The population of Austin, TX is booming. The metro area of nearly two million grew by three percent last year, making the Texas capital the third-fastest growing metro in the country.
As more and more new residents move to the area, so does their stuff—and that’s creating a big opportunity for self-storage developers like locally based Capella Capital Partners.
“The secret’s already out. Everybody is aware Austin is a good market,” said Scott Moxham, chief financial officer.
Early in the game
Fortunately for Capella, the company got a head start on the current wave of self-storage development overtaking the city. The company has completed two facilities and has six more on the way.
“It’s getting harder and harder to find a piece of property. There is lot’s of competition and not just from storage developers,” Moxham said.
The company was formed in 2012 to focus on self-storage development. Its members are area commercial real estate professionals with backgrounds in different asset types. The firm is an affiliate of Capella Commercial, a full service commercial real estate firm.
“We love the asset class,” Moxham said, “It’s a cheaper build than other asset types. Rents per square foot can exceed multifamily and it’s easier to operate with the right management company.”
Capella completed its first storage facility in December 2013. The facility, at 4221 Ranch Road 260, operated for seven months before Morningstar Mini-Storage purchased it for an undisclosed sum. The 68,325-square-foot facility was 43 percent occupied at the time of sale, Moxham said.
Capella’s decision to purchase and develop new sites proved prescient, as the number of new storage developments in the area has mushroomed in the last two years.
Moxham estimates at least a dozen other self-storage developments in the area that are currently in development or just opened. While Capella is starting to look beyond Austin for new projects, Moxham said the company doesn’t sense that the market is overbuilt.
“It is easy to measure supply, but no one truthfully knows what demand is,” Moxham said. “Austin on the whole is at roughly nine square feet of storage per capita and everything is leased up.”
The company recently completed its second facility at 9521 US Hwy 290 West in late December 2015. Moxham said occupancy is tracking ahead of plan. The facility spans 85,650 square feet and is managed by Extra Space Storage.
More to come
Capella has six more projects on the way:
I-35 and JM Page Lane in Georgetown: Construction of the 90,000-square-foot facility started in January, with completion expected in the fourth quarter of 2016.
5431 Williams Drive in Georgetown: Construction started in July 2015. The 90,000-square-foot facility is scheduled to open in May and will also be managed by Extra Space. (pictured at top)
2401 East Ben White in Austin: Construction is expected to begin in June or July. The facility will span 73,000 square feet.
2525 I-35 in Austin: Work is expected to start on this 113,774-square-foot facility in September or October of 2016.
700 Victor Street in Austin: Capella is targeting the second half of 2016 to start work on this 75,000-square-foot facility.
I-35 and FM 150 in Kyle: Capella also plans to start work on this 90,000-square-foot facility during the back half of 2016.
All together, Capella’s six completed and upcoming facilities will bring 618,000 square feet of new self-storage construction to the Austin metro.
In addition to ground-up development, Moxham said the company is interested in value-add acquisitions and property conversions as well. He said they are currently considering sites as “far north as Dallas and down to San Antonio” and looking outside the state on a selective basis.
Ultimately, Moxham said, “Capella is planning to build five to seven facilities a year for the next three to five years.”