Anytime you are talking about starting or opening a business—self storage or otherwise—one of the biggest initial expenses is the building or facility that the business will be housed in. Prospective business owners are faced with two options when it comes to purchasing. They can either save a little money now and go with an existing facility or spend a lot of money and build new.
For a while lenders were not very eager to give loans for building new self storage facilities; renovations were okay as were existing facilities– just not new construction. The costs involved were simply too much for most lenders to want to take a chance on.
With the stability that the self storage industry has shown in recent years many investors have looked to get into the business. A number of existing companies have looked to expand their portfolios by purchasing other self storage facilities.
That is exactly what Five Star Partners LLC was thinking when they purchased SafeLock Self Storage in Ann Arbor, Michigan, for $7.7 million.
“Self storage was the number one performing real estate investment on Wall Street the past four years,” Brett Hatcher, a local realtor said. “It’s much more stable in the downturn of markets and it has weathered the storm…”
The sale is indicative of the ever improving health of the industry. When the former owners purchased the facility back in 2007 they paid $3.75 million. In just a few short years they more than doubled their money!
As further proof of the positive turn the economy has taken (at least in regards to the self storage industry) some lenders are starting to approve more loans for new facilities.
For example, Safeguard Self Storage completed the purchase of 50,000 square feet on March 21 in Brooklyn, New York. The site will be the location for the company’s 65th self storage facility. Like many of the other facilities this one will feature climate controlled units, varying sizes, computer controlled access and so much more.
“The Albany Avenue location, like all of our New York facilities, will be designed to provide an exceptional customer experience,” says Jim Goonan, Senior Vice President of Development.
The company already has a pair of facilities under construction in the New York area to go along with the 20 existing self storage facilities. One of the facilities under construction is scheduled to open on April 15.
“Safeguard Self Storage Completes the Purchase of Land for a New Facility on Albany Avenue in Brooklyn, New York.” PR.com; 27 March 2013.
“SafeLock self storage southwest of Ann Arbor sells for $7.7 million.” Ann Arbor.com; 14 March 2013.