Self-storage draws condo-level rents

Thursday, February 19th, 2015


Self-storage is becoming a hot commercial real estate sector, with many B.C. properties seeing 90 per cent occupancy levels and per-square-foot rents that match that of a condominium. 

In Metro Vancouver, typical rent for a 100-square-foot self-storage unit is from $1.84 to $2.00 per square foot, which is equal to a typical condo rent in Burnaby or Richmond, according to study by Urban Analytics.

Two primary factors influence storage, according to Vadim Kobasev of Re/Max Commercial, who specializes in self-storage sales. First is the large amount of stuff that people acquire; second is a reluctance to throw anything away. On average, one-third of self-storage clients store their belongings for three years, meaning a steady cash flow for the owners, Kobasev noted.

Studies show that nearly 80 per cent of Canadian self-storage properties remain in the hands of small, independent owners, but the sector has begun to attract large institutional investors.

Of the top 25 real estate investment trusts measured in five-year-returns on investment last year in the U.S., four of them were in the self-storage business, according to SNL Financial, a real estate research firm.

Los-Angeles-based DealPoint Merrill recently launched a $25 million fund that will target former retail properties, in particular stand-alone big boxes and strip centers, for conversion into self-storage properties. 

“Self-storage is now legit, it’s not anymore like that odd business model that nobody really understood,” said R. Christian Sonne, executive managing director in Cushman & Wakefield Inc.’s self-storage industry group.

The Western Investor

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