TSAG Market Analysis: Salt Lake City

TSAG Market Analysis: Salt Lake City

By: The Storage Acquisition Group

Salt Lake City, Utah

Salt Lake City hits a self-storage sweet spot.

If there’s such a thing as a self-storage sweet spot for investors, it may well be Salt Lake City.

The Salt Lake City region may not have the most impressive industry statistics when it comes to self-storage rental prices, occupancy rates and other measurements of how hot (or not hot) a market may be compared to other areas of the country.

But Salt Lake City and its surrounding suburbs still score high in just about every category of importance to self-storage players, such as in population growth, new housing construction and economic expansion, in addition to strong rental prices and occupancy rates.

As a result, the Salt Lake City area of Utah has become one of the most desirable self-storage markets to be in for owners and investors alike, industry officials agree.

“It’s a very strong market,” says Michael Wolfe, owner of Downtown Storage and an investor in other self-storage enterprises in the Salt Lake City area. “All of our facilities are doing well.”

“The Salt Lake City area has all the right check marks in its favor,” says Cory Sylvester, a partner at Radius +, the industry research and analytics arm of Union Realtime. “Where’s there’s growth in population and new jobs, self-storage will follow. And Salt Lake City has both.”

In recent decades, the Salt Lake City area has most definitely grown, from 792,000 people in 1990 to about 1.18 million people today, according to U.S. Census data. Over the years, people have flocked to the region for a number of reasons, including its natural beauty, its growing tech industry and its status as the state capital and home to the Church of Jesus Christ of Latter-day Saints (LDS Church).

Recently, the region and other parts of Utah have also seen an influx of new residents arriving from high-cost states such as California, industry officials say.

No matter what the reasons, Salt Lake City’s recent growth in population is driving a regional housing-construction boom and increasing demand for storage, says Dan Nixon, owner of Paragon Group Inc., a property management and development company that owns and operates a number of self-storage facilities in Utah. Its brands include Lock it Up Self Storage and Cubes Self Storage.

“The area’s economy and housing market are among the strongest in the nation,” Nixon says. “In-migration has been huge.”

Yet as storage demand has increased, the region has only seen relatively modest increases in new construction, data indicates.

With about 194 storage facilities, the region has 9.8 million square feet of storage space, or about 8.3 square feet per capita, which is higher than the national penetration rate of about 6, according to Radius + data.

But the region’s penetration rate is far below those seen in other red-hot storage markets, indicating Salt Lake City is far from being oversaturated with new facilities. Indeed, only nine new facilities are currently in the planning pipeline, according to Radius +.

The general lack of overbuilding is one of the reasons why rental prices have remained relatively stable, excluding recent price spikes associated with the COVID-19 pandemic and economic downturn. In December, rents for 10-by-10-foot, climate-controlled units in the area were going for about $150, according to data.

Occupancy rates, meanwhile, have remained steady, in the 93 percent range, at facilities tracked by Radius +.

Jordan Cherrington, a manager at Draper Self-Storage and a member of the board of directors at the Utah Self Storage Association, says many developers are balking at new projects due to the high cost of construction.

Rent prices may have risen 10 percent to 20 percent due to the pandemic-era increase in demand for storage, he noted. But construction costs for some items have increased by 100 percent or more, he says.

“Construction prices are through the roof,” Cherrington notes. “A lot of builders are very hesitant to proceed with projects.”

Nixon adds that the cost of land has also skyrocketed in recent years, further discouraging new developments. “I’m not buying any new land for self-storage (development) because none of the numbers pencil out,” he says.

Jonathan Cutler, chief operating officer at Storage Acquisition Group, says there’s another reason why there isn’t much construction going on in the Salt Lake City area: zoning and permitting restrictions. “A lot of municipalities are stopping self-storage from coming in,” says Cutler.

The combination of scarce land and government building restrictions has contributed to the Salt Lake City region becoming a “high barrier area” for those trying to expand or crack into the market, says Cutler.

But that’s good news for existing facility owners, who benefit from limited supply amid increasing demand for storage.

Cherrington notes that many large investors, attracted to the Salt Lake City market, have recently been offering huge sums to buy properties, driving down cap rates from about 6.5 two years ago to below 4 today.

“It’s a great time if you’re an owner,” he says.

Storage Acquisition Group’s Cutler said he’s not surprised that so many industry players want a piece of the Salt Lake City action. He rattled off all the pluses of the area – its growing tech industry (with some calling the region a “mini-Silicon Valley”), skilled work force and strong tourism sector, among other strengths.

“Salt Lake City is a great opportunity for anyone looking to do business in a high-growth area,” Cutler says. “We’re very high on Salt Lake City.”

Salt Lake City at a Glance

Metro Area Population 1.8M
Penetration Rate 8.3
Total Storage Space 9.86M SF
Occupancy Rate 93%
Median Household Income $75,878

  Note: Data from Radius+, U.S. Census

The Storage Acquisition Group logo

The 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.

Pensacola Self Storage-Pensacola, FL

Pensacola Self Storage-Pensacola, FL

By: The Storage Acquisition Group

Pensacola 2

The Storage Acquisition Group (TSAG) is pleased to announce the closing of Pensacola Self Storage in Pensacola, FL. The facility is located at 1130 West Nine Mile Road Pensacola, FL. The facility offers 66,623 net rentable square feet across 483 units of both climate and non-climate-controlled space and is conveniently located near Interstate 10 and major retailers.

The buyer was represented by Monty Spencer, CEO of The Storage Acquisition Group and Vice President of Mid Atlantic Commercial Realty in Yorktown, VA, and the seller was represented by Adam Schlosser, Senior Vice President with Marcus & Millichap.

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 their four-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.

TSAG Market Analysis: Seattle and Tacoma

TSAG Market Analysis: Seattle and Tacoma

By: The Storage Acquisition Group


The Seattle-Tacoma self-storage market: Steady as she goes

Looking for a self-storage market that’s traditionally been strong, stable and steady over the years? Those interested in self-storage need look no further than the Seattle metropolitan area.

The Seattle-Tacoma self-storage market definitely has had its share of challenges and opportunities in recent years, from high land prices and tough zoning laws to a growing population and vibrant tech-driven economy.

Through it all, the Seattle-Tacoma area has managed to achieve a sort of Goldilocks balance – not too hot, not too cold – that’s led to a combination of strong, though not too strong, self-storage occupancy and rental rates, new construction and heightened competition.

It is anyone’s guess how long the relatively stable and steady market can last – and there are those who believe the Seattle-Tacoma market may soon experience major turbulence due to what they see as recent overbuilding.

For now, though, most industry players say the overall Seattle-Tacoma market is humming along quite nicely.

“The whole industry is doing well here,” says John Eisenbarth, vice president of operations at West Coast Self Storage, which manages 94 facilities in Washington, Oregon, California and Nevada. “Demand is high and there’s a lot of money flowing into the industry.”

“The Seattle metro area is such a strong market,” says Cory Sylvester, a principal at Radius Plus. “It has a lot of jobs, and it’s a scenic area where people want to live and work.”

All of which translates into an attractive self-storage market, where the occupancy rate is just under 93% for the 454 facilities tracked in the Seattle-Tacoma region. Prices are currently hovering around $200 per month for a 10-foot-by-10-foot climate-controlled unit.

The solid numbers are ultimately driven by the region’s population growth over the decades, rising from 1.7 million in 1980 to 2.7 million in 2000 and then to 3.8 million today, according to data.  Driving those numbers has been the Seattle-Tacoma area’s emergence as a major tech hub, with both Microsoft and Amazon calling the region their home.

The net result: A healthy self-storage market stretching back more than a generation.

“Across the board, it is a strong market,” says Melissa Shandor, chief strategy officer at The Storage Acquisition Group. “The market is consistent, with tracked, gradual growth.”

One industry number that jumps out is the area’s overall penetration rate of 6.8, or the number of square feet of self-storage space per capita.  That’s higher than the national penetration rate of about 6, but it’s far from being considered oversaturated.

There is one major cause for concern: Approximately 1.9 million square feet of new self-storage space in the planning and construction stages in the Seattle-Tacoma area.

With the potential of adding more than 7 percent to the region’s current 25.4 million square feet of storage space, the possibility of oversaturation looms in the future.

Patrick Gilroy, co-owner of Stor-House Self Storage, is seeing the burst of new construction first hand.  Across the street from his 730-unit facility in Bellevue, a city of 144,000 located across Lake Washington from Seattle, Public Storage is tearing down an old facility and planning to build a new 1,000-unit storage facility, he says.

Once the Public Storage project is finished, Gilroy says he’s expecting “downward pressure on rental rates” in the area.

In general, Bellevue and other growing communities surrounding Seattle and Tacoma are seeing the highest number of new construction projects, Gilroy and other industry experts agree.

“Bellevue and other places are getting spillover from Seattle,” says Gilroy. “People are moving further out, especially since COVID-19. Remote work has helped the suburbs.”

“Investors should pay attention to the activity and data surrounding Seattle and Tacoma,” agrees TSAG’s Shandor. “The story is being told in the tertiary markets.”

Not that it’s easy to build or do business in those surrounding communities, the entire Puget Sound area is surrounded by water, mountains and evergreen forests, thus limiting where developers can build and driving up land prices in the process. Then there’s tough zoning laws that contribute to the area’s image as a “high barrier” storage market.

Andrew Burachinsky, an advisor at The Storage Acquisition Group, says the Seattle-Tacoma market clearly has more pluses than minuses. “It’s been experiencing an influx of young professionals moving there, helping the housing market, and that’s keeping the self-storage rental rates high,” he says.

But he warned recent new construction is threatening to disrupt the usually stable Seattle-Tacoma market. “Unfortunately, it could be over-supplied soon,” he says. “There could be some major adjustments in prices.”

West Coast Self Storage’s Eisenbarth agrees the potential is there for market turbulence ahead. “I don’t have a crystal ball, but over the next three or four years new supply could cause some price pressures,” he said.

Still, Eisenbarth, a member of the Washington (State) Self Storage Association’s board of directors, says he’s bullish on the Seattle-Tacoma self-storage market in general.

“Acquisitions have become more of a scene this year, compared to past years,” he says, noting the increasing flow of investment dollars into the popular Seattle-Tacoma region.

Seattle-Tacoma at a Glance

Population 3.8M
Number of storage facilities 454
Square feet of storage 25.4M
Penetration Rate 6.7
Occupancy Rate 92.94%
Median Household Income $91,068

  Note: Data from Radius+, U.S. Census

The Storage Acquisition Group logo

The 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.

Virginia Beach Self Storage Facility

Virginia Beach Self Storage Facility

By: The Storage Acquisition Group

Barber pic

The Storage Acquisition Group (TSAG) is pleased to announce the closing of 2424 Castleton Commerce Way in Virginia Beach, VA.  The facility offers 390,816 net rentable square feet across 795 units of both climate and non-climate-controlled space and 186 RV parking spots.  It is conveniently located by hospitals, retail, and in the fastest growing residential area in Southeast Virginia.

The transaction was negotiated by Cowles M. “Monty” Spencer, CEO of The Storage Acquisition Group and Vice President of Mid Atlantic Commercial Realty in Yorktown, VA.  Spencer has received the Power Broker Award as the top producing agent in Hampton Roads for the past 10 years.

The Storage Acquisition Group specializes in purchasing storage facilities and portfolios nationwide and in Canada.  With their four-tiered approach, Market Analysis, Acquisitions, Underwriting, & Closing Support, TSAG allows owners to sell direct without listing or any seller-paid fees or commissions.  TSAG is able to navigate a simple sales process while netting the highest profit for sellers.

CubeSmart-Tampa, FL

CubeSmart (Mgd) Tampa, FL

By: The Storage Acquisition Group

Tampa Closing

The Storage Acquisition Group (TSAG) is pleased to announce the closing of a CubeSmart managed self-storage facility in Tampa, FL.  The facility is located at 3935 W. Cypress St. and offers 58,135 NRSF across 591 units of both climate and non-climate controlled space.  The facility is conveniently located adjacent to Interstate 275 and part of the Tampa-St. Petersburg MSA hosting over 3.1M people.

The transaction was negotiated by David Spencer, Vice President and Senior Advisor with The Storage Acquisition Group and Executive Advisor with Spencer Commercial Group (based in Decatur, GA, and brokered by eXp Commercial) and TSAG CEO & President Cowles M. “Monty” Spencer, Jr.

The Storage Acquisition Group specializes in purchasing storage facilities and portfolios nationwide and in Canada.  Uniquely they allow owners to sell direct without listing or any seller-paid fees or commissions.  With their four-tiered approach, Market Analysis, Acquisitions, Underwriting, & Closing Support, TSAG is able to navigate a simple sales process while netting the highest profit for sellers.

TSAG Market Analysis: Calgary

TSAG Market Analysis: Calgary

By: The Storage Acquisition Group

Calgary skyline

Calgary is a seemingly boom-or-bust town in more ways than one.

Canada’s third-largest city and fourth-largest metropolitan center, Calgary is well known for its vibrant, though volatile, oil-and-gas industry that has economically dominated large portions of Alberta Province for decades now.  This has spurred fast growth when times are good for the oil and gas markets and slow growth when times are not so good.

In a way, Calgary’s self-storage market reflects that boom-or-bust trend.  Some areas of metropolitan Calgary are experiencing an oversaturation of self-storage facilities while other areas have little or no facilities. Other areas have seen construction of new self-storage facilities, while many areas still rely on old (and full) drive-up facilities.

“It doesn’t make sense sometimes,” says Louis Libin of Calgary-based Trilogy Self Storage, referring to the juxtaposition of old and new storage facilities spread inconsistently around the Calgary region. Calgary is an anomaly. You’ll have an old and unheated drive-up facility doing well and nearby a new facility that’s struggling.”

To be clear, Libin and other self-storage players are big fans of the Calgary market, noting that the metropolitan area continues to grow in population, though in fits and starts, and that the economy has been diversifying in recent years. The Calgary region’s population now stands at about 1.4 million people.

As for the region’s self-storage market, Radius Plus currently tracks 64 storage facilities, or 3.17 million square feet of space, in the Calgary metropolitan area.

As is the case in other Canadian cities, Calgary has fewer square feet of storage space per capita compared to metro areas in the U.S. The self-storage penetration rate for metropolitan Calgary is about 2.25, roughly equal to other major Canadian cities but only about one-third the rate as seen in U.S. cities.

The reason cited for the relatively low storage supply in Calgary and other Canadian cities: higher taxes and construction prices and tougher zoning and building codes.

Industry experts also note that self-storage is still a relatively new concept for many Canadians, though its popularity and the demand for space are steadily rising.

The result of the limited supply and slowly growing demand: solid rental prices in Calgary.

Prices for 10-foot-by-10-foot storage units can range anywhere from $180 to $200 and up (Canadian dollars) per month, or $145 to $161 in U.S. dollars, according to Radius Plus data. Those are strong numbers, no matter what the international currency.

The favorable rental numbers and other positive factors are attracting more self-storage investment players to Calgary, says Matt Verity, vice president of storage operations and marketing at StoreWest, which owns two self-storage facilities in Calgary, one in Montreal and two in Nova Scotia.

“It’s getting more competitive,” says Verity. “More companies are looking at Calgary.” They include both Canadian and U.S. self-storage players, he notes.  New construction is occurring in some parts of the city – while existing facilities are being snapped up. “Consolidation is occurring,” says Verity.

It helps that the oil-and-gas industry has been on the upswing of late, as commodity prices soar amid supply-chain problems across the world, caused mostly by pandemic-related disruptions at international ports. Calgary is benefiting from that recent surge in oil and gas prices.

“It’s getting more robust,” Verity says. “We’re feeling more bullish these days.”

The city needed the economic shot in the arm, considering the global oil-and-gas industry had been struggling until recently and harming Calgary’s economy in the process. Indeed, the office vacancy rate in downtown Calgary remains high and the region’s unemployment rate hovers at about 9 percent, according to data.

The economic ups and downs have made Calgary a tricky place for self-storage, Calgary is a good market, but it’s volatile.  The pluses are definitely there, noting the region’s growing population and strong housing market. Calgary’s median household income is also strong at $107,479 (Canadian), higher than other major Canadian cities, such as Montreal, where the median household income is about $85,000 (Canadian), according to Radius Plus data.

In addition, Calgary may be known as an oil-and-gas town, but it’s located in a scenically beautiful area of Alberta, at the foothills of Canada’s Rocky Mountains, and its tourism and recreational sectors are considered strong — and getting stronger by the year.  That has led to a boost in storage of boats, RVs, and other recreational-related items.

“I’m very, very bullish on Calgary,” says Lloyd McDonald, director of acquisitions in Canada for The Storage Acquisition Group. “It’s a very beautiful and livable area. There’s more to Calgary than oil and gas.”

McDonald notes that storage occupancy levels in Calgary have remained strong over the years despite economic ups and downs. Indeed, some of the best-performing facilities are non-climate-control, drive-up storage structures built in the 1970s and 1980s.

Meanwhile, new facilities are mostly going up in the outer northern, western, and southern areas of metro Calgary. McDonald said there are “great opportunities” for development in underserved areas of Calgary.

Libin of Trilogy Self Storage said his firm is eyeing possible new self-storage developments “within a five- to ten-year window,” possibly marrying them up with car-wash services at sites. “I’m not too worried about raising capital (for new projects),” says Libin.  Still, zoning restrictions are among the biggest challenges facing any new developments, Libin says.

Verity at StoreWest said it’s critical to carefully research an area before embarking on new storage projects in the Calgary area. After securing a site, developers then need to closely work with community groups and boards to make sure their concerns are addressed.

Among the things communities want are well-landscaped sites and ground-floor amenities of some sort, such as retail or some other non-storage services, Verity says.

Greater Calgary at a Glance

Population 1.4M
Penetration Rate 2.25
Development Pipeline 2.25%
Median Household Income $107,479 (Canadian)
Tracked SF of Storage 3.17M

  Note: Data from Radius+, industry officials

The Storage Acquisition Group logo

The 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.

TSAG Market Analysis: Montreal

TSAG Market Analysis: Montreal

By: The Storage Acquisition Group

Aerial View of Montreal in Autumn Season, Quebec, Canada

First off, it’s “entreposage,” not “storage.”

That’s one of many things U.S. investors and others need to learn when trying to crack into the highly desirable but high-barrier self-storage market in Montreal, the second largest city in Canada.

Much has been made of the subtle differences between the Canadian and American self-storage markets, such as Canada’s higher construction costs and capital gains taxes and its lower number of storage units per capita compared to the U.S.

But those differences are only magnified in Montreal, the cultural and economic center of the French-speaking Quebec province that thinks of itself as almost a separate nation within a nation, with its own unique laws and regulations, including mandatory use of French when conducting (most) business in Quebec.

“French-Canadians are very proud of their language and heritage,” says Alain Gingras, senior director at StorageMart, which owns eight self-storage facilities in Quebec, five of them in the immediate Montreal area. “Anyone who doesn’t understand that (pride) is going to be in for a surprise.”

To be clear: Montreal, like other large Canadian cities, is an attractive self-storage market for long-time owners and new investors alike.

With more than 4 million people living in the metropolitan Montreal area, demand for self-storage is growing, albeit at a slower pace than in the U.S., and rent prices are strong, running around $200 (Canadian) a month, or about $156 in U.S. dollars, for a 10-by-10-foot storage unit.

But demand alone doesn’t account for the solid pricing. The Montreal area has a relatively small supply of storage properties, about 136 facilities, which amounts to about 1.39 square feet of storage space per capita, a low level compared to the penetration rate in other major Canadian cities, according to data from Radius Plus.

There are a number of reasons for the low supply, including the fact that Montreal proper is an island city at the confluence of the St. Lawrence and Ottawa rivers and doesn’t have much available space on which to build.

“The cost of land is very restrictive,” says Lloyd McDonald, director of Canadian acquisitions for The Storage Acquisition Group. “It’s not easy to find affordable space to build. Montreal is an older city, so old buildings often have to be converted if you want more storage.”

But like in other parts of Canada, as well as in parts of the U.S., zoning and permitting are tough in Montreal, increasing the time and cost of conversions or new construction, assuming investors can find properties to develop or redevelop. Further, construction costs are high in Montreal, as they are throughout most of Canada, even compared to the increasing rates in the U.S.

The city’s lack of available land and zoning restrictions has tended to push new self-storage construction into Montreal’s suburbs, though even there the pace of development is slower than in other areas of Canada, industry officials agree.

Another reason for the tight storage supply in the Montreal area: modern self-storage consisting of multi-story facilities and sophisticated climate-controlled systems – is relatively new to Canada, not just Montreal.  This is in comparison to the U.S. where these features consistently exist in major MSA’s.

“People here are just discovering self-storage,” says Simon Berman, co-founder of Montreal Mini-Storage, operator of 14 facilities in Quebec, with an additional two facilities on the way as a result of conversion projects. “There’s a relatively low awareness of self-storage, but it’s gaining acceptance. People realize they need space.”

And, last but not least, there are indeed cultural barriers that can make it challenging for some non-French speakers to do business in Montreal, such as requirements that marketing has to be conducted in both French and English.

“It’s different doing business in Quebec in general,” says David Allan, vice president of Apple Self Storage and a well-known writer and speaker about the Canadian self-storage industry. “Montreal is such a wonderful city. They’re very proud of their heritage, so they have specific laws to protect it. It’s little things that can be a challenge, such as digital marketing in both languages.”

In addition, French-Canadians tend to like doing business with local or regional companies, if possible, so larger national (or continental) self-storage operators may be at a disadvantage when it comes to some local customers, industry officials agree.

Such customer sentiments and other high-barrier factors partly explain why there are relatively few large self-storage players in the Montreal market compared to the rest of Canada.  About 50 percent of self-storage facilities in Toronto are owned by national companies, but in Montreal, the figure is only about 15 percent. Partly due to hesitancy on the part of developers and investors to enter the market.

The overall attractions of Montreal – including its size, growing storage demand, and solid pricing — ultimately outweigh any challenges.

“Montreal is such a unique city,” agrees McDonald of The Storage Acquisition Group. “It’s a good storage market with a lot of potential to grow.”

And remember: it’s “entreposage,” not “storage,” or “entreposage libre service,“ if you really want to impress the locals.


Greater Montreal at a Glance

Population 4.2M
Square Feet of Storage Space 5.5M
Number of Storage Facilities 136
Penetration Rate 1.39
Percentage of renter-occupied dwellings 42%

  Note: Data from Radius+, industry officials

The Storage Acquisition Group logo

The 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.

TSAG Market Analysis: Vancouver

TSAG Market Analysis: Vancouver

By: The Storage Acquisition Group

Vancouver - Canada

Vancouver is considered one of best self-storage markets for investors in North America; that is if you can find an affordable property to buy or build upon.

As Canada’s third-largest city, Vancouver, has been booming in recent decades. With the population of the British Columbia metropolis, located just north of the U.S. border along the Pacific Rim, increasing by 500,000 since 2000 and by nearly a million people since 1990.

Not surprisingly, the housing market has been on fire, as new multifamily towers and other dwellings are built, sold, and leased at an expeditious pace to meet the growing demand of the region’s now 2.4 million residents. All of the growth has been very good for self-storage operators in Vancouver.

“A lot of micro-sized apartment buildings are going up and they offer very little in the way of storage for tenants or owners,” says Hugh Cartwright, co-founder, and chairman of Vancouver-based Nationwide Self Storage. “So, outside of the standard users such as the four D’s (Death, Divorce, Downsizing or Dislocation), everyone needs to store camping equipment, sporting equipment, like skis and hockey gear, and Christmas stuff or small business inventories.”

As a result of that demand, self-storage occupancy rates and rent prices are high in Vancouver.  Radius Plus reports prices for some 10-by-10 storage units in the Vancouver area are now hovering in the $366 (Canadian dollars) range, or about $290 in U.S. dollars. Those are eye-popping dollar figures in either currency.

Sure, demand for storage in Vancouver is strong, but when it comes to why occupancy and rental rates are so high there is more to the story than increasing population. The supply of storage space is very low in Vancouver, at least by U.S. standards.  Low supply and high demand – that’s where it gets challenging for investors.

With about 5.8 million square feet of self-storage space in the region, Vancouver’s self-storage penetration rate – or the amount of square feet of storage per capita – is about 2.4, less than half the U.S. rate of 6, according to Radius Plus. The Vancouver metro area has only about 114 storage facilities, averaging about 52,000 square feet in size.

Vancouver’s self-storage penetration rate is actually in line with the rest of Canada, which traditionally has had fewer storage units per capita compared to the U.S. There are a number of reasons cited for Canada’s lack of storage facilities, including the fact Canadians don’t pick up and move from region-to-region as often as Americans.

In the case of Vancouver, there’s another reason: lack of available, and affordable, land. The scenically beautiful Vancouver area is hemmed in by water, mountains, and the U.S. border.  Available land is hard to find, says Robert Madsen, president of U-Lock Mini Storage and President of the Vancouver Island Self Storage Association.

“Land is very expensive – and when you do find available land it usually goes to someone else who plans to use it for a different purpose and can pay more,” he says, noting Vancouver’s voracious appetite for more housing.

In fact, Vancouver is considered the most densely populated city in Canada, with a large number of multi-family residential towers packed into a relatively small area, according to published reports.

Besides the lack of available and affordable land, construction prices in Canada are higher than in the U.S.  Then there’s the, oftentimes daunting, zoning and building restrictions that add to the woes of developing new facilities in Vancouver.

Combine everything together – lack of land, high land and construction costs, and regulatory hurdles to building – and you have “sheer frustration” when it comes to new construction, says Madsen.

While there are high barriers to building in Vancouver, there are also high barriers to buying in Vancouver, as well as in other Canadian cities. The main barrier: the country’s high capital gains tax that discourages existing facility owners from selling.

“The capital-gains tax makes people think twice about selling,” says Lloyd McDonald, director of Canadian acquisitions for The Storage Acquisition Group. “When talking to owners of self-storage facilities, the tax question comes up quite often.”

The bottom line, says McDonald, is that owning self-storage facilities in Vancouver is an “unequivocally good investment” – but cracking into that market is hard.

There is new construction under way in the Vancouver area. According to Radius Plus, the current projected supply pipeline would add about 2.9 percent to the region’s total square footage of self-storage space, increasing Vancouver’s penetration rate to about 2.52.

But that supply increase probably won’t be enough to meet demand, especially if Vancouver remains a popular magnet for newcomers, particularly immigrants from Asia. Besides its natural beauty, Vancouver is seen as a culturally sophisticated and cosmopolitan city, consistently ranking high on travel lists as one of the more attractive and “livable” cities in the world.

“Vancouver is such a unique place,” says McDonald. “It really feels like a different country. I love going and staying there.”

Vancouver’s attractiveness makes it a “very positive” long-term bet for investors, says Cory Sylvester, a principal at Radius Plus. “Its housing market is hot. Obviously, housing growth helps storage.”

Nevertheless, U-Lock Mini Storage’s Madsen warns there are plenty of “if” caveats when it comes to investing in the Vancouver region.

“The big “ifs” are if you can find a place to buy or if you can find a site to build,” he says. “Vancouver is a great market, but it’s a very challenging market”.

Greater Vancouver at a Glance

Population 2.4M
Square Feet of Storage Space 5.8M
Number of Storage Facilities 114
Storage Per Capita 2.4
Percentage of renter occupied dwellings 34%

  Note: Data from Radius+, industry officials

The Storage Acquisition Group logo

The 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.

Understanding the Real Estate Transaction

Understanding the Real Estate Transaction

By: Monty Spencer, CEO

Business network concept. Customer support. Shaking hands.

Although negotiation times vary, there are principal steps that occur as part of the real estate transaction that parties involved can expect to see.

To begin, the buyer and seller must agree upon a realistic, market-supported starting point for price negotiations.  Both parties should be amenable to a confidentiality agreement before exchanging proprietary information.  The buyer must be prepared to provide the seller with a list of reports/information needed in order to perform a thorough evaluation of value. Both buyer and seller should be clear about any extenuating circumstances that may require an adjusted transaction timeline such as tax considerations, third-party inspector availability, financing issues.  The buyer should provide the seller with an LOI or a PSA. Once provided, the seller should consult with an attorney and counter with any desired changes in order to begin a formal negotiation. Once terms are agreed upon, both parties sign, and buyer deposits earnest money as outlined in the PSA. At this time, the process would move to the due diligence period.

Sellers should expect a due diligence period of 30-60 days followed by a closing period of 30 days.  During the due diligence period, sellers should expect the following: 

Seller’s number one priority should be to continue running their business as efficiently as possible throughout the sales process.  Sellers should gather and organize 12 months of financials, operational reports, bank statements, rent rolls, surveys, environmental reports, approved building/zoning plans, list of major improvements.

Additionally, the seller will need to provide access to the buyer and their third-party vendors to complete their due diligence. In most cases, terms regarding access, notice, and confidentiality will have already been addressed in PSA negotiations.  The seller should begin focusing on a transition plan for staff, utilities, vendor accounts, equipment, and items that will not convey with the sale.

Buyers have their own set of responsibilities when transitioning into the due diligence period.  Buyers are expected to do the following: 

Regarding the buyer’s financing (if any), the buyer should have all the required debt and equity lined up and committed.  Further, the buyer should perform a thorough review of the facility’s financial and operating reports or have someone lined up who can perform such an evaluation within the constraints of the due diligence period.

The buyer should have third-party vendors vetted and booked to perform any required consultations. Not only must the visits be performed within the due diligence period, but the buyer must allow themselves time to review any returned reports.  The buyer should have a clear understanding of the criteria they hope to find after performing their financial and operational reviews.

The goal is to have a simple and seamless sales process that avoids potential problems and delays.  To avoid problems, parties should consider the following: 

Both the buyer and the seller should have a contingency plan and know where they are willing to compromise should unknown problems arise.  It is essential for both parties to do their homework and understand market conditions. Taking the time to research the market including sales comparables, rental summaries, and development pipelines will pay off when it comes time to negotiate a price.

As for transaction times, they can range from 60 days to 120 days (without complications).  To avoid frustration, both parties should begin by setting clear guidelines and taking the time to make sure essential items have been addressed.

Transparency by both parties is key to a successful transaction.  Both buyer and seller have a vested interest in completing the transaction. If either side experiences an unforeseen challenge, it is highly likely both sides will want to come together to find a solution and salvage the transaction.  Having realistic expectations and goals when presented with delays in the process will allow both parties to work together more efficiently.

As seen in other industries, commercial real estate has noted trends that impact change in the market and transactions 

Recently, Covid 19 has created challenges for owners that slowed transactions.  Moratoriums on raising rents and evictions altered the outlook of many facilities and affected the ability to provide accurate reporting to initiate a sale.  2021 has proved to reverse some of this and shown the resiliency of self storage.

The exuberance of investors who focus on this market sector has increased over recent years.  The self storage industry has proved to be an effective hedge on investment dollars for companies and individuals looking for a recession-resistant way to invest their capital.

Proposed tax changes may have a significant impact on the urgency to enter into a real estate transaction.  With the uncertainty surrounding capital gains, set up in basis, and 1031 exchange options, sellers may choose to expedite future liquidation plans.

The best advice that could be given to buyers and sellers is:

  • Set realistic expectations
  • Be willing to do the homework
  • Prepare for and be patient through unforeseen challenges
  • Bring integrity and transparency to your transaction
Monty Spencer

Cowles M. “Monty” Spencer, Jr. serves as The Storage Acquisition Group’s President & CEO. Monty is an accomplished real estate executive with over 20 years of commercial real estate experience. He has won numerous CoStar® Power Broker of the Year and Commercial Real Estate Council Awards, as well as winning the Deal of the Year Award & Broker of the Year Awards for three consecutive years. Distinguished throughout the industry for developing dozens of high-profile retail projects, Monty has brought his unique blend of expertise and ambition to spearheading The Storage Acquisition Group. He received his BA from the University of Mississippi in Business Administration & Marketing.

TSAG Market Analysis: Las Vegas

TSAG Market Analysis: Las Vegas

By: The Storage Acquisition Group

Panoramic view of Las Vegas Strip at night in Nevada

Las Vegas has become a very good bet for self-storage owners and an increasing number of investors looking to jump into the Nevada market.

Though Greater Las Vegas has seen a substantial uptick in new self-storage construction in recent years, Nevada’s largest metropolitan area hasn’t experienced major price volatility.  Although other cities have endured price unpredictability with new facilities suddenly coming online, Vegas’s growing population has kept demand high for self-storage in the market.

“It’s been a great market,” says Cory Sylvester, a principal at Radius Plus, the research arm of Union Realtime, the self-storage data analytics company. “Las Vegas has been a big beneficiary of net migration, a lot of it coming from California.”

Indeed, Sin City, known for its bright lights and the high hopes of gamblers flocking to its famed casinos, isn’t the only metro area booming these days in Nevada.

Reno, the state’s third-largest city located in northwest Nevada, has seen its population spike by about 18 percent over the past ten years, to about 266,500 people. New residents keep coming into Reno, and surrounding areas, often from nearby California.  California’s taxes and cost-of-living are much higher than in Nevada, which doesn’t have a state income tax.

“There’s a lot of building going on, but it’s not overbuilding,” says Todd Whear, owner of Stor-All, referring to the suburban self-storage market in northern Nevada. “It’s needed construction due to high demand. It’s all demand-driven.”

Whear, vice president of the Nevada Self-Storage Association, owns five facilities in northern Nevada, with its headquarters located an hour south of Reno, and is adding 35,000 square feet at two facilities as a result of the strong demand.

In the Las Vegas area, there’s most definitely a boom in both population and the demand for more housing – and thus the need for more self-storage space has spiked.

With 276 facilities and 17.9 million square feet of self-storage space, the Las Vegas-Henderson-Paradise region has a penetration rate, or the amount of square feet of self-storage space per capita, of about 8.3, just a little higher than the national average, according to Radius Plus data.

Currently, there are about 29 facilities in the development pipeline, which could add 12.4 percent to the Las Vegas region’s total supply of self-storage space, according to Radius Plus. But Sylvester of Radius Plus says the area should be able to absorb new space.

“People know it’s a healthy market and that’s why it’s attracting investors,” says Sylvester.

There has indeed been some price unpredictability of late, with climate-controlled prices falling from around $2.30 per square foot in early July to $1.79 per square foot in early August. But prices are still way up from the pre-pandemic average of around $1.20 per square foot, data shows.

Meanwhile, the occupancy rate in the Las Vegas area has continued to hover at around 95 percent.

“Las Vegas is a very dynamic market,” says Gary Free, president, and CEO of Towne Self Storage, which has seven facilities in the Las Vegas area, in addition to about 20 other facilities in Utah and Arizona. “Things got a little difficult during the pandemic last year, but currently we’re doing quite well. Rents have been going up.”

Free noted that all segments of commercial real estate, not just self-storage space, seem to be doing well these days in Las Vegas.

Despite the vibrant nature of the Las Vegas market, Free, whose firm develops self-storage facilities, said investors still have to do their research in order to succeed in the region. Some of the risk factors include the state of the still fragile national economy, inflation, and overbuilding in certain sections of the region.

“You have to be very careful because it’s easy for an area to get overbuilt,” says Free. “But we’re pretty happy right now.”

Dylan Stallings, an advisor for The Storage Acquisition Group, said he’s impressed with the rents that storage facilities have been getting of late in the Las Vegas area, noting they’re now hovering just shy of $1.30 per square foot. The reason for the strong price trends: The region’s growing population, Stallings said.

According to U.S. Census data, Las Vegas’s population has increased by about 14 percent over the past ten years, to about 667,500 people.

Meanwhile, the city of Henderson, just south of Las Vegas, has seen an eye-popping 32 percent increase in population since 2010, to about 341,500 residents. All of those new residents need new housing – and self-storage space that’s associated with people on the move.

“There’s definitely a lot of people moving out of California and feeding into Nevada,” says Stalling.

As for potential overbuilding, Stalling said it’s a concern, but not a big concern, considering the growing demand for space in the Las Vegas region. “If rent trends continue, new construction shouldn’t be a problem,” says Stalling.

The bottom line: Las Vegas area is considered a “very healthy market” in the long run, says Stalling.

Steve Kramer, president of the Nevada Self Storage Association, agrees that Las Vegas is a good long-term bet for investors – as long as the market doesn’t get too hot and overbuilt. “Oversaturation is the only thing I worry about,” he said.

Greater Las Vegas at a Glance

Number of Facilities 276
Development Pipeline 29 Facilities/12% of Supply
Population 2.2M
Penetration Rate 8.3
Median Household Income $60,909
Percentage of renter-occupied dwellings 41%

  Note: Data from Radius+, industry officials

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The 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.