A regional hotel development and management corporation in the Southeast is the latest player to jump into the booming self-storage market, aiming to one day own more than 100 storage facilities.
JHM Hotel Group, a Greenville, SC-based hotel and restaurant company, recently formed TD Self Storage Enterprise LLC and already owns five new self-storage facilities that it built from the ground up in its home state of South Carolina and in Florida.
On August 10, the firm announced its latest project: TD purchased a 1.5 acre lot in Greenville where it will build a 120,000-square-foot storage facility on Woodruff Road.
Roger Burgin, senior vice president of business development at TD Self Storage, said the firm, founded last year, has ambitious plans for future ground-up developments and acquisitions, with a long-term goal of owning more than 100 self-storage facilities.
Intergenerational investment
The firm is currently focusing its efforts on the Southeast and Midwest, but wants to eventually push into Texas, California and elsewhere.
“They’re not building to flip,” Burgin, an industry veteran, said of the family that owns TD Self Storage. “This is a long-term, intergenerational investment for them.”
Burgin was previously attached to Simply Self Storage, the country’s seventh largest operator by square footage.
JHS Hotel Group owns about 100 hotels, mostly in the Southeast, while another subsidiary, JHM Restaurant Group, is the owner and operator of high-end, full-service restaurants.
From hotels to storage
JHS was founded by H.P. Rama, an immigrant from India who purchased his first hotel in California in 1973. The family business expanded from there and went on to accumulate more than 40 hotels in six states, according to its website.
Burgin said the JHS Hotel Group decided to enter the increasingly competitive self-storage industry because the company wanted to broaden its holdings and determined self-storage was a “relatively safe” field.
“It’s not recession proof, but it’s as close as you can get to being recession proof,” Burgin said.
For self-storage developments and acquisitions, TD Self Storage has a set criteria about where it will either build or buy, said Burgin. A site must be located where 50,000 people live within three miles, 150,000 people within five miles, a 30-percent apartment rental rate — and in areas with less than eight square feet per capita of self-storage space. The median household income of an area must also be at least $50,000, Burgin said.
As for acquisitions, TD Self Storage is looking for either existing “Class A” facilities or lower-quality facilities with “added value” potential, Burin said. CubeSmart will handle management of TD’s portfolio for the time being.
Finding opportunities
Funding for TD Self Storage’s growth is coming from JHM Hotel’s own resources and via traditional bank financing, said Burgin.
TD Self Storage is aware that some markets across the nation have been overbuilt, but the company is confident that it can succeed with careful, thorough market research prior to making development or acquisition commitments, Burgin said.
Marc Boorstein, a partner at MJ Partners Self-Storage Group, agrees that many areas of the country – such as in Miami, Atlanta and parts of Texas – have been overbuilt in recent years.
“But there’s still plenty of opportunities out there for a firm like TD,” he said. “You may have to be a little more cautious. But smaller companies like TD can navigate niche markets because they know those markets.”
Self-storage lobbies?
With both new and renovated existing facilities, TD Self Storage hopes to distinguish itself with “customer friendly” service and “A-plus-plus” amenities, including “lobbies that mimic hotels,” Burgin said.
“They’re borrowing a lot from what they’ve learned in the hotel business,” said Burgin of TD Self Storage’s owners. The firm’s future facilities, for instance, will include comfortable waiting rooms, WiFi, private office spaces to make calls and do some work, food and beverage kiosks, and even children’s play areas, he said.
“We want them to have a hotel feel,” Burgin said.
