A new self-storage brokerage firm in Tampa, FL, is looking to expand quickly throughout the U.S.

Jay Crotty started BayView Advisors in January after a year leading the self-storage division of real estate investment bank Brown Gibbons Lang. He brought two colleagues, Thomas Doyle and Joseph Brazill, along with him. (Crotty and Doyle are in the back row of the top photo; in the front row are Brazill, Rachel Hung and Steven Hung).

“We just felt like it was an opportunity to allow us to better serve our clients,” Crotty, founder and managing partner of BayView Advisors, told The SpareFoot Storage Beat. “Our goal is to become the premier self-storage advisory firm in the country.”

It may be the best time ever to be a seller.
— Jay Crotty, founder and managing partner of BayView Advisors

Crotty said being the principal of his own firm allows him to make business decisions quickly without going through a chain of command. His team’s departure from Brown Gibbons Lang was amicable, he said.

“We still do a lot of business back and forth with each other,” Crotty said.

BayView Advisors has closed deals this year for five properties totaling $36 million. That includes the $16.4 million sale of Fibber McGee’s Closet in Naples, FL, to W.P. Carey, a New York City, NY-based REIT.

The SpareFoot Storage Beat spoke with Crotty about his plans for the firm and his view of the acquisition market in 2015. Here is an edited transcript.

Jay Crotty
Jay Crotty left Brown Gibbons Lang to form BayView Advisors.

Now that you’ve launched BayView Advisors, how do you plan to expand?

Crotty: A lot of our clients have asked us to broaden our geographic reach. Storage is really a regional and national business; it isn’t enough for us to focus on just transactions in Tampa.

Out of the gate, we are able to do business in over 40 states, so from day one we can do deals anywhere in the country. We made a decision as a company to centralize all operations and marketing here in Tampa. We will have teams in other regions of the country to get out and meet owners face-to-face. (Crotty said locations of new offices will announced soon.)

How does the acquisition market differ in 2015 compared with last year?

Crotty: We have not seen a slowdown in terms of buyer interest. Probably the recurring theme at the recent Self Storage Association show in DC was the massive war chest of money that buyers have to spend. The challenge is there is not enough product to buy.

So what does that mean for sellers?

Crotty: It is a terrific opportunity for sellers who are realistic about valuation. It may be the best time ever to be a seller. Cap rates are very low, and operating fundamentals continue to be strong.

Back to the product mix that is out there: How is it different from what the industry has seen over the past couple of years?

Crotty: So many large portfolios have already been sold, so we are seeing a lot more single-asset transactions. We are in communication with hundreds of owners who are in their 60s and 70s who are potentially getting ready to retire and feel like it’s a good time to sell.

We will see some smaller and midsize portfolios trade this year. We are seeing a little more buyer appetite in tertiary markets. Because cap rates are so compressed in primary markets, we are seeing money that would only be looking in the top 25 markets going outside of that to look for higher yields.

What about the REITs? Are they as active as they have been?

Crotty: From what we are seeing with our business, the REITs are very active, but quite selective. From talking to them all, I feel like they do anticipate their acquisition volume to be down this year over last year. Again, if you have a really well-located asset and it fits into their box, they will still get very aggressive and pay top dollar.

With the REITs easing up off the gas a little bit, does that create opportunities for other self-storage buyers?

Crotty: We are seeing that some private operators that are backed by private equity firms have gotten really aggressive. They don’t have as many checkboxes as the REITs do. We have one deal that has not closed yet that has a retail component up front and storage in the back. It is in a great area and all the REITs looked at it, but because of the retail, they decided to pass. The private guys are also highly competitive with multiple offers going back and forth, increasing by $100,000 each time.

Being based in Florida, do you expect the state to still be as hot a market for self-storage deals as it has been recently?

Crotty: Florida as a state has strong job growth and population growth. It is very pro-business with low taxes, and companies are relocating to Florida. That all fuels demand for storage. All the big money wants to be there. I would say that there are not as many large portfolio deals available in Florida, so the total sales volume may not be as large this year.

Alexander Harris