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Real Estate Experts Say New Jersey Self-Storage Market Shows Signs of Growth


Commercial real estate brokers in New Jersey say improvements in the multi-family housing and multi-tenant retail markets have buoyed investor interest in the self-storage market and poised the industry for local growth.

As recently as 2010, the state’s multi-family housing and mixed-use markets had increasing vacancies. This, combined with poor economic conditions and sagging job prospects, hurt self-storage occupancy rates and slowed real estate transactions and development of new facilities, said Michael Fasano, vice president of Marcus & Millichap Real Estate Investment Services and regional manager in the company’s Elmwood Park, N.J., office.

Recently, however, Marcus & Millichap and other commercial real estate brokers have seen an increase in self-storage transactions in the state, including the sale of multi-property portfolios and investment in self-storage conversion projects.

“Before, no one wanted to come off the sidelines and go out in the market because they knew they couldn’t get financing,” Fasano said. “Then, in 2009, lenders started lending again for multi-family properties; and then in 2010, they did the same for retail. Now, there are more dollars available for specialty products like self-storage, and that’s brought investors back into the marketplace.”

“I think there’s a broader trend going on with investors looking to real estate for a return, so they’re investing in certain types of properties that they feel are comfortable investments because there’s a demand for it on the consumer side, like multi-family and self-storage,” said Michael McGuinness, CEO of the New Jersey chapter of the National Association of Industrial and Office Properties (NAIOP), a commercial real estate development association.

Increased investor interest combined with an aging baby-boomer population with a desire to downsize living quarters but keep its possessions could signal a market ripe for new self-storage development, McGuinness said.

Fasano was more cautious in his outlook, believing the state is too soon into its economic recovery to trigger much new storage construction. Instead, he believes self-storage conversion projects will continue to rise in the sector.

“I think any self-storage construction is going to be driven by a need in a specific community,” he said. “If a community has some vintage warehouse space and a need for more self-storage, then I think investors are willing to take advantage of that opportunity.”

Marcus & Millichap has more than 1,000 investment professionals in offices nationwide and closed more than 5,000 transactions last year.


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