Two real estate investment firms with extensive experience in the self-storage sector are banding together to develop new storage facilities in high barrier to entry areas along the I-95 corridor from Boston to Washington, D.C.
The Hampshire Companies of Morristown, N.J. and Harrison Street of Chicago have already started construction on a new 110,000-square-foot facility on the outskirts of downtown Providence, RI.
Meanwhile, Michael Legacki, senior acquisition manager at Hampshire, which has developed 45 self-storage facilities over the years, says the new partnership is close to starting other projects as well.
“We’re under contract for a handful of properties,” he said, without providing details. “We’re quite active.”
‘As many as we can’
The Hampshire-Harrison alliance isn’t revealing how many storage facilities it hopes to develop – nor is it revealing timetables and total dollar amounts it expects to invest.
“We’ll do as many as we can do,” Legacki said
But the two firms are shooting for “a lot” of deals, primarily in underserved “high barrier” locations where it’s expensive to build and difficult to get zoning permits to operate. Legacki mentioned the partnership is currently looking at areas on New York’s Long Island and in “our own backyard” in New Jersey.
As Legacki sees it, the biggest challenge the Hampshire-Harrison partnership will face, besides costs and local zoning restrictions, is today’s fierce completion for available properties.
“A lot of new investors have jumped into the self-storage class,” he said. “There’s a lot more competition than there used to be. There are more new developers out there,” Legacki said.
‘Plenty of pockets’
Marc Boorstein, a principal at MJ Partners Self-Storage Group in Chicago, said the new Hampshire-Harrison partnership is right to be targeting “high barrier” submarkets.
In general, the I-95 corridor has a lot of self-storage facilities, but there are “plenty of pockets” along the upper-East Coast that are underserved.
“They’re more difficult to find,” he said. “But if they look at enough sites, they’ll find them. They’ll have to do a lot digging, but they’re there.”
Boorstein added the Hampshire-Harrison partnership seems to be a “good fit” for both companies.
The Hampshire Companies is “very experienced and well known” within the self-storage development sector. Boorstein said Harrison Street is a respected company within real-estate investment circles and can provide financial and nationwide expertise to the new partnership.
In a recent press release announcing the new partnership, Harrison Street was described as having $18 billion in assets under management across multiple property classes. Since 2005, Harrison Street has invested $2 billion across 223 storage properties and has sold 137 self-storage properties for a gross transaction value of $1 billion, the release said.
Storage power couple
Hampshire’s Legacki said Harrison Street is a “like-minded” firm with similar views on self-storage.
As for Hampshire, it has developed dozens of self-storage facilities over the years and still retains ownership of four units in Connecticut, New Jersey and Pennsylvania, Legacki said.
The new seven-story facility at 145 Corliss Street in Providence is the kind of location that the partnership likes, Legacki noted. It’s near retail outlets – in this case, a Walmart, Home Depot and a Stop & Shop supermarket – and it’s in a densely populated area.
The Providence facility will be managed by Extra Space Storage, the huge publicly traded self-storage owner and operator that both Hampshire and Harrison Street have worked with in the past, he said.
The goal of the new partnership is to develop new self-storage facilities, though Legacki didn’t rule out buying existing facilities or converting properties into self-storage.