In just 10 years, Columbia, SC-based Taylor/Theus Holdings Inc. has become a regional player in self-storage.
Walter Taylor and Bill Theus have been partners in commercial, residential and multifamily ventures for 30 years. In 2007, they began targeting the self-storage sector by converting a vacant Target store in Columbia into a self-storage facility with 75,000 rentable square feet.
“We entered the self-storage business because we liked how well the industry performs in both a strong and weak economy,” Theus said.
Since that initial foray into self-storage, Taylor/Theus Holdings has been in growth mode. In all, the company owns, is developing or has developed 27 facilities in Florida, Georgia, North Carolina, South Carolina and Virginia.
Overall, those 27 facilities represent more than 2 million rentable square feet and nearly 21,100 units. If Taylor/Theus had all of that square footage in its portfolio now, it would rank among the 60 largest self-storage operators in the U.S., based on figures reported in 2016.
Extra Space Storage, a self-storage REIT, came aboard in 2010 as the third-party manager of all Taylor/Theus facilities. Two years later, David Ellison joined the company, followed by Ty Colpini in 2015.
Follow the blueprint
The four executives at Taylor/Theus, together with outside consultant Anthony Wood, are striving to execute on a growth blueprint backed by $25 million in equity from Taylor/Theus and a private partner.
“We look for sites with great visibility and high traffic counts in areas with low supply and high barriers to entry. Because rezonings are so difficult, we tend to stick with sites that are zoned for self-storage use,” Ellison said.
Taylor/Theus knows all too well the challenges of rezoning.
In 2015, for instance, the City Council in Charlotte, NC, shot down a controversial rezoning request that would have paved the way for a Taylor/Theus mixed-use project anchored by a self-storage facility. A year later, Taylor/Theus came back with a scaled-down proposal — with no office space and less parking — that the City Council approved. Construction is nearing completion on the 135,000-square-foot, 985-unit storage facility.
Charlotte and beyond
That experience certainly hasn’t soured Taylor/Theus on the Charlotte market, though. Of the 27 facilities that have been under the company’s umbrella, eight are in the Charlotte area. Right now, three of those eight facilities are in the construction or permitting stage.
Last October, Ellison told the Bisnow website that when Taylor/Theus first entered the Charlotte market, he and other company executives were surprised by the abundant self-storage development opportunities.
“Aside from a few Class A facilities, it was almost as if the market had missed the last development cycle,” Ellison said.
For now, Taylor/Theus won’t stray too far from North Carolina and the four other states where it currently operates, Colpini said, although the company has looked at opportunities in Maryland and Pennsylvania.
“Certain demographics, such as income and age, aren’t particularly important to us when qualifying a site,” Ellison said. “The most important demographic criteria is population and density, and we tend to search for sites with a minimum of 60,000 people in a three-mile radius.”
Navigating the new supply
“When we first started developing, there were very few competitors building new facilities. We still are excited about the industry, but we are even more selective in site selection,” Theus said.
In the short term, Colpini said, Taylor/Theus will concentrate on its under-construction facilities as well as undeveloped sites that it owns or has under contract.
“We will use third-party management to lease up the facilities,” he said, “and then evaluate if we are long-term holders or will sell the facilities.”
Since its inception, Taylor/Theus has sold 10 facilities to Extra Space, with one of those deals — for a 752-unit facility in the Charlotte suburb of Cary, NC — having closed in mid-July.
In the long term, Taylor/Theus will keep pursuing developments in markets with low per-capita supply, high occupancy rates at competitors’ facilities and robust population growth, Colpini said.
“We’re trying to build an A-plus-quality portfolio on A-plus sites that don’t have a lot of supply issues,” he said.