Self-storage REIT CubeSmart recently opened a facility in New York City, increasing its dominance in one of the country’s hottest storage markets.
The new 50,6127-square-foot building at 1235 E. Tremont Ave. in the Bronx is CubeSmart’s 23rd location in the city. As of Dec. 31, the company had spent $15.6 million to develop the facility, which features indoor and outdoor drive-up units, office workspaces and free Wi-Fi for customers.
Publicly traded CubeSmart is the largest self-storage operator in the Big Apple, with more than 1.68 million square feet of rentable space. The company took New York’s top spot in one fell swoop back in 2012, when it bought a 22-facility portfolio from Storage Deluxe for $560 million. That deal remains the largest self-storage transaction of all time.
Staying on top
Malvern, PA-based CubeSmart plans to spend even more money to remain king of New York. In the fourth quarter of last year, the company formed two joint ventures to develop more facilities in the city.
One joint venture, with CubeSmart as a 51 percent partner, will develop a facility at 251 Jamaica Ave. in Queens. The other joint venture, with CubeSmart as a 90 percent partner, will develop another two facilities in New York City. The second joint venture also includes a project in Northern Virginia.
The four facilities are set to be completed in 2015. As of Dec. 31, CubeSmart had sunk $16.9 million into the projects, including the Virginia facility.
Competition from all sides
CubeSmart maintains a big lead when it comes to market share in the city. Public Storage, the country’s largest storage operator, has 12 locations in the city. Extra Space has eight locations and Uncle Bob’s has none.
Last June, Public Storage opened a 12-story, 4,000-unit facility at 385 Gerard Ave. in the Bronx, just a few miles from the new CubeSmart location. Public Storage acquired that site in 2012 for $30 million.
Private operators Storage Post, Safeguard Self Storage, StorageMart, Manhattan Mini and Storage Deluxe also maintain a strong presence in the city. New brands are breaking into the market as well. Last year, Gotham Mini Storage opened its first facility in Manhattan, the first new storage development in the borough in more than a decade. Development of the Gotham facility cost $15 million.
The high cost of land and construction are one reason why New York City commands some of the highest rental rates in the U.S. The national average monthly rate for a 10×20 unit is about $171. In New York, that unit would cost almost $500 a month.