The Jenkins Organization Inc., a Houston-based developer and operator of 45 self-storage facilities in five states, has opened Magnolia Parkway Storage in Magnolia, Texas. It’s the company’s 23rd managed property in the greater Houston area, according to a press release.

The facility at 18015 FM 1488 will serve the communities of Conroe, Magnolia, Montgomery, Pinehurst, The Woodlands, Tomball and Spring. It contains 293 climate-controlled and drive-up units as well as vehicle storage. A grand-opening celebration is scheduled for April 21, 11 a.m. to 3 p.m.

Jenkins will eventually expand the site, the release stated.

The company has opened several sites in recent weeks, including Murphy Self Storage in Murphy, Texas. The facility contains 635 climate-controlled and drive-up units. In March, it opened two locations in Austin, Texas: ATX Storage and Lakeline Storage.

Jenkins has three acquisitions, seven new developments and five expansions underway, all in Texas and slated to be complete within the next year. The projects total more than 1.2 million square feet of storage space and represent a $125 million investment, according to company officials.

Formed in 1989, Jenkins has an ownership and management portfolio comprising more than 3.5 million square feet of storage space in Louisiana, Minnesota, Missouri, Oklahoma and Texas.

A self-storage feasibility study is critical in determining the validity of a target market and intended project, forecasting the chances of success. A thorough and unbiased analysis can minimize headaches and costly missteps while protecting against a bad investment. Here are some of the ways in which a study can help you make better project decisions.

Financial Viability

A feasibility study will help you answer many questions, chief among them being: Is the project financially worthwhile? Developers and investors sometimes make the mistake of acquiring land and committing dollars to a site before they fully understand the market. However, you need to know in advance if the market is overbuilt, or the customer base is better suited for one design over another, or how much you should be paying for land.

Your feasibility consultant should be able to provide data on several factors that impact success, including rental rates in the area, key demographics and competition in the market (how many units and net leasable square feet competitors have, their current occupancy, and more). This information will help your consultant make recommendations regarding the size facility you should build, an appropriate unit mix for the area and which amenities to include.

Before committing to a property, review the lease rates in the area, as this affects expenses and income. The feasibility analysis should reveal what you can afford to pay for “dirt” and what revenue can be achieved. Some facilities can profitably support their expenses and debt service at an average of 68 cents of income per square foot, while others require upward of $1.25 per square foot to be lucrative.

You should also understand any specific building requirements that might affect the viability of your project, such as floor-area ratio (FAR). A low FAR may allow you to build only 25 percent of the gross land purchased, while a high FAR could allow you to build on 100 percent. A parcel’s allowable building area will help you determine how much land you’ll have to purchase to build a facility to provide an adequate return. All this data—rental rates, demographics, competition and building requirements—provides you with the matrix you need for a sound investment.

Future Growth and Competition

The feasibility study’s demographic analysis should consider anticipated growth and potential new competition in the target market. First, recognize that self-storage development is cyclical, and we may be nearing the end of the current cycle in the next two to four years. Unless the land you’re considering is already zoned for storage by right, it may take two years to get a conditional- or special-use permit and project approval. It can be a lengthy (and costly) process. Consider this before you begin.

Also, be cautious when basing investment decisions on anticipated population growth or residential construction in an area. It may be foolish to depend on new residences planned for the region, as they may never be built.

Your feasibility report should also provide data on competition in the pipeline, including projects under construction, those already approved and those pending approval. Each will impact your project differently. Any new competitors could affect your lease-up potential, leaving little or no room for you in the marketplace.

Per-Capita Ratio

One way to determine how much “room” may remain in the market is to look at the per-capita ratio, or the amount of self-storage per person. The ratio is derived by dividing the supply of rentable square footage in the area by the known population. The resulting number is used as a basis of comparison between the target location and other known markets in the area. An absorption assumption is developed by applying feasibility-study results across many markets over time and interpolating the data for today’s self-storage marketplace.

However, it’s important to understand there’s no universal per-capita ratio. Every market is unique. I’ve seen ratios as high as 15 square feet per capita, with the market holding steady, and as low as 2 square feet per capita, with no room for growth. Trying to apply the wrong per-capita ratio could result in over or underbuilding your facility.

To ensure your ratio is accurate, you need the right numbers for the calculation. Determining this “market depth” requires properly weighting the competitions’ square footage. For example, you want to consider the location of each competing facility relative to your subject property, reducing the total square footage based on proximity. For example, the square footage of a facility that’s nearly 3 miles away might be weighted at only 30 percent, whereas the square footage of a facility on the next block might be weighted at 100 percent.

When completing the depth analysis, the feasibility consultant should include any competitor, even if it’s a less desirable facility, as well as any competitors whose market touches yours and facilities in secondary markets. This might stretch your market area to a four- or five-mile radius. Unless a competitor is in a distinct area marked with notable topographical boundaries, such as a river, this practice of “weighting” allows a greater latitude of error.

Market Equilibrium

A feasibility study will seek to identify the point of market equilibrium. A market in equilibrium has a zero net gain in tenants, meaning there’s an equal number of move-ins and move-outs. You’d typically see this in a market that has no population growth. If the report reveals more move-outs than move-ins, you might expect to also see a notable drop in the average household income that renders storage less affordable for local users. If there’s a surplus of move-ins to move-outs, it could be that newly constructed homes have spurred an influx of new residents who need storage.

The question to answer is whether any additional square footage you build in the market would be absorbed in a reasonable lease-up timeframe, based on projected population growth. To devise an answer, your feasibility consultant will factor population-growth indicators, renter statistics and occupancy levels at nearby self-storage facilities against known markers in the market.

Impartial Analysis

It’s important to have a feasibility study executed by a third party who has no emotional attachment to the project. Your consultant shouldn’t have any upside based on his analysis, such as the future management of your facility or acting as your development partner. An independent examination without conflict of interest will provide the best intelligence about your market and its self-storage investment potential.

Jo Beth White owns Development Services Inc., which has specialized in feasibility analysis of self-storage and RV-storage projects nationwide for more than 15 years. She has more than 30 years of experience in construction and development. For more information, call 949.433.3395; e-mail [email protected]; visit www.storagefeasibility.com. 

Update 4/13/18 – A Saratoga County IDA public hearing scheduled for Monday was canceled after Prime notified the IDA it was temporarily withdrawing its application seeking more than $460,0000 in tax breaks on its self-storage project on Route 50 in Wilton, according to the source.

It’s not clear why Prime withdrew its application nor why the move was characterized as “temporary.” Site work on the property is already under way, the source reported.

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3/21/18 – The Saratoga County, N.Y., Industrial Development Agency (IDA) is debating whether it should provide mortgage and sales-tax savings to New York-based real estate group Prime Group Holdings for a two-story self-storage facility it intends to build near Edie Road and Route 50 in Wilton, N.Y. County officials are hesitant to grant the tax break because it would be unprecedented for a self-storage project, according to the source.

Part of the quandary for the county is six other self-storage developers have come forward to indicate they will also seek tax breaks if the IDA approves the Prime application, IDA Chairman Rod Sutton told the source. “This is a thought-provoker,” Sutton said. “You open the floodgates if we go ahead with this. Saratoga County being what it is, other storage units are going to spring up all over the place.”

The construction project would create 90 jobs, though the completed storage facility would only employ five full-time employees. The property will target business customers, according to Marty Vanags, president of the Saratoga County Prosperity Partnership, the county’s designated economic-development organization.

Though the county hasn’t previously awarded tax breaks to self-storage businesses, officials also have never received an application from one until now, the source reported. “This would be setting a precedent,” Sutton said.

Prime already owns the 3.41-acre parcel on which Wilton planners have recommended the project for approval. A public hearing is scheduled on April 9 to discuss the proposal.

Headquartered in Saratoga Springs, N.Y., Prime Group Holdings owns self-storage and other real estate interests. It owns and manages more than 170 self-storage facilities in 23 states. Its operating portfolio comprises more than 10 million rentable square feet.

Source:
Saratogian, IDA Has Reservations about Self-Storage Tax Break
Saratogian, Spa City Company Withdraws Tax Break Proposal

Real estate developer Meredia Living intends to build a self-storage facility across the street from one of its luxury apartment buildings in Bound Brook, N.J. The five-story structure would comprise 58,224 square feet in 796 units and be among the tallest in the borough, according to the source.

Meredia is working with the borough on a 15-year Payment In Lieu of Taxes (PILOT) program for the property, which would allow the company to pay Bound Brook a fixed amount each year rather than property tax. A similar program is in place for its nearby apartment complex on S. Main St., the source reported.

As part of its proposal, the developer would also build a 60-space municipal parking lot for commuters who use the nearby train station on the New Jersey Transit’s Raritan Valley Line. The planning board was scheduled to review the self-storage project last night.

Meredia specializes in luxury apartments, with featured properties in Linden, Rahway and West New York, N.J.

Source:
My Central Jersey, Five-Story Storage Building Proposed in Bound Brook

A cat burglar was caught on security video on April 13 breaking into New York Self Storage at 1053 Metropolitan Ave., in the Williamsburg neighborhood of Brooklyn, N.Y. The male suspect squeezed through a skylight and got away with $1,000 cash and a MacBook laptop computer, according to police.

The man was described as cavalier, casually dangling a cigarette in his mouth and smirking at a video camera with his face exposed before blocking the lens. Video footage also shows him operating a payloader before exiting the equipment and calmly crossing the street, a source reported.

The thief was wearing blue jeans, black sneakers, a baseball cap and sunglasses. Police believe his knowledge of operating the payloader could mean he’s a construction worker.

Anyone with knowledge of the incident is encouraged to call police.

Sources:
4 New York, Cigarette-Sucking Smirker Sought in Skylight Shimmy Heist at Brooklyn Storage Facility
Williamsburg Patch, Smoking Cat Burglar Nabs MacBook And $1K In Williamsburg: Cops

The William Warren Group (WWG), a privately held real estate company that operates the StorQuest Self Storage brand, has purchased Storage Depot in Shirley, N.Y., for $10 million. The property at 393 Smith Road comprises 46,730 rentable square feet of storage space.

The buyer and the seller were represented in the transaction by Linda Cinelli, the New Jersey and New York broker affiliate for the Argus Self Storage Sales Network.

WWG has been actively growing its portfolio in recent months. In February, it opened a new location in Vero Beach, Fla., its first in the city. It also opened facilities in Lakewood, Colo., and Reno, Nev., in January and December, respectively. It acquired Outback Storage Laguna, a 67,750-square-foot property in Elk Grove, Calif., in December, and intends to convert a former taco shop in Los Angles into a four-story facility comprising 85,000 square feet.

Founded in 1994 and based in Santa Monica, Calif., WWG acquires, develops and operates 128 self-storage facilities in Arizona, California, Colorado, Florida, Hawaii, South Carolina and Texas.

Argus is a Denver-based network of real estate brokers who specialize in storage properties. Formed in 1994, the company has 36 broker affiliates covering nearly 40 markets.

Public Storage Inc., a self-storage real estate investment trust (REIT), has acquired 3D Self Storage in Elkhorn, Neb. The 5.8-acre property at 20809 Cumberland Drive is 13 miles west of Omaha. Built in 2016 and expanded a year later, it contains 11 buildings comprising 122,070 net rentable square feet of storage space in 802 units.  

The buyer and the Omaha-based seller were represented in the transaction by John Arnold, Bill Bellomy and Michael Johnson, brokers with Bellomy & Co., a commercial real estate firm with offices in Atlanta, Houston, and Austin, Texas.

Public Storage recently opened two other locations, including a three-story, 900-unit facility in Huntersville, N.C. The other is a three-story, 350-unit facility in Gardena, Calif., a suburb in the South Bay region of Los Angeles County. That site opened in February.

The REIT also received approval last week to demolish a set of drive-up units at its Spring Lake Park, Minn., facility and build a three-story, climate-controlled structure in their place.

Based in Glendale, Calif., Public Storage has interests in 2,386 self-storage facilities in 38 states, with approximately 156 million net rentable square feet. Operating under the Shurgard brand name, the company also has 220 facilities in seven European countries, with approximately 12 million net rentable square feet.

There has been much hype in the media over the past year related to Bitcoin, Ethereum, Litecoin and the cryptocurrency market in general. As Bitcoin quadrupled in the latter part of the year, many began to take notice. Detractors proclaimed it a “scam,” while others heaped praise on this emerging form of global payments. Noted Wall Street gurus went from hating it to loving it and back to questioning the entire concept. Suffice it to say it's been a wild ride in terms of pricing and perception.

What’s undeniable is cryptocurrency is more than likely here to stay in some form or fashion, even though the present volatility scares most who consider using it in day-to-day transactions, especially when the price of the currency fluctuates inexplicably from minute to minute. Cryptos (what the cool kids are calling it) trade 24/7, and there's no market open and close like on a traditional exchange. They can be also be traded in fractional portions, not a whole share like a stock. So, even though Bitcoin may be trading at more than $10,000, you can send just a few hundred dollars’ worth, down to the 10-thousandth of a coin.

The evolution of more secure systems and larger companies accepting payments in cryptos will continue, becoming more commonplace in the months and years to come. Millennials seem to like the idea of them and are comfortable using them, not only as a form of payment but also for investing. And if you're up on trends in the self-storage industry, you know this generation is your next big source of customers.

Cryptos Simplified

So, what is a crypto? Primarily, it’s a digital asset. Think of the days when you wanted a book, visited a bookstore, looked for something that interested you, and purchased it. Now you just download the book to your tablet. That book is a digital asset you paid for and never have to lug around when you move or find a place for in your home.

Cryptos exist in the digital world like many other assets. If you consider how money flows through the banking system, there isn't much difference. What the future will determine is how easily these assets can be converted into usable form so they’re as ubiquitous as using your debit card. That time is coming, and the investors in the space are pouring in big money to get a piece of what will likely be a very large pie.

The main difference between cryptos to other types of investments is ownership. They’re truly more like a currency. There are varieties of structure, and regulations continue to impact that. For the most part, a digital asset exists almost solely on supply and demand, since there’s no liquidation value, no price-earnings ratio and other metrics.

Now, let’s talk briefly about blockchain, the technology that enables the existence of cryptocurrency. Though it serves as a framework for many different applications, what you need to understand in relation to cryptos is it’s the basis for security. With it, a person can send you Bitcoin, for example, and cannot send that same Bitcoin to someone else.

Adoption Is Coming

The reality is we still live in a dollar-denominated world! You have to pay your bank, along with property taxes, payroll and every other expense with dollars. It's doubtful that will change even within the next few years, but the trend is coming whether we like it or not.

The adoption of various forms of customer payments will become necessary in the years ahead, but there’s time to examine this trend and see how to position your storage business in this unique market. This change will slowly work its way into our daily lives, and exchanging digital currencies for real things will become easier and more secure.

One of the most important developments has been how cryptos are viewed by various governments and their regulators. We know from trying to develop properties, paying taxes and sorting through regulations—whether simply operating a storage facility or attempting to rezone a prime tract of land—that the process can be mind-numbing. At this point, it's unclear exactly how agencies around the world will deal with this, but the genie is out of the bottle, and there's no foreseeable way to put it back in.

For sake of conversation, I’d argue there really isn't much difference between a crypto and a fiat (government-sponsored) currency in theory. If you have dollars, euros, yen or yuan in your account, that value is represented by what you can exchange them for and how many the seller of an item needs to agree to the exchange. It's not like if you own so many dollars you can go somewhere and claim your piece of the assets of the United States. You simply trade it or invest it in something else.

The same principle holds true for all Altcoins, digital assets or cryptos. In fact, the issuer of these coins is more akin to a federal reserve chairman than a CEO, whether many realize it. That role was originally intended to provide stability to the currency, and is truly the position Altcoin issuers should take to defend the value and price of their currency long term.

It’s Just Currency

Even though there are many comparisons between cryptos and stocks, there’s a clear and distinct difference (and this is an important point). If you own $20,000 of Apple stock and $20,000 of Bitcoin, these aren’t the same. The ownership of Apple gives you a miniscule proportional ownership in that company, but your money in Bitcoin just gives you Bitcoin. Remember it’s only a currency, not a share ownership. It's a method of payment, a method of exchanging one item for another.

If you own two Bitcoin, regardless of what the current trading value is, you still own two Bitcoin. This is probably the single biggest misconception regarding the crypto market in general and confusing the perception as an investment.

Of course, if you bought Bitcoin for $3,000 and you can now sell it for $10,000, then it’s a pretty good investment. It can be used as an investment no different than if you traded currencies like the dollar or euro; but the wild fluctuations and dramatic price increase have made this market and most other cryptos enticing. However, they’re still just currencies. You don’t own a piece of the company that issues that coin. You only own the currency. There's no Bitcoin office to go to or call.

What will make cryptos usable in the self-storage industry? The main issue being developed rapidly now is the conversion back into the local fiat currency, and the potential transaction speed and greatly reduced cost to process payments and move money. Blockchain is sound and durable; but if a customer can't exchange his crypto into an acceptable form of payment quickly, then it just becomes an interesting conversation and that's all.

However, embracing this new paradigm may provide new ways to profit, and to reward customers and employees as well as market facilities as its acceptance expands. There’s much more to come in terms of advancements for use in payments, not only in daily and monthly small transactions but in large dealings where value can simply be e-mailed from sender to receiver instantly.

One thing is certain: It’s coming, ready or not. Some companies will be ahead of the curve if they embrace this inevitable trend and take advantage of the marketing opportunities cryptos represent. Many of us can remember when the Internet was just a neat idea. Can you imagine living without it now?

Charles Anderson is the founder of Self Storage Coin LLC, which is working to promote and expand the use of STORcoin, a cryptocurrency designed for the self-storage industry. As a licensed commercial real estate agent, his experience includes residential and commercial acquisition and development of self-storage projects from ground-up to Certificate of Occupancy. For more information, e-mail [email protected]; visit www.selfstoragecoin.com. 

Storage Express, which operates 94 self-storage facilities in five states, has purchased a dozen Storage General facilities across Central Illinois from the Plummer Family. The acquisition adds 370,000 square feet of storage space and more than 2,000 units to the company’s portfolio. It includes two new sites and 10 locations that have available land for expansion.

The sellers, who own more than 50 RP Lumber Co. building-materials stores in the state, decided to exit the storage industry and focus on their core business, according to a press release. Developed over the last decade, the storage facilities are adjacent to the family’s retail stores.

“With existing facilities in Illinois, this portfolio was a good fit for both us and for the Plummer Family,” said Jefferson Shreve, owner and president of Storage Express. “These facilities averaged 30,000 square feet, and are located on retail corridors in smaller markets. Those are bread-and-butter locations for us. And their build quality is consistent with the uniformity we seek in our portfolio.”

Storage Express plans to integrate the sites with the company’s technology and systems, which includes automation for remote management of all its properties, the release stated. Rentals are centralized out of the company’s headquarters in Bloomington, Ind.

The buyer and the seller were represented in the transaction by Brett Hatcher, vice president of investment, and Brian Kelly, associate, for Marcus & Millichap, a commercial real estate firm.

Founded in 1992, Storage Express operates self-storage in Illinois, Indiana, Kentucky, Ohio and Tennessee. It has offices in Bloomington, Indianapolis and Jeffersonville, Ind. The company has a half-dozen expansion and new build projects underway throughout Indiana, the release stated.

The Arvada, Colo., City Council unanimously approved a 180-day moratorium on April 2 that will temporarily halt any self-storage applications for the area. The move will allow city staff to evaluate the business use in relation to its Comprehensive Plan, according to the source.

City officials allowed self-storage to be added as a use within two planned-unit development districts (PUD-1 and PUD-BP) in July 2016. Since then, the city has received five applications for storage developments after receiving just two the previous decade, the source reported.

“We have not liked to see the use of moratoriums, but this was a situation where we need more time to look at these,” Mayor Marc Williams said during the meeting. “Once these facilities go in, it will stay there forever. They are good money generators for the people running them; but they don't generate sales tax, and they take land that could be used for other things.”

Though Blue Wing Development opened a new storage facility in Arvada in January, the city council rejected a proposed Public Storage project targeted for the Whisper Creek subdivision in February. City staff began looking into creating a moratorium after the council voted 6-1 against the development, according to the source.

Source:

Arvada Press, City Council Puts Moratorium on Self Storage Facilities