Friday, March 16, 2007

Ever Think About Self-Storage Units?

Increasingly, one of the better real estate investments is in self-storage units. Sound crazy? Many, many people need more space to store their junk, and never have enough around the house. Or hubby can't let go of his past. Or someone inherits Aunt Glady's belongings and doesn't know what to do with them, so they rent a storage unit.

Frequently, when working with clients, we look for "value-added" characteristics of an investment property. It might be as simple as adding coin-op washers and dryers. Shopping mall and strip center operators regularly take advantage of additional revenue opportunities seasonally, such as renting ground for Christmas tree lots. I have been involved with two different properties where there was additional ground that would be perfect for construction and operation of storage lockers, in Franklin and Hocking Counties in Ohio. Don't think the possibilities are there? Read on.

Charlotte, N.C.-based Morningstar Properties LLC and Chicago-based Harrison Street Real Estate Capital have formed a $200-million joint venture to acquire, develop and redevelop self-storage facilities. The joint venture will focus on properties in the Carolinas. It is expected that the joint venture will acquire $200 million in property over the next three years. The joint venture was launched with the acquisition of three assets totaling 1,589 units in the Charlotte, Fayetteville and Carrboro/Chapel Hill, markets with a value of $13 million. The Charlotte facility is located in the CBD where recent condominium development has added or will add 5,000 units. The Fayetteville property is located near Fort Bragg Military Base and the Carrboro asset is near Chapel Hill, where 50,000 students and facility live each year.

“The self-storage asset class remains highly fragmented. With over 45,000 self-storage facilities in the US still largely held by local operators, we have targeted the self-storage market given the excellent risk-adjusted returns one can achieve as the sector consolidates,” said Harrison Street Real Estate Capital principal Robert Mathias in an interview with

So there you have it. The big boys see the possibilities. Even on a smaller scale, self-storage presents significant opportunities for owners who have a few acres of unused ground adjacent to their retail, multifamily or commercial investment.

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