For the second year in a row, Denver-based Spartan Investment Group has been named to Inc. magazine’s annual Inc. 5000 list, based on its revenue growth of 2,543 percent from 2018 to 2020. In fact, Spartan Investment was ranked 166th on this year’s list, up from No. 306 in 2020, making it once again a member of the elite Inc. 500 for the fastest-growing private companies.

With $125 million in investment funds, Spartan Investment has clearly been on a roll of late, increasing the number of self-storage facilities it owns from 14 to 25 since this past spring alone. And it currently has 32 additional self-storage properties under contract, including an 18-facility portfolio based in the Dallas-Fort Worth area.

Founded in 2013, the 55-employee firm now has $325 million in assets under management in nine states, operating under the FreeUp Storage brand, and CEO Scott Lewis says Spartan has every intention of keeping up its blistering pace of acquisitions and new construction.

Lewis recently talked with SpareFoot about his company’s goals and challenges moving forward.

A Spartan owned facility in Texas.

Spartan Investment has now been named two years in a row to the Inc. 5000 list. What are the chances of making it three years in a row? Can you possibly sustain a three-year 2,543 percent growth pace?

I think the probability of making the list again is very, very high. We did some quick math. We’ll probably be at around 1,500 percent growth for next year. As for continuing to make it in future years, the Inc. 500/Inc. 5000 is (categorized) into two parts. The probability of us sticking around the top 10 percent for much longer is probably lower. But we’ll probably be on the Inc. 5000 list for a while.

Spartan Investments now has self-storage facilities in nine states. Is there a state or region that you’re currently not in but would really like to expand into? 

In the upper Midwest we have only one facility and we would really like to grow in that area. The reason for that is we’d like to concentrate our assets so that we can leverage economies of scale, both from a labor perspective and from a materials perspective.

Define upper Midwest.

Wisconsin and Minnesota. Probably not Illinois. But really it’s Wisconsin and Minnesota.

One of your colleagues at Spartan Investment, Aaron Saunders, director of construction, recently told SpareFoot that he hoped one day to build three to four new facilities a year. Is that still a goal and is it feasible? Do you see new construction as part of your future?

Now more than ever. Our goal now is actually five to six new builds per year. When Aaron came on (earlier this year), he didn’t have a construction team. We’ve since built up Spartan Construction Management. Since you’ve spoken to Aaron, we’ve added five additional members to that team and we got two more positions out there to round out the construction team to seven people.

How are prices of construction going? Are they still rising and is it still a problem?

They are still rising. But as far as how does it effect us for our underwriting, for underwriting you really have to do a multi-variables analysis to come to an answer. As construction prices are rising, the rents have grown coming out of the pandemic and interest rates have dropped. While construction prices are coming up, rents are also keeping pace. Some of the construction prices are starting to drop down. And interest rates are phenomenal right now. So are construction costs going up? Yes. It is a problem on the construction side, but overall we’re still able to underwrite deals.

Do you see raising more funds from investors for self-storage acquisitions and developments? 

Yes. We have built up a retail investor list of about 4,000 investors. Today, we’ve raised about $125 million. We have got about $175 million to $225 million to go in order to hit our goal of having about a billion and a half dollars in assets under management by around 2023.

Really? Within two years?

We have a lot of work to do.

Some say self-storage may actually have too many investment players and dollars chasing too few deals. Do you agree or disagree with this assertion – and why? 

I’m in the middle there. I know it’s a wishy-washy answer. The reason I’m in the middle there is because there’s a lot of consolidation going on. So, yes, there is a lot of money chasing deals. However, we also have some tax changes coming up that could incentivize some of the mom-and-pop operators to put their facilities on the market because they don’t want to mess with capital gains and they’re getting older and it’s harder to compete because the market is consolidating. So, again, there’s a lot of money chasing deals. At the same time, there are starting to become additional incentives for more deals to come to the market. 

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Jay Fitzgerald