Self-storage development in the Milwaukee metro area has been surging in the last year and a half, with a large number of projects involving the conversion of large industrial buildings. Notable conversions include a former beer distributorship in Brown Deer, Wis., by Metro Self Storage and a Harley Davidson plant in Wauwatosa, Wis., by U-Haul, according to the source.
New construction has been less common due to the scarcity of available open land, but a development planned in Menomonee Falls, Wis., by The Vault would comprise approximately 104,000 square feet, the source reported.
“It’s been a trend over the last several years, and it’s definitely ramped up over the last 12 to 18 months for sure,” said Brian Parrish, president and CEO of Milwaukee-based PARADIGM Real Estate LLC, a commercial brokerage. Parrish predicts 4,878 new self-storage units will hit the Southeast Wisconsin market by the end of this year or early 2016, with the average development adding 300 to 600 units, according to the source.
In addition to the availability of several viable options for self-storage conversions, banks have helped spur development with an outlook at storage as a safe investment and a willingness to provide Small Business Administration (SBA) financing, Parrish said.
An improved economy and undersupplied market also have been factors, according to Adam Matson, senior vice president and industrial real estate broker at Milwaukee-based NAI MLG Commercial, a brokerage and property-management group. “In the Milwaukee metro area, we are underserved currently by self-storage, which means there’s a high demand for the units,” Matson told the source. “We’re getting there real quickly with all these conversions, but they still have not outpaced the demand.”
In its latest Self-Storage Metropolitan Statistical Area (MSA) Report for the Milwaukee MSA, commercial real estate firm Cushman & Wakefield identified the local market as undersupplied, with 4.88 rentable square feet per person compared to the national average of 6.5. In addition, there are 13.1 households per existing self-storage unit in the local market compared to an average of 7.6 households in the top 50 U.S. MSAs.
The flurry of development activity primarily has come from self-storage businesses already operating in the Milwaukee market, Parrish told the source. Local players are looking to expand within the state and prevent operators in saturated markets from establishing a local foothold, he said.
Among those is Metro Self Storage, which opened its 79,000-square-foot facility in Brown Deer this month and is “aggressively” looking for more opportunities in the area, according to R.K. Kliebenstein, vice president of acquisitions for the Chicago-based operator.
Conversion opportunities are beginning to wane, according to Matson, who estimated the region’s industrial market currently has a vacancy rate of around 5 percent. However, even as development inevitably slows down in Milwaukee and Waukesha Counties, project activity is likely to migrate north and south into other areas, Parrish told the source.
“There will be a lot of opportunities for the foreseeable future in self-storage development,” he said. “It’s just not necessarily going to be in Milwaukee and Waukesha Counties.”