MyPlace, a new self-storage venture recently founded by industry veteran Kurt O’Brien and financially backed by Nuveen Real Estate, expects to acquire and develop hundreds of self-storage facilities as it expands primarily in secondary markets in coming years, a top Nuveen executive says.
Nuveen Real Estate, the huge real-estate investment company with $154 billion in global assets under management, recently invested an undisclosed amount of money in MyPlace, described as a “vertically-integrated” storage firm launched last year by O’Brien, who’s also the founder and former CEO of Simply Self Storage.
MyPlace and Nuveen started acquiring assets together in 2022 and have approximately $300 million of assets under management across both value-add and core-plus strategies—a number they hope to grow to $1 billion over the next two years.
MyPlace already owns and operates about 30 facilities in Texas, Florida, North Carolina and other southern states, says Michael Hunter, global co-head of housing and alternatives at Nuveen, which itself separately owns hundreds of self-storage assets valued at $3 billion in the U.S. and Europe.
A tech-driven opportunity
The new company will primarily focus on secondary markets across the Midwest, Sunbelt, and Mountain West with strong demographic trends and limited self-storage supply.
MyPlace will automate many of the facilities, using the most up-to-date technology to obtain greater efficiencies, said Hunter, who expressed confidence MyPlace will grow to hundreds of facilities in five years.
“We think the opportunity in the private market is huge for a new platform to come out with new technology starting from scratch,” Hunter said.
Hunter recently talked with the Storage Beat about why it invested in MyPlace, the firm’s long-term plans and the self-storage industry in genera
What is it about MyPlace that made you want to invest in the company?
Michael Hunter: We’ve been spending quite a bit of time looking for the right platform, or a person to align with our vision, and we did come across Kurt O’Brien several years ago. When he was ready to go start his own platform, we were pretty excited that we got a call from him and are really excited to be part of MyPlace and the growth opportunity there.
It’s the long term vision that Kurt has and that aligns with what we want to grow. We’re not here for a quick turnaround to the platform. It’s really about building long-term growth, building it the right way for long-term sustainability. Also, building from the ground up gives you an interesting opportunity to start from scratch and to leverage new technology.
MyPlace’s strategy is to focus on secondary markets in the Midwest, Sunbelt, and Mountain West areas. Why those markets?
Think of our strategy more as outside of the urban core and the big gateways. For us, it really comes down to two things. One is less supply. And in secondary [areas] we’re seeing a lot better growth in these markets because of that. So for us, it’s really kind of following the demographics. As we all know, the data says that 70% of renters live within a three- to five-mile radius. That’s about a 15-minute drive from the assets.
We’re a large platform at Nuveen. We are one of the largest multifamily owners. We have over 70,000 apartment units. Leveraging our data and our ability to kind of say, ‘Okay, where do we see the puck going? What can we do here?’ And that’s led us to these secondary markets.
We still see the REITs are there. The largest players are there. But we’re just hoping to see better growth opportunities and, frankly, less competition on acquisitions as well.
How big do you see MyPlace getting, say within five years and then 10 years?
We just want to build a best-in-class platform. We think the opportunity in the private market is huge for a new platform to come out with new technology starting from scratch. For us, I don’t know if we ever want to be competing with the biggest investors. It’s all about quality over quantity for us. So we just want to be out there. We don’t have a goal for size. It’s more about performance. We’re more performance driven.
But do you see MyPlace growing beyond 100 facilities within five years?
Oh, yeah, yes, definitely. We do have strong ambitions to grow this right. Kurt has historically built two of the largest privately held self-storage platforms. … That’s part of why we teamed up with him.
Do you see hundreds, plural, of facilities?
Does Nuveen intend to keep investing in non-MyPlace storage companies and properties?
We have no intentions to do that. We’re planning to do all of our self-storage with MyPlace that we can, kind of aggregating everything into that one platform. Nuveen is a top five asset manager globally. And size is great, but only if you leverage it the right ways.
How do you see the self-storage market playing out through the end of 2023?
We take the top view that there’s a lot of volatility out there in the market. It’s obviously affecting all sectors and all sectors differently. I do think self-storage is not immune to that. I think you’ve seen some slowdown in terms of occupancy and rental rates. But I think you’re coming off of such a historical high, that even coming down we’re still at or above long-term averages for rental rate growth, as well as for occupancy. So I think we’re still in a good spot.
Are you concerned about rising interest rates and how they may impact the self-storage industry?
It’s hard to say that interest rates going to where they have from where they were a year ago have had zero impact. But I do think a couple things that separate self-storage from other sectors are the month-to-month lease rates. The small incremental amounts of increases in storage as well as the month to month leases do allow us to pass through those inflationary costs that we are seeing. Being able to pass it through I think is a big benefit for self-storage.
Is there any impact that you foresee from the Silicon Valley Bank collapse and from other banks struggling of late?
I think it’s too early to say. I don’t see any impact right now. Obviously, we’re being prudent with our own banks. We always have been. We are responding judiciously, making sure we’re taking the right steps we always have. I feel like we put ourselves in a good spot. But I think it’s still very hard to say what the impact is going to be. Time will tell.