As Canada\u2019s 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.<\/p>\n
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\u2019s now 2.4 million residents<\/strong>. All of the growth has been very good for self-storage operators in Vancouver.<\/p>\n \u201cA lot of micro-sized apartment buildings are going up and they offer very little in the way of storage for tenants or owners,\u201d says Hugh Cartwright, co-founder, and chairman of Vancouver-based Nationwide Self Storage. \u201cSo, 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.\u201d<\/p>\n As a result of that demand, self-storage occupancy rates and rent prices are high in Vancouver. \u00a0Radius 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.<\/p>\n 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.\u00a0 Low supply and high demand \u2013 that\u2019s where it gets challenging for investors<\/strong>.<\/p>\n With about 5.8 million square feet of self-storage space in the region, Vancouver\u2019s self-storage penetration rate \u2013 or the amount of square feet of storage per capita \u2013 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<\/strong>.<\/p>\n Vancouver\u2019s 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\u2019s lack of storage facilities, including the fact Canadians don\u2019t pick up and move from region-to-region as often as Americans.[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_btn title=”Subscribe to Market Analysis Reports” color=”primary” size=”lg” align=”center” link=”url:https%3A%2F%2Fthestorageacquisitiongroup.com%2Fsubscribe-to-our-market-analysis-reports%2F|||”][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]In the case of Vancouver, there\u2019s another reason: lack of available, and affordable, land<\/strong>. The scenically beautiful Vancouver area is hemmed in by water, mountains, and the U.S. border.\u00a0 Available land is hard to find, says Robert Madsen, president of U-Lock Mini Storage and President of the Vancouver Island Self Storage Association.<\/p>\n \u201cLand is very expensive \u2013 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,\u201d he says, noting Vancouver\u2019s voracious appetite for more housing.<\/p>\n 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.<\/p>\n Besides the lack of available and affordable land, construction prices in Canada are higher than in the U.S. <\/strong>\u00a0Then there\u2019s the, oftentimes daunting, zoning and building restrictions that add to the woes of developing new facilities in Vancouver.<\/p>\n Combine everything together \u2013 lack of land, high land and construction costs, and regulatory hurdles to building \u2013 and you have \u201csheer frustration\u201d<\/strong> when it comes to new construction, says Madsen.<\/p>\n 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\u2019s high capital gains tax that discourages existing facility owners from selling<\/strong>.<\/p>\n \u201cThe capital-gains tax makes people think twice about selling,\u201d says Lloyd McDonald, director of Canadian acquisitions for The Storage Acquisition Group. \u201cWhen talking to owners of self-storage facilities, the tax question comes up quite often.\u201d<\/p>\n The bottom line, says McDonald, is that owning self-storage facilities in Vancouver is an \u201cunequivocally good investment\u201d \u2013 but cracking into that market is hard.<\/p>\n 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\u2019s total square footage of self-storage space<\/strong>, increasing Vancouver\u2019s penetration rate to about 2.52.<\/p>\n But that supply increase probably won\u2019t 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 \u201clivable\u201d cities in the world.<\/p>\n \u201cVancouver is such a unique place,\u201d says McDonald. \u201cIt really feels like a different country. I love going and staying there.\u201d<\/p>\n Vancouver\u2019s attractiveness makes it a \u201cvery positive\u201d long-term bet for investors, says Cory Sylvester, a principal at Radius Plus. \u201cIts housing market is hot. Obviously, housing growth helps storage.\u201d<\/p>\n Nevertheless, U-Lock Mini Storage\u2019s Madsen warns there are plenty of \u201cif\u201d caveats when it comes to investing in the Vancouver region.<\/p>\n \u201cThe big \u201cifs\u201d are if you can find a place to buy or if you can find a site to build,\u201d he says. \u201cVancouver is a great market, but it\u2019s a very challenging market\u201d.<\/p>\n Greater Vancouver at a Glance<\/strong><\/p>\n \u00a0 <\/em>Note: Data from Radius+, industry officials<\/em><\/p>\n 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.<\/p>\n [\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n","protected":false},"excerpt":{"rendered":" [vc_row][vc_column width=”1\/2″][vc_column_text] TSAG Market Analysis: Vancouver By: The Storage Acquisition Group[\/vc_column_text][\/vc_column][vc_column width=”1\/2″][vc_single_image image=”15187″ img_size=”full”][\/vc_column][\/vc_row][vc_row][vc_column][vc_separator border_width=”4″][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]Vancouver is considered one of best self-storage markets for investors in… <\/p>\n\n\n
\n Population<\/td>\n 2.4M<\/td>\n<\/tr>\n \n Square Feet of Storage Space<\/td>\n 5.8M<\/td>\n<\/tr>\n \n Number of Storage Facilities<\/td>\n 114<\/td>\n<\/tr>\n \n Storage Per Capita<\/td>\n 2.4<\/td>\n<\/tr>\n \n Percentage of renter occupied dwellings<\/td>\n 34%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n ![\"The](\"https:\/\/thestorageacquisitiongroup.com\/wp-content\/uploads\/2019\/06\/TSAG_pngs-01-300x106.png\")
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