A middle market national investment bank out of Virginia has created a new real estate practice group that will be run by the former principal of a self-storage company.
Jeff Weber well serve as the managing director of The McLean Group and head up the firm’s new real estate practice out of its Newport Beach, CA office. Weber has more than three decades of commercial real estate investment and development experience. He previously worked for Coldwell Banker Commercial Real Estate Services and SDC Development, and has owned and managed projects for affiliates of J Weber Group, a company that he founded in 1985.
Most recently, Weber was a principal with Resco Self-Storage, a Newport Beach-based developer/co-owner of self-storage projects with Shurgard Storage Centers and its successor Public Storage.
In his new role with The McLean Group, Weber lead the firm’s efforts in raising equity capital for individual real estate projects and real estate enterprises, including those within the sector of self-storage.
“The product types we’ll work in are vast,” he said. “There’s not much limitation. If there’s an appetite on the behalf of investors, then we’re going to try to find them that stuff to invest in. And, there’s a lot of guys who want to invest in storage.”
The only issue with the self-storage industry, Weber points out, is there has been a “real run-up” in pricing – especially in certain markets.
“When prices have been run up, it can make it harder for investors to make those deals pencil,” Weber said. “However, there are still opportunities out there.”
Finding the right deals
In particular, since storage is still a fragmented market, there are often portfolios and individual properties where owners are moving on or retiring.
“There are always problems for a new person to come solve,” Weber added. “That’s where investors come along. It’s a matter of finding the right problems to solve relative to your available resources. Plus, I have some equity investors who are very long-term minded and looking to invest in quality storage platforms that want to grow with no time limit.
As such, successful storage operators seeking to double or quadruple the number of facilities over the next decade will not likely have trouble finding investors who want to help build their brand, Weber believes.
In general, Weber believes his experience of having worked on the development and operations side gives him an advantage as an investment banker.
“I know what developers are looking for, and what their problems are,” he said. “And even though we’re hitting the end of the run-up in this cycle, there are still opportunities.”
Weber’s experience in the self-storage industry has also brought him to the conclusion that it makes the most sense to build and operate in harder to develop sites or markets with good barriers to entry in order to protect market share and better drive rent growth.
“This is a supply-demand game,” Weber said. “If you can find sites that are well-protected from competition, then I think those are the winner sites.”
High density urban growth
For example, higher density areas with smaller living quarters and sustained urban growth are good bets these days.
One market that is going through a hyper-urbanization of sorts is Nashville, TN. The city is seeing increased density, particularly downtown, Weber notes.
Kenneth Cox, executive managing director for NGKF Capital Markets in Memphis, agrees Nashville is currently experiencing tremendous growth in population that has led to an uptick in self-storage development.
“There’s more cranes downtown than in most inner centers in the country,” he said. “If you can find something affordable for storage downtown, then it’s certainly something you want to do. In general, it’s a very dynamic market for storage. That’s not to say pockets might not get overbuilt but overall it’s a very strong market that should remain so for the long-term.”