Clutter Inc.’s recent $152 million purchase of four Storage Fox facilities in the New York City, NY, market apparently isn’t the end of the shopping spree for the provider of on-demand storage.
Ari Mir, co-founder and CEO of Clutter, said the Culver City, CA-based startup will evaluate buying more self-storage facilities in the markets where it currently operates. In addition to the New York City area, those markets include the San Francisco Bay Area, Los Angeles, Sacramento, Palm Springs and San Diego, all in California; Philadelphia, PA; Chicago, IL; Seattle, WA; and Portland, OR.
“Owning self-storage real estate enables us to extend Clutter services to customers who need regular or in-city access to their belongings, such as small business owners, contractors, pharmaceutical representatives and teachers,” Mir told the SpareFoot Storage Beat.
The four Storage Fox facilities — with 5,240 units in about 320,000 rentable square feet — are expected to be operating under the Clutter brand by November. The deal represents Clutter’s first foray into self-storage ownership and management.
The competitive landscape
Clutter co-founder Ari Mir
Adam Schlosser, senior director of Marcus & Millichap’s national self-storage group, doesn’t think Clutter will be satisfied with making just one acquisition. But he wonders how competitive the company will be against other bidders and whether its business model will give it an edge on deal pricing.
“I heard they were trying to enter the space with a real estate acquisition,” Schlosser said, “but was surprised that they competed against some of our industry’s biggest buyers and won.”
Self-storage broker Linda Cinelli, president of LC Realty in North Branch, NJ, believes Clutter might encounter some hurdles if it does pursue more acquisitions.
“The acquisition market right now is extremely active,” said Cinelli, who’s affiliated with the Aurora, CO-based Argus Self Storage Sales Network. “There are not enough opportunities to [satisfy] the appetite that the market demands.”
On a mission
Going forward, Schlosser thinks the Clutter deal signals that it aims to be a long-term player in self-storage.
“The narrative always seems to be us-versus-them on what the consumer prefers when the need for storage arises,” Schlosser said. “I think the future holds a combination of both on-demand storage and self-storage in some form, and the companies that are able to diversify and pivot to capture it will pull away. We can learn a lot from one another.”
Cinelli said the emergence of Clutter will force a lot of self-storage operators to examine whether they should add on-demand capabilities to their current platforms, given that Clutter is “on a mission to acquire market share.”
Behind the deal
Clutter’s recent $200 million round of venture capital will aid that mission. For the Storage Fox deal, Clutter took out a $116 million loan from Los Angeles-based Colony Credit Real Estate Inc.
“We spent the last few years building out our own warehouse network and creating infrastructure for urban areas,” Mir said in a news release. “Now, we’re focused on owning real estate in key markets to offer the most comprehensive suite of storage products and services.”
Clutter’s vision goes beyond merely owning real estate, though.
“Imagine a day when America’s massive self-storage real estate footprint can be used to store, donate, dispose, sell or rent your belongings. Or even better, imagine it’s repurposed for affordable housing, parks and other more value accretive causes,” Mir wrote in a blog post on Medium.com.
