TSAG Market Analysis: South Florida – Miami

TSAG Market Analysis: South Florida-Maimi

By: The Storage Acquisition Group

Miami, Florida, USA downtown
Miami is holding its own despite building boom and economic storm clouds.

Despite a surge in new supplies over the past three years, the Miami-area self- storage market is considered in relatively good shape to withstand tough economic times ahead for Florida and the nation as a whole, according to industry data and experts.

There’s no doubt that Greater Miami, which includes Miami, Fort Lauderdale, and West Palm Beach in the tri-county area of southeast Florida, has seen its share of new self-storage supplies, rising just over 5 percent last year and by 15.8 percent over the past three years, according to Radius+ data.

That’s a significant amount of new supply over three years,” says Cory Sylvester, a principal at Radius+.

Not surprisingly, the surge in supply has led to price pressures in southeast Florida, with prices for climate-controlled units falling about 20 percent over the past year, according to data. Prices for non-climate controlled units fell by just over 12% for the same time period.

And more supplies are on the way for Greater Miami, with new self-storage facilities currently under construction expected to add about 8 percent more space to the area. If all tentatively planned facilities are included, Greater Miami’s supply could theoretically increase by 18.6 percent to 42.2 million square feet in the coming years, according to data.

Those supply projections are slightly higher than the national average estimate of around 3.3 percent growth of under-construction facilities and nearly 10 percent growth when planned and permitted facilities are included, according to Radius+ data.

But even with slightly higher supply numbers in the tri-county area, many Greater Miami self-storage players and industry observers are still bullish on the region for a number of reasons.

First, they point to the fact that Miami, the nation’s seventh-largest metropolitan area, is faring better than many other major markets across the nation in terms of supply. Over the past three years, Miami ranks 12th in supply growth, compared to No. 1 Denver’s 27.6 percent growth, according to Radius + data.

In addition, Greater Miami was in a better position to absorb more self-storage facilities at the start of the past decade’s nationwide building boom. Even after the surge in new facilities, Greater Miami’s self-storage penetration rate today is hovering at about 6 net rentable square feet per person, roughly in line with the national average of about 6, according to Radius+.

In addition, Miami’s lease-up period for new facilities remains about 3 to 4 years, roughly the national average and considerably lower than the up to 5 years it can take to fully lease new facilities in other hot markets, industry officials say.

There’s one other thing in Greater Miami’s favor: Earlier this year, Miami’s planning board passed a ban on construction of new self-storage facilities near mixed-use residential areas and a 270-day moratorium on any new storage facilities in general.

While no one in the industry likes anti-self-storage sentiments in general, the fact is that new restrictions on construction and conversions help existing self-storage owners by limiting the introduction of new facilities into the market, officials say.

The bottom line: Greater Miami, whose population is still growing (although slower than in past decades), is in a better position to prosper moving forward than many other major markets in the nation.

In the long-term, Miami is in good shape,” said Brian Cohen, president of Andover Properties LLC, developer, owner and operator of 41 facilities in 12 states, most of them along the East Coast, with one facility in Miami and one in Fort Lauderdale.

Confirming what others are seeing, Cohen said the occupancy rate in its Miami-area facilities has remained in the 90 percent range, despite new supplies coming on line, with absorption “going pretty well,” despite competitive price pressures.

Scott McLaughlin, executive vice president of Sentry Self Storage Management, which operates two facilities in Miami, said Miami got hit hard by a recent surge in new construction “But it’s not necessarily an oversupply problem,” he said. “It’s been an all-delivered-at-one-time problem.”

He noted that Extra Space, a large real estate investment trust, recently opened a new 75,000-square-foot facility only three blocks away from a 50,000-square-foot Sentry facility in Miami, creating price pressures.

But he said occupancy nevertheless held steady at his facility, indicating demand is still strong in Miami. McLaughlin attributed some of the strong demand in Miami to new multifamily housing projects being built in the city, providing additional potential customers for self-storage operators

As for the new self-storage building restrictions in Miami, it can only help existing owners, said McLaughlin. “If it slows up development for a year or so, that’s a year in which we can absorb what’s coming on line,” he said.

But what about the coronavirus emergency and the subsequent economic downturn caused by stay-at-home policies across the U.S.?

Industry officials say they’ve noticed additional price pressure in Miami, as well as in other cities. But they say the self-storage industry, often described as a “counter-cyclical” and “recession-resistant” industry, should be able to hold its own during the current national economic downturn.

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The Storage Acquisition Group logoThe Storage Acquisition Group specializes in purchasing storage facilities and portfolios nationwide. Uniquely, we allow owners to sell direct without having to list their facility. With our 4-tiered approach, Market Analysis, Acquisitions, Underwriting, & Closing Support, The Storage Acquisition Group is able to help owners navigate a simple sales process while netting the highest possible profit.

Due Diligence & Self-Storage: What is the process?

Due Diligence & Self-Storage:
What is the Process?

By: The Storage Acquisition Group

due diligence self storage investment
The Misunderstood Step of Investing in Self-Storage.
Have you recently decided to acquire or liquidate a self-storage investment? Let us help you understand how to standardize due diligence and the steps in the process.

Definition of Due Diligence:

In plain terms, due diligence is simply the process of taking reasonable steps to ensure the terms and conditions of a transaction meet a particular standard before proceeding. That analysis can be as superficial as walking around a used car and giving the tire a sturdy kick, or it can be as in-depth as an investigative audit. In the case of a self-storage facility, the complexity of the requirements will fall somewhere in between. This article will examine common terms, processes, and best practices to shed some light on an often-misunderstood step of the purchase and sale transaction.

The Due Diligence Process:

During the due diligence period, the prospective buyer and seller have agreed to work together. The seller is not actively marketing their facility for sale to others. They are giving the buyer a chance to examine the facility in-depth so that the buyer can determine whether or not moving forward to closing is prudent.

Ideally, both buyer and seller will have given some thought to the review process before contract negotiations begin. The details of the due diligence period are spelled out in the purchase and sale agreement. Both parties will need to agree on what is often a lengthy list of documents to be provided to the purchaser (Table 1.0), access to the property, and most importantly, timing. Generally speaking, one can expect the review period to last between 30-90 days depending on the resources of the buyer and the scope of the deal. The due diligence process can feel like a very pervasive experience.  While many of the documents required by the buyer are non-negotiable because they are fulfilling a bank requirement, some other terms are negotiable, and the seller is not without recourse before the terms of the agreement have been set.

In addition to document requirements, sellers will need to be prepared to provide access to a number of third-party consultants. Common visits include environmental testing, property condition visits, appraisals, and surveyors, to name a few. By adhering to normal business practices and continuing to address facility maintenance, marketing efforts, and occupancy all the way through to closing, these visits should not pose an interruption or cause undo strain for the seller.

Buyers & Sellers:

So, what is the point? What exactly is the prospective buyer doing with all of those documents?  A buyer is using the financials and operational reports provided to recreate and simulate the current state of the facility and make high-quality projections about future growth. It benefits both seller and buyer when those projections are based on plenty of reliable data points that account for seasonality, changes in the community demographic and area development. In the end, the shared goal is for the transaction to move forward with feelings of confidence on all sides and that is best achieved through patience and cooperation.

Just as experienced buyers often rely on a proven checklist of due diligence requirements and procedures, sellers too can take the strain out of the process with a little forward preparation. Keeping well-organized financial and operational records will not only make the due diligence process easier but conducting a monthly review of said documents can give an owner/operator valuable insight. Treating record maintenance as another line item on the to-do list is a best practice that can have far-reaching benefits, but perhaps nowhere will those benefits be felt more than when it comes time to collect data during the due diligence period of a facility sale.

Table 1.0

Sample List of Due Diligence Documentation Required During a Facility Sale
Document Type Range
Tax Returns 3 Years
Income Statements by Month 3 Years
Balance Sheets by Month 3 Years
Tax Bills 1 Year
Utility Bills 1 Year
Management Summaries by Month 1 Year
Occupancy Statistics by Month 1 Year
Copy of Rental Lease Agreement
Listing of All Current Rental Agreements
Listing of Major Improvements with $ Value
Pertinent Permits and Licenses
Environmental Reports
Surveys
Certificates of Occupancy (All Buildings)

 


The Storage Acquisition Group logoThe Storage Acquisition Group specializes in purchasing storage facilities and portfolios nationwide. Uniquely, we allow owners to sell direct without having to list their facility. With our 4-tiered approach, Market Analysis, Acquisitions, Underwriting, & Closing Support, The Storage Acquisition Group is able to help owners navigate a simple sales process while netting the highest possible profit.

Maxi-Space Self Storage – Tacoma WA

Maxi-Space Self Storage – Tacoma, WA

By: The Storage Acquisition Group

Maxi Space Tacoma WA

Maxi-Space Self Storage portfolio in Tacoma (MSA), Washington. Bill Sitar Jr., Esq., Andrew Burachinsky and Cowles M. “Monty” Spencer, Jr. conducted the transaction. The 7 properties offer a combination of self-storage, office and industrial space, acoustically equipped band rooms and a variety of other specialized spaces.

The sale was overseen by group president and CEO, Cowles M. “Monty” Spencer, Jr.[1]

This portfolio includes 182,255 rentable square feet of prime storage space in the Tacoma MSA.

The sale was finalized on February 4, 2020.

The Storage Acquisition Group is the premier agency for owners of self-storage facilities or portfolios presently considering opportunities for acquisition. Recognized across the industry for its owner-friendly acquisition process and providing fair market values with the lowest possible transaction costs to the owner, The Storage Acquisition Group prides itself on an open and communicative process. With decades of combined transactional experience and an integrated network of industry related consultants, the group is equipped to offer solutions on even the most complex transactions. To learn more about The Storage Acquisition Group’s unique model, visit https://thestorageacquisitiongroup.com/. The Storage Acquisition Group is a division of Mid-Atlantic Commercial Real Estate located at 110 Mid-Atlantic Place in Yorktown, VA 23693.

[1] Cowles M. “Monty” Spencer, Jr. is president and CEO of The Storage Acquisition Group, a division of Mid-Atlantic Commercial Real Estate.

Self Storage with More – Mesa, AZ

Self Storage with More – Mesa, AZ

By: The Storage Acquisition Group

Self Storage with More Meza AZ

Greg Vanlerberghe conducted the purchase of the facility located at 5932 East Brown Road in Mesa. The facility offers 780 units for a total of 91,569 square feet of prime storage space. This sale was finalized on January 17, 2020.

The Storage Acquisition Group is the premier agency for owners of self-storage facilities or portfolios presently considering opportunities for acquisition. Recognized across the industry for its owner-friendly acquisition process and providing fair market values with the lowest possible transaction costs to the owner, The Storage Acquisition Group prides itself on an open and communicative process. With decades of combined transactional experience and an integrated network of industry related consultants, the group is equipped to offer solutions on even the most complex transactions. To learn more about The Storage Acquisition Group’s unique model, visit https://thestorageacquisitiongroup.com/. The Storage Acquisition Group is a division of Mid-Atlantic Commercial Real Estate located at 110 Mid-Atlantic Place in Yorktown, VA 23693.

Cherry Road Self Storage – Rock Hill, SC

Cherry Road Self Storage – Rock Hill, SC

By: The Storage Acquisition Group

Cherry Road Rock Hill, SC

Cherry Road Self Storage in Rock Hill, South Carolina. Scott Eckert and Jonathan Spencer conducted the sale of the facility located at 1022 Hearn Street, totals 495 units across 63,980 net rentable square feet on 3.76 acres. The sale was finalized on Feb. 7, 2019.

The Storage Acquisition Group is the premier agency for owners of self-storage facilities or portfolios presently considering opportunities for acquisition. Recognized across the industry for its owner-friendly acquisition process and providing fair market values with the lowest possible transaction costs to the owner, The Storage Acquisition Group prides itself on an open and communicative process. With decades of combined transactional experience and an integrated network of industry related consultants, the group is equipped to offer solutions on even the most complex transactions. To learn more about The Storage Acquisition Group’s unique model, visit https://thestorageacquisitiongroup.com/. The Storage Acquisition Group is a division of Mid-Atlantic Commercial Real Estate located at 110 Mid-Atlantic Place in Yorktown, VA 23693.

Selling Your Facility or Portfolio

Selling Your Facility or Portfolio

By: The Storage Acquisition Group

IMG_0224

Self-Storage facilities are valued based on a range of factors, including occupancy, location, size, condition, and financials.

See how your facility measures up.

If you are thinking about selling your facility or portfolio, providing detailed documentation on all the above factors will be a necessary step whether you sell direct, list with an agent, or attempt to sell the property yourself.

A widely used financial term, capitalization, or CAP, rate, reflects a rate of return based on the property’s net operating income (NOI).  Being able to determine and justify the NOI, or cash flow of the property after income and expenses, will directly relate to the purchase price you are offered. The more desirable the property, the lower the return, CAP rate, a buyer is willing to accept to purchase the property.  There is an inverse relationship between the CAP rate and the value.  Since the NOI is fixed at the actual number, the lower the CAP rate a buyer is willing to accept, the higher the price they will pay for the property.

Completing an accurate cash flow analysis is done by reviewing your expenses as they relate to all operations. If you leave out expenses that are commonly included for typical facilities, the buyer will add back in an estimated amount for their valuation calculations.

Items in your cash flow need to include:

  • Real estate taxes & property insurance
  • Advertising & marketing
  • Management fee & payroll
  • Office Expenses: supplies, phone/Internet, credit card processing fees, online software
  • Operating Expenses: utilities, lawn care, pest control, repairs and maintenance, trash service and security

The worst way to try to increase your perceived value is to cut expenses, this does not work in today’s market.  If your property is underperforming you may want to investigate some ways to increase revenue prior to selling.  There are many ways to accomplish increasing revenues.

The Storage Acquisition Group looks at the following primary criteria when targeting self-storage facilities for acquisition:

  • 45,000 net leasable square feet or higher
  • Urban market, preferred in Top 100 MSA’s
  • Retail oriented sites with 35,000 VPD and 50,000 population in a 3-mile radius
  • Climate control and other enhanced features

Although your facility may not offer all of these primary criteria, it still could be considered as a candidate for our direct acquisition process.

Additional characteristics which help the value of your facility are:

  • Multiple unit sizes advertised at market rents
  • Attractive appearance (curb appeal matters in storage too)
  • Proper drainage (avoiding flooding and freezing)
  • Proper signage or ability to have signage seen by passing traffic
  • Automatic gate with 24-hour access
  • Proper lighting (security systems and cameras are a definite bonus)
  • Web-enabled rentals and payments

Having or adding any of these features will increase the property’s value and allow it to be considered as part of our acquisition process. In addition, understanding your market and its specific demands is also essential in the valuation process. Are you located in Florida? If so, climate-controlled units are a must. Always analyze your market to determine if you are offering the features considered standard and offered by your competition.

Now you that you have determined your facility meets some, or all, of the criteria to sell, what comes next? You will need to decide how you would like to sell your facility. There are three basic options: list your facility with a broker, sell it yourself, or skip all the marketing and sell direct to our client.

With our direct selling option, once we review the financials, we can provide a purchase offer. With the acceptance of the offer, the next step in the process is due diligence. At The Storage Acquisition Group, we handle the due diligence process for you with the help of our due diligence coordinator.

Due diligence includes (but is not limited to) verification of the following:

  • Trailing 12-month financial statement
  • Occupancy statistics report
  • Management summary
  • Income and expenses
  • Property inspections

Once the due diligence has been completed, the next step is to proceed to closing. We offer closing support including one point of contact during the closing process.

The decision to sell is never easy which is why we offer a free market analysis and an associate who specializes in your market. Setting aside the complexity of the transaction, simply walking away from a business can be a difficult decision. For many owners, storage ownership has been a continuous process of designing, building, maintaining, and improving the asset. As a company, we appreciate the hard work, sweat equity, financial and emotional risk that goes into this. We want to make the selling process smooth and help you make the right decision, so we’re here to help with any questions regarding market dynamics, capital gains, 1031 options, and other issues that may affect the decision or timing of a sale.

If you have more questions concerning selling your facility, please reach out to us anytime at 757-867-8777 or info@thestorageacquisitiongroup.com.

Unlike other CRE brokers, selling direct to our client eliminates the need to list your facility in order to sell. In fact, our company’s model is based on selling direct and netting you the highest possible return. We are able to do this because we exclusively represent a buyer who has dedicated $5B to self-storage acquisitions nationwide and we charge no fees to the seller for our service, thereby increasing your bottom line


The Storage Acquisition Group logoThe Storage Acquisition Group specializes in purchasing storage facilities and portfolios nationwide. Uniquely, we allow owners to sell direct without having to list their facility. With our 4-tiered approach, Market Analysis, Acquisitions, Underwriting, & Closing Support, The Storage Acquisition Group is able to help owners navigate a simple sales process while netting the highest possible profit.

CrossTrax Self Storage – Charlotte, NC

CrossTrax Self Storage – Charlotte, NC

By: The Storage Acquisition Group

Crosstrax Self Storage Charlotte NC

CrossTrax Self Storage in Charlotte, North Carolina. Scott Eckert and Jonathan Spencer conducted the sale of the facility located at 9400 Bob Beatty Road in Charlotte. The facility sits on 11.86 acres and totals 666 units across 116,350 net rentable square feet. The sale was finalized on Feb. 7, 2019.

The Storage Acquisition Group is the premier agency for owners of self-storage facilities or portfolios presently considering opportunities for acquisition. Recognized across the industry for its owner-friendly acquisition process and providing fair market values with the lowest possible transaction costs to the owner, The Storage Acquisition Group prides itself on an open and communicative process. With decades of combined transactional experience and an integrated network of industry related consultants, the group is equipped to offer solutions on even the most complex transactions. To learn more about The Storage Acquisition Group’s unique model, visit https://thestorageacquisitiongroup.com/. The Storage Acquisition Group is a division of Mid-Atlantic Commercial Real Estate located at 110 Mid-Atlantic Place in Yorktown, VA 23693.

The Storage Acquisition Group Announces New Chief Marketing Officer

The Storage Acquisition Group Announces New Chief Marketing Officer

By: The Storage Acquisition Group

Melissa Shandor

YORKTOWN, VA, January 9, 2020 (Newswire.com) – The Storage Acquisition Group (TSAG) appointed Melissa Shandor as Chief Marketing Officer, effective immediately. As CMO, Shandor will be responsible for the company’s advertising, sponsorships, promotions, research, insights, and digital marketing initiatives.

“We are excited to bring Melissa on board to continue our presence nationally and launch our initiative to expand internationally,” said Monty Spencer, President & CEO of The Storage Acquisition Group. “Since its inception in 2014, The Storage Acquisition Group has seen substantial growth and bringing Melissa on board will support our expansion.”

Shandor brings extensive experience in digital marketing and brand awareness and a proven and consistent track record to launching and driving rapid growth in marketing. As CMO, Shandor will be responsible for driving TSAG’s success through a layered marketing approach throughout its 30+ markets.

About The Storage Acquisition Group 

The Storage Acquisition Group is a commercial real estate firm that specializes in self-storage acquisition. With brokers nationwide, the TSAG team is able to purchase properties prior to listing. TSAG represents one of the largest private owners of self-storage in the United States. Its investment fund allocated over $2 billion for the acquisition of quality self-storage for sale.


The Storage Acquisition Group logoThe Storage Acquisition Group specializes in purchasing storage facilities and portfolios nationwide. Uniquely, we allow owners to sell direct without having to list their facility. With our 4-tiered approach, Market Analysis, Acquisitions, Underwriting, & Closing Support, The Storage Acquisition Group is able to help owners navigate a simple sales process while netting the highest possible profit.

Monty Spencer Announced as Power Broker Award Winner for CoStar

Monty Spencer Announced as Power Broker Award Winner for CoStar

By: The Storage Acquisition Group

Monty Spencer

Cowles M. ‘Monty’ Spencer, Jr. receives the CoStar Power Broker Award for the highest transaction volume in Commercial Real Estate

WASHINGTON, March 17, 2020 (Newswire.com) – CoStar Group, Inc., the data/analytics leader of the commercial real estate industry, just announced this year’s Power Broker Award recipients, recognizing professionals and firms who closed the highest transaction volume in commercial real estate deals and leads in their respective markets. In Hampton Roads, Virginia, Cowles M. “Monty” Spencer, Jr. has been recognized as one of the most active local dealmakers with the prestigious industry award

Monty serves as the President and CEO of The Storage Acquisition Group, an affiliate of Mid-Atlantic Commercial Real Estate. He has completed over $1.5 billion in transactions over his career in the CRE industry.

About The Storage Acquisition Group:

The Storage Acquisition Group specializes in purchasing storage facilities and portfolios nationwide. Uniquely, they allow owners to sell direct without having to list their facility. With its four-tiered approach – Market Analysis, Acquisitions, Underwriting and Closing Support – The Storage Acquisition Group is able to help owners navigate a simple sales process while netting the highest possible profit.

The Storage Acquisition Group is an affiliated entity of Mid-Atlantic CRE, located at 110 Mid-Atlantic Place, Yorktown, Virginia.


The Storage Acquisition Group logoThe Storage Acquisition Group specializes in purchasing storage facilities and portfolios nationwide. Uniquely, we allow owners to sell direct without having to list their facility. With our 4-tiered approach, Market Analysis, Acquisitions, Underwriting, & Closing Support, The Storage Acquisition Group is able to help owners navigate a simple sales process while netting the highest possible profit.