There is a process for every kind of decision that needs to be made. For investors the hard part can be in figuring out just what kind of approach to take. There is something to be said for careful planning and deliberation, but there is also something to be said for striking while it’s hot.
If there is one industry that is hot and ready for investing it is the self storage industry. Even when the economy was at its worse in recent years it proved to be a reliable investment; an oddity in a poor economy. As the economy has improved it has become an even better investment.
The problem may be in finding the opportunities.
“There’s a lot of competition for these assets. People like self-storage,” said Spencer Kirk, CEO of Extra Space Storage. “With the top 10 operators owning, controlling or operating less than 10 percent of the market, we’ve got a very fragmented environment, and I think that although there’s some pricing competition that’s a little stiffer than we would like, the landscape for a number of transactions for financial consolidation appears to be wide open. I actually think we’ll see an acceleration in the acquisitions market.”
Individual self storage facility owners recognize this whenever they take offers for their facilities. Some are going as far as amassing a decent sized portfolio and offering the whole collection up as one investment. As the market to acquire becomes hotter a single offering of multiple facilities can be hard to find making them rare.
For example, Marcus & Millichamp has managed to get a hold of a rare portfolio of six class A self storage facilities in Nashville, Tennessee.
“The ability to amass a portfolio like this in a singular investment has not been available in middle Tennessee in over 8 years, said Anne Williams, a senior associate at Marcus & Millichamp.
Companies are going as far as to purchase the right land before they are even have clearance with the city to build a new facility. Compass Self Storage purchased a lot of largely vacant building in Cleveland for a million dollars. The company only recently presented the city with plans to renovate the area and convert into a self storage facility—and it is just one of three projects the company has been working on.
“We are a Cleveland-rooted company,” said Ed Hainrihar, Jr., vice president of operations at the Amsdell Cos.(who own and operate Compass Self Storage).
“Rare Nashville Self-Storage Portfolio Hits Market.” GlobeSt.com; 31 December 2013.
“CEO Spotlight: Kirk Sees Unprecedented Times in Self-Storage.” Reit.com; 11 December 2013.
“Compass Self Storage stakes out downtown Cleveland buildings for 700-unit warehouse facility.” Cleveland.com; 07 December 2013.