The Opportunity

  • Consolidation

    Industry Consolidation is inevitable - 90% of industry are "Mom-and-Pop" Operations

  • Urban Assets

    REITs have acquisition appetite for industrial quality Urban Assets

  • Absent New Construction

    Absence of significant New Construction especially in the Urban Cores

  • REITs Reliance

    Result is REITs reliance on entrepreneurial developers for acquisition pipeline

  • Portfolio Generation

    Intrinsic value in portfolio generation 1 + 1 > 2

Urban Storage Fund focuses on creating storage product in urban markets which consistently perform best from rental rate, occupancy and valuation perspectives.

The self-storage industry is highly fragmented with publicly traded self-storage companies comprise only 10% of the industry and the remaining 90% made up of private “mom-and pop” operators. Additionally, urban markets are characterized by smaller housing units and increasing population densities which has lead to a huge uptick in demand for urban core storage facilities.

Yet, despite these demand drivers, a disproportionately low supply of self-storage product exists in these markets leading to significantly higher storage rents and occupancies in urban markets. In fact, urban operators have been raising rents at levels of 5% or more over the past two years.

These desirable urban core markets are characterized by:

  • Higher population densities
  • Higher rents
  • Higher occupancy levels
  • Higher entry barriers – to preserve investment value
  • Higher exit valuations

Key Drivers for Opportunity

  • Small, regional operators lack the resources and expertise to develop urban infill self-storage product.
  • Large, publicly traded self-storage companies lack the agility and entrepreneurial vigor to execute new urban development.
  • REIT financial structure represents an added disincentive to development as new project construction and rent-up periods are not accretive to REIT balance sheets.
  • High demand for multi-property portfolios has lead to a pricing premium with a cap rate gap as wide as 100 basis points between portfolio sales and single-property sales.
  • Over the past year total U.S. self-storage acquisitions have approached $2.5 billion, the largest volume since 2007, and far in excess of the annual average of $1.5 billion over the past 5 years.