Irving Toys-R-Us Now Self-Storage
Introduction: As more and more retailers find themselves retreating from brick-and-mortar spaces, self-storage developers are seizing the opportunity to build facilities in prime locations.
Supermarkets, office supply, discounters and furniture stores are just a few of the empty big box stores that are getting a second chance as self-storage facilities. Meanwhile developers are bidding up prices on lots traditionally targeted towards apartment and hotel developers.
In the past, self-storage developers have not given those locations much of a second glance, because they haven’t been able to pay the higher prices that retail space typically commands. These days, self-storage is chasing – and winning – retail sites that bring them ever closer to a dense customer base.
Economic shifts: Two notable shifts have helped clear the runway to buy existing retail property for conversions or in-fill sites for new development. First, e-commerce has changed the retail landscape and thinned the herd of potential retailers willing to backfill an empty big box space or acquire land to build new stores. Second, rising rents at storage properties has given storage developers a bigger appetite – and more buying power – to acquire prime retail property.
“What has really happened is that as rents in certain markets have increased, that has given developers a greater opportunity to take a look at more expensive locations and conversions,” said Todd Amsdell, president and CEO of Cleveland-based Amsdell Companies.
In summary: Retail locations have previously been considered too expensive for self-storage sites. The above photo of a former Toys-R-Us on Airport Freeway in Irving, Texas shows retail can in fact be converted as this one has been to a Extra Space Storage.
Takeaway: The rising rents and high occupancy has created new opportunities for us investing in self-storage.