it is good if a company can recognize its own limitations. According to Nikolich Banner Storage can so it will be hiring a third-party management company to run their facilities.
“We own 6,000 units of multifamily. Those are self-managed, and that works out great,” Nikolich said. “On the storage side, the economy of scale doesn’t make a lot of sense [for self-management].”
This isn’t the first time that an apartment developer has crossed in to self storage development. Stephen Brendle is expected to open Superior Self Storage in Midvale, Utah, soon. The apartment developer in him showed in the manager’s residence—a 2500 square foot suite complete with luxury amenities.
“Apartment developer enters self-storage industry.” SpareFoot Storage Beat; 28 May 2014.
“Self Storage Facility will Soon Reset the Standard When it Comes to Keeping Managers Happy.” Self Storage Industry News; 14 April 2014.