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Self-Storage Owners Go Hybrid to Offer RV/Boat Storage

Nearly one-fifth of Americans rent self-storage space, according to a recent study conducted by StorageCafe, an online platform that provides storage unit listings across the nation. One of the hottest assets in the industry is the RV and boat storage industry, which can’t keep up with demand. This trend is enticing traditional storage operators to capitalize on this precious commodity by expanding their facilities to include toy storage. 

According to a March article in Heartland Real Estate Business, furniture is mostly commonly stored, but RV and boat storage is on an upward trend: “The combined share of people renting space for all types of vehicles — including cars, recreational vehicles (RVs) and boats — stands at 9%, a year-over-year increase of 50% (according to StorageCafe). One of the reasons for the rise is the trend for RVing that accelerated in recent years.”

“As people engage in more hobbies and recreational activities, they accumulate equipment that may not be used regularly, such as camping gear, sports equipment or seasonal decorations,” says Frank DeSalvo of Franklin Street, based in Tampa. “Self-storage provides a space to store these items safely when they are not in use.” 

The article quotes numerous industry players, including Anthony Chereso, CEO and president of The Inland Real Estate Group LLC in Oak Brook, Illinois, “There’s about a 20% cost differential between putting up a building from the ground up versus taking an existing building, using that footprint and infrastructure, and then redesigning it and retrofitting it into self-storage.”  

Chesaro adds, “Speed to market is critical. The dynamics of what’s happening in the capital markets is changing rapidly, so the sooner you can get developed and into the market with a stabilized asset the better.” 

In the last few years, Inland has completed 22 self-storage development projects, including 20 big box retail makeovers. One example: the repositioning of a former Kmart store in Allentown, Pa. “The property’s success has led Inland to begin an expansion project that will add 200 more units,” says the article.

Extra Space is expanding a property in Fox Lake, Ill., purchased in 2020 to add 25,000 square feet of climate-controlled units, outdoor RV spots and parking spaces, the article continues. Expected to be completed in 2025, the expansion offers revenue growth for 95%-occupancy rate of the facility.

Developer Hunt Midwest is currently building StorTropolis Olathe near Kansas City to offer 112,987 leasable square feet across 867 units, ranging from 5-by-5-foot units to 13-by-42-foot units for boats and RVs. The company’s brand features virtual leasing, 24-hour video surveillance and oversized elevators.

Rental rates and occupancies are returning to norms after the COVID-19 surge. “It got to the point where it was very expensive to lean into the self-storage sector,” says Chereso. “We’ve seen a softening, and it’s funny because people will portray that as the market is going in an opposite direction. But it’s actually reverting to the mean.”  

“With construction starts down, owners have moved to renovate or add space to their existing properties, with a focus on maximizing utility and competitive market position,” states Cushman & Wakefield in the article.

“The cost of capital right now is creating some disconnect, but we’re seeing that gap closing,” says Chereso. “Our expectation is that the third or fourth quarter will return to a normal market.” 

This article provides excerpts from an article written by Kristin Harlow for Heartland Real Estate Business magazine. 

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