Monthly Archives: November 2016

Self-Storage Startups Distrupt Storage Industry

self-storage-w-brickDrive Up Self-Storage Facility

Introduction…Self-Storage startups disrupt storage industry.  Let’s look at four ways disruption is happening today.

  1.  Betting on small volumes.  MakeSpace rents only boxes for small volumes instead of renting individual units as do other big companies.  MakeSpace sends the boxes to the customer, picks up the packed items, then stores them outside of town for a fraction of the cost. Customers don’t have anything to do with storing the box, rather it is catalogued and can be accessed anytime.
  2. Utilizing an ap to make the customers life easier.  Clutter, an app-based company aimed at being as convent for customers as possible. The customer opens an app, requests storage box, takes photo of items, and appoints a time for the box to be picked up.  When they want the box returned, they simply tap “Bring Me My Boxes” in Clutter app and it is delivered the next day.
  3. Starting a library service…BoxBee is a Cloud-based self-storage that allows customers to lend the things they store to friends and colleagues.   Each customer is free to arrange inventory via the company’s website and place photos of the things they are willing to lend.
  4. Stepping away from tradition…Startup Storage Palmentto offers client-controlled facilities and specifically mention that they allow unusual uses in their units.  For example, they mention that the units could be used for band practice.

Conclusion…Self-storage business may look old-fashioned, but it’s rapid growth market that can win from applying new, high-tech approaches.  The door is wide open for new applications of current or future technology in the self-storage world.

Why Dallas Developer Entered Self-Storage

muti-story-ss

Multi-Story Self-Storage

Introduction…A Dallas developer, Baranof Holdings, has entered the self-storage arena with eight different properties in various levels of development.  Why jump into this space with eight properties to start?

What makes self-storage so attractive?  “Superior fundamentals in the space that are not found in any other property type,” says Andy Hendricks, managing partner at Baranof Holdings, explaining why the company wanted to invest in self storage.

“Large investors and institutions who have identified the storage sector for its performance during the downturn have a high demand for quality infill properties, yet few quality infill properties are available for acquisition as the public REITS rarely sell any properties of quality. The result is a void of quality infill product available for acquisition.”

“We (Baranof) continue to search for quality in-fill development sites in high barrier to entry markets. As the development cycle continues to progress in storage, we feel that developing in the right locations is going to be more important than ever. We will continue to focus on difficult but quality sites rather than any specific quantity, keeping close tabs on the overall market and especially the growing amount of development.”

In conclusion...This Dallas developer is one more example of social proof that self-storage is the real estate segment that continues to present opportunity.  Our model is to purchase and or develop properties on the edge of the metro areas that are not competition with the large public owners.

Drop an email, if you want additional information on this exciting low maintenance cash flow machine.

How To Capitalize On, “The Need To Store That”

Love Of Self-Storage

Rents are rising, most units are occupied, and competition is tame for companies that lease out storage units to consumers.  A Preferred Self-Storage Property in Double Oak, Texas

Business is booming for companies that lease out storage units to consumers. Rents are rising, most units are occupied, and competition is tame due to limited new construction in the wake of the financial crisis, storage executives and analysts say.

Large investment firms also are trying to cash in, with Carlyle GroupLP spending about $80 million to help build new facilities in Southern California, the Pacific Northwest and elsewhere, and Harrison Street Capital LLC considering selling storage properties it snapped up in recent years.

“It’s a good industry to be in,” said Charles Byerly,chief executive of Westport Properties Inc., which is based in Irvine, Calif., and operates more than 80 facilities in 13 states under the US Storage Centers brand.

Consumers seek storage space because of life changes that occur in good times and bad. Some in the industry refer to the 4Ds—death, divorce, downsizing and dislocation, which can include people finding new jobs, getting married or moving away or back home from college.

Because such events don’t necessarily track the economic cycle, the storage business “isn’t recession-proof, but it is recession-resistant,” said Ryan Burke, an analyst at Green Street Advisors, a real-estate research firm.

Part of the reason for the tight supply is that building new units can take years. In one extreme example, it took Extra Space more than a decade to build one facility in Southern California, said Spencer Kirk, the firm’s CEO. Some communities are unenthusiastic about hosting storage facilities.

Still, analysts said storage can be a good long-term business because the space tends to be “sticky.” Once people rent storage units, they are unlikely to move to a different facility even if the rent is slightly lower, and they tend to keep the units longer than they anticipated, according to Mr. Burke.

In Summary...Consumers also often have a sentimental attachment to their possessions that keeps them around. “Your competition is the dumpster,” said Christopher Merrill, co-founder of Harrison Street, which manages $7.9 billion in assets.

Reference: Liam Pleven, “Need To Store That? Booming Self-Storage Industry Says No Problem,” The Wall Street Journal, October 13, 2016