Inside Self-Storage Magazine 02/2001: Orlando, Fla.
|Copyright 2014 by Virgo Publishing.|
|By: RK Kliebenstein|
|Posted on: 02/01/2001|
Orlando, Fla.The Booming East Side
By RK Kliebenstein
Editor's note: The Market Profile, a new addition to Inside Self-Storage, will focus each month on the state of self-storage development in a unique geographical area. Suggestions for "hot spots" to be examined should be sent to firstname.lastname@example.org.
I have seen very few markets like Orlando, Fla. I recently had occasion to study the city's east side. Typically, in a three- to five-mile radius of a market I find 10 to 12 competitors, with three or four new sites in the works. Surprisingly, my radius search of Orlando found 22 competitors, and I quit logging potential new sites at the 34 mark.
One fact is certain about Orlando: There are some great competitors in the market. All of the major players have set up shop--Public Storage, Storage USA (which is just getting its feet wet), Shurgard, Personal Mini Storage and Stor-All. A few years back, I visited a conversion Mike Carter Construction was doing there for Public Storage. Market sophistication was increasing with each new store design. Since then, the multistory, climate-controlled, state-of-the-art facility has become commonplace. Let's see what a few of the Orlando locals have to say about the market...
Mike Mikkelson, a development partner with Shurgard, comments:
Orlando is experiencing a softness in occupancies. Our year-to-date occupancy report shows we are down from an average of 83 percent to 73 percent from the previous year. I attribute this to a tremendous increase in new facilities constructed over the past several years. I don't know what is motivating developers to continue flooding this market with product. The new projects are being absorbed at slower-than-projected levels, and sometimes at lower rates than projected. We've seen some new facilities sit at 50 percent to 55 percent from year one to year two, while other new ones have been opened for more than three years and have not surpassed the 75 percent to 80 percent mark.
I also spoke with Marc M. Smith of Shader Brothers Corp., which operates as Personal Mini Storage among other names. Shader Brothers manages 30 locations in Florida, with 24 in the Greater Orlando area, and has developed four locations in the last three years. Smith has lived in the Orlando area for 12 years and his wife, Laurie, is an Orlando native. They both understand this market very well. According to Smith:
Occupancies are softer than they have been in the past. Increased competition has definitely hurt overall occupancies and has restricted rental-rate increases in most of the Greater Orlando market. We continue to see development of new projects, which, in my mind, means occupancy growth and increased rents per square foot are going to be many months away. As to eastern Orlando, Smith says, There has been a high concentration of population growth, as well as self-storage development. Some of the softest submarkets in the Greater Orlando market are in eastern Orange County.
Carl Cunningham, a local Orlando developer, shares Smith's sentiments.
As a whole, the market is still expanding. There is rapid growth in a number of areas (primarily east and west). Certain areas are being overbuilt, such as the University of Central Florida (UCF) and Kissimmee area. There have been five new projects in the UCF area in the last three to five months. The Kissimmee area is experiencing occupancy in the mid to low 80th percentile down from the high 80s to low 90s. It seems people (developers) are not spending enough time at the local municipalities checking with planning, zoning and building departments to determine what is in the pipeline for new projects.
Larry Anderson of Stor-All has been developing in Orlando for the last three years. He shares his views:
Stor-All has always tried to select locations in niche markets--gaps where there is limited competition. Our first project in Orlando, on Goldenrod, was not an "A" location, but we purchased a project with entitlements in place, which gave us speed to market. From there, we chose a site in Longwood that has superior exposure compared to the competitors. We looked near Kirk Road, but there was too much activity at that location. We chose a site in Oviedo that is several miles from competition in either direction, and in close proximity to the mall and big box retailers. We are very excited about our UCF location, with its proximity to shopping, apartments and the university. We may be the only self-storage facility on University Drive--exactly the kind of niche location Stor-All seeks. We have looked at several other opportunities, but feel we are going to hold with what we have (unless something really spectacular comes along).
Overall, my assessment is that Orlando--particularly eastern Orlando--appears overbuilt. I looked for pockets of opportunity and simply did not see many "A" sites available. There is a lot of population growth, and it seems the supply is slightly outpacing the demand. Look for more favorable market conditions in the next few years if building slows down a little.
RK Kliebenstein of Coast-To-Coast Storage, Boca Raton, Fla., provides feasibility studies and market analyses for self-storage projects, in addition to financing and consulting with self-storage owners. A well-known author and speaker to the industry, Mr. Kliebenstein will be sharing his market expertise with Inside Self Storage readers. He may be contacted at 561.367.9241.