Phoenix-based U-Haul International Inc., which operates more than 1,300 self-storage locations across North America, has converted the former Zellers department store in Kelowna, British Columbia, Canada, to self-storage. The 110,000-square-foot facility contains more than 1,000 indoor climate-controlled storage units, according to the source.
British Columbia has seen an increase in new storage developments and conversions of shopping malls due to a lack of storage properties for sale in the market, the source reported. The region has average vacancy rates below 10 percent and capitalization rates above 5 percent, said Vadim Kobasew, a broker with local real estate firm Re/Max Commercial. These figures offer little incentive for owners to sell their property, he said. “The owners know the market conditions. Sure, they can get a lot of money if they sell; but if they put it in the bank, they are only making 1 percent.”
U-Haul had been looking for acquisition opportunities in the area for two years before deciding to convert the Zellers store, which had been vacant just as long, the source reported. “The Okanagan Valley is one of the fastest-growing communities in B.C.,” said Horace Martin, president of the U-Haul Co. of British Columbia.
The absence of real estate opportunities in Canada may have been a catalyst for the acquisition of U.S. company Simply Self Storage for $830 million a year ago by Brookfield Asset Management, a Toronto-based global asset manager with large investments in commercial real estate, according to the source. The purchase included more than 192 self-storage facilities in the United States and Puerto Rico.
Established in 1945, U-Haul owns more than 44 million square feet of storage space. The company’s corporate sustainability initiatives, which support infill development to help local communities lower their carbon footprint, has led to dozens of conversion projects in recent years.