As the self-storage industry heads into 2017, old and new players alike are looking to make their mark in an increasingly competitive self-storage industry.
Based on their past performance and future plans, here are 10 storage companies we expect to make headlines in 2017:
Capital Boulevard Self-Storage by Baranof Holdings will be a 123,000-square-foot facility in Raleigh, NC.
1. Baranof Holdings
Self-storage developer – Dallas, TX
2016 accomplishments: Broke ground on 9 new facilities in 4 markets: Seattle, Portland, Austin, Raleigh. Facilities will be completed one per month starting in March 2017, and represent a total of 650,000 square feet of rentable storage space.
2017 goals: 6-8 new storage developments in high barrier-to-entry markets.
Greatest strength: “Baranof is well capitalized and from the outset of our company, a purposeful internal set of systems and procedures were designed to move quickly throughout the development process, particularly in otherwise difficult to develop markets,” said Andy Hendricks, managing partner.
Biggest challenge 2016: “Increasing competition in the development market has had a major impact on almost every aspect of the process,” Hendricks said. The biggest day-to-day challenges was getting enough time with busy vendors. Forming long term strategic relationships with vendors has helped strengthen commitments.
Biggest challenge 2017: Rising construction costs will place higher premiums on site selection and partnering with the right design and build professionals.
2. Brookfield Asset Management / Simply Self Storage
Global alternative asset manager – Toronto, ON / Self-storage operator – Orlando, FL
2016 accomplishments: Acquisition of Simply Self Storage by Brookfield in March. Under Brookfield, Simply has acquired about $600 million in assets, going from 90 facilities to 175 owned properties by year-end. The company closed on developments and lease up facilities at a projected cost of $125 million that will expand its footprint into Southern California, Texas, Florida and the New York metro. “Many of the acquisitions marked Simply’s entrance into new markets thereby adding sufficient scale for the company to perform competitively in these markets while pursuing smaller deals to fuel future growth,” said Kurt O’Brien, CEO of Simply. Also obtained $750 million securitized loan to refinance existing debt, finance new assets and purchase additional facilities.
2017 goals: Continue aggressive growth through acquisition of operating and certificate of occupancy assets in addition to ground-up development. Invest in revenue management and digital marketing technology to further drive customer demand. I
Greatest strength: Brookfield has made a long-term commitment to the sector and provides sellers great comfort in Simply’s ability to close quickly with certainty, and enhances Simply’s already strong reputation in the industry among brokers and other industry players.
Biggest challenge 2016: The biggest challenge for Simply in 2016 was implementing Brookfield’s reporting requirements and policies and procedures. Brookfield’s policies and procedures now have Simply operating in the same fashion as a public company.
Biggest challenge 2017: Our aggressive growth strategies can stretch resources and our biggest challenge will be to ensure that we continue to invest in people and processes to execute the strategy.
Closetbox greatly expanded its presence in 2016 and is looking to partner with self-storage operators in 2017.
3. Closetbox
Full-service storage provider – Denver, CO
2016 accomplishments: Achieved 7x growth year-over-year and expanded nationally to reach 70 percent of the US population, with service in 40 out of the top 50 metro areas.
2017 goals: Partner with a few great self-storage operators to help them expand service offerings. “Closetbox presents a unique opportunity for the most forward thinking and innovative self-storage operators to gain a competitive advantage by partnering with us,” said Chris Griego, vice-president of partnerships.
Greatest strength: Our devotion to exceptional customer service, our proprietary technology and our unique ability to help customers anywhere in the United States.
Biggest challenge 2016: We overcame many challenges by doing hard things well.
Biggest challenge 2017: Finalizing partnerships with select self-storage operators.
4. Monolith Group
Self-storage owner and developer – Scottsdale, AZ
2016 accomplishments: Entitled and developed 5 self-storage facilities totaling more than 550,000 square feet. Drone video above shows construction in progress in Glendale, AZ.
2017 goals: 7 projects spanning 800,000 square feet under contract and finalizing entitlements. 2 more projects closed escrow and ready to start construction in February. Capacity for 2 more development projects.
Greatest strength: 30 years industry experience and vertical integration of acquisition, development, entitlement, brokerage and construction. Ability to build facilities faster and more economically than others. “The fastest we have built an all Masonry CMU built building was 5.2 months from the moment we put a shovel in the ground. That building was 105,000 square feet. I won’t tell you what my cost was because nobody would believe us,” said Tony Ardizzone, CEO.
Biggest challenge 2016: Worthing with municipalities to build near residential areas. “When you are building a 100,000 + square foot building directly next door to a residential neighborhood, you need to envision your own family living in that house that you are impacting. You need to take yourself out of the developer/investor mode and acquiesce to the concerns of your neighbors,” Ardizzone said.
Biggest challenge 2017: “Lenders appear to be restricting the advantages we saw in the last 24 months. There is still plenty of lending options but the right lending partnership is crucial to a successful project,” Ardizzone said.
5. Prime Group Holdings
Self-storage owner and operator – Saratoga Springs, NY
2016 accomplishments: Acquired more than 80 locations and entered 5 states for the first time. Portfolio now totals 124 facilities in 19 states.
2017 goals: Add 50 to 75 more locations, approaching portfolio of 200 facilities.
Greatest strength: Our greatest strength is our people. We have carefully chosen people that not only have excellent skill sets, but also care about others and the industry as a whole.
Biggest challenge 2016: Adding 80+ locations while maintaining solid infrastructure.
Biggest challenge 2017: Finding properties that meet criteria.
A Space Shop Self Storage facility in Marietta, GA.
6. Space Shop Self Storage
Self-storage owner and developer – Atlanta, GA
2016 accomplishments: Acquired or started construction on 7 new self-storage properties. Opened 3 new properties in metro Atlanta.
2017 goals: 7 ground-up development projects on track to open. Several acquisitions of existing properties with improvement and expansion capability in process.
Greatest strength: “Discipline. Performing detailed, thoughtful market due diligence and choosing to walk away from mediocre deals to find great deals,” said Cliff Hite, vice president of operations.
Biggest challenge 2016: Rising construction costs and increasing new supply in overheated markets. “Construction costs have elevated the overall cost of doing a new development to a point where conservative rental rate projections many times do not justify moving forward,” Hite said. Willingness to walk away from deals that are just “good” and waiting for ones that are “great” is critical to success.
Biggest challenge 2017: Our big challenge is operating multiple facilities in multiple states undergoing lease up. “Keeping an eye on unit rates and balancing concessions and growth, this is where we excel and we have put systems in place to help maximize our success,” Hite said.
7. Storage Pros Self Storage
Self-storage owner – Farmington Hills, MI
2016 accomplishments: Acquired 13 properties and started 3 development projects. Completed portfolio repositioning involving sale of 54 assets over two-year period.
2017 goals: Complete 2 to 3 developments in progress and carefully examine other opportunities. “If we could match 2016’s production, that would be terrific,” said David Levenfeld, CEO.
Greatest strength: “We think that for a while now, we have been the largest company in the industry without pre-determined equity source that has a hand in our investment decisions,” Levenfeld said. This allows Storage Pros to be nimble and quick when it comes to decision making, and freedom to consider strategic exits in response to market conditions.
Biggest challenge 2016: Transformed from a self-managing operator of 70+ assets to a company utilizing third-party management (CubeSmart). This change in business model resulted in a substantial restructure of our organizational Chart and day-to-day focus. On acquisition front: intense competition for desirable properties and high asking prices. On development front: extremely difficult, costly and lengthy permitting processes.
Biggest challenge 2017: Continued disciplined growth at this part of the cycle.
8. Store Here Storage Management
Owner, operator and management company – Orange, CA
2016 accomplishments: 4 acquisitions, 2 expansions/remodel projects, 15 facilities rebranded, 4 facilities sold. Launched call center for system of 70 facilities.
2017 goals: 10 acquisitions, 4 new development projects, expand call center to serve 150 facilities.
Greatest strength: “The owners/principals are highly involved in every aspect of the business from acquisitions, operations, accounting, tenant insurance and call center, we handle all business internally and limit outsourcing. We use state of the art tracking and revenue management to maximize returns to our investors and partners,” James Hanrahan, managing partner.
Biggest challenges 2016: Finding deals with solid upside, with preference for off-market direct deals. “It can be a ton of work, but we have found the deals in the areas we wanted with a bit of tough digging,” Hanrahan said.
Biggest challenges 2017: Finding the right deals to expand into regions where we are not doing business. Anticipating cap rate trends and lending environment.
Rendering of a self-storage scheduled for completion in 2017 by Wentworth Property Group.
9. Wentworth Property Company
Self-storage developer and owner – Phoenix, AZ
2016 accomplishments: Since late 2015, accumulated portfolio of 15 existing facilities and development projects in 4 states: Arizona, California, Oregon and Nevada. Currently have 9 facilities in operation and 6 under construction, representing an eventual total of 1.2 million rentable square feet.
2017 goals: Close on one project a month and surpass 2 million rentable square feet. Grow into several more states.
Greatest strength: “With a lot of help from the rest of our company, David Brown and I pride ourselves on not getting out-hustled. We’re a small team that are all willing to wear a lot of hats,” David King, vice-president of self-storage.
Biggest challenge 2016: Sourcing good opportunities and being able to get debt that makes sense. “Having great partners that can move fast is also really important,” King said.
Biggest challenge 2017: “Getting the doors open on all of our current development projects and replicating what we did in 2016,” King said, “Finding the right kind of Debt is also a challenge.”
A new facility by Westport Properties nears completion in North Miami Beach.
10. Westport Properties / US Storage Centers
Self-storage owner, operator and management company – Irvine, CA
2016 accomplishments: Acquired 25 new facilities in 4 states. Expanded brand and market presence. Began construction or entitlements on 8 new facilities.
2017 goals: Continue to acquire and develop well-located facilities. Capacity to do as many good deals as the market allows. Starting year with “very full” pipeline of prospective acquisitions and development deals.
Greatest strength: “What differentiates us competitively is our entire team and company culture. Our late founder – and industry pioneer – Barry Hoeven created a culture of being results driven, accountable, respectful, and of giving back to the community. Also, we have a very deep bench with dedicated departments for acquisitions, development, marketing and operations.”
Biggest challenge 2016: Market shift made deals more difficult to get done. “We still got all of our deals done but, just not with the ease of 2015. I know many of our peers experienced this as well and it’s probably for a variety of reasons.”
Biggest challenge 2017: Finding quality deals in good markets due to heightened competition compared to recent years.
