Why Build Your Own Self Storage Industry When You Can Invest in the United States Instead?

Posted on May 13 2014 - 11:58pm by John Stevens

There are close to 60,000 self storage facilities in the world. Most of them (around 50,000) are in the United States leaving roughly 10,000 spread out over the rest of the world leaving room for growth just about everywhere. However, rather than build up the industry in their home country one company is looking to buy in to the industry in the United States.

The self storage industry in several countries is starting to thrive. Canada has around 3,000 facilities, Australia about 1,000, and the UK more than 815. With four of five in the UK expecting to see a better profit margin in the next year the industry is expected to continue to grow even more.

“Confidence is definitely up. We’ve had a very strong start to the year with demand mostly from householders,” said Nick Poole from Fort Locks Self Storage.

Rather than invest in their own countries a collection of Middle Eastern companies have decided to take advantage of the active market in the United States.

RiverCrossing Capital Partners is an investment company from the Middle East that launched in April. The purpose of the undertaking is to seek out and find investments that comply with Sharia law, a moral and military code that governs some Muslims.

“Combining our global investment expertise with that of our network of specialized asset managers in the U.S. and Europe, we are creating new opportunities for investors for diversification,” Mohammed Abdulmalik, chairman of RiverCrossing said.

The plan is to raise upwards of $125 million to invest in American real estate with $45 million of it to allow the partners to get started by the end of June.

To accomplish their goal they have teamed up with Virtus Real Estate Capital out of Austin, Texas. Virtus will be expected to help find appropriate investments.

“We are focused on up-and-coming markets outside the top 10 to 15 MSAs based on where we feel we can competitively bid, where there is little REIT presence but expressed interest, and where we feel there is a lack of professional management,” Scott Humphreys, acquisitions director at Virtus said.

Humphreys has also stated that ten percent of the fund has been earmarked for self storage acquistions. Several facilities are already under consideration in Oklahoma, Arkansas, Texas, Georgia, and Kentucky.

“We are focused primarily on recession-resilient property types, and storage has historically performed well throughout good and economic periods,” Humphreys said.


Sources Used:

“Mideast money headed for U.S. storage market.” SpareFoot Storage Blog; 12 May 2014.

“The Self Storage Association UK Annual Survey.” Self Storage Association UK.

2013 SSA Fact Sheet; Self Storage Association.