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Inside Self-Storage Magazine 02/2001: Orlando, Fla.

February 1, 2001

4 Min Read
Inside Self-Storage Magazine 02/2001: Orlando, Fla.

Orlando, Fla.

The Booming East Side

By RK Kliebenstein

Editor's note: The Market Profile, a new addition to InsideSelf-Storage, will focus each month on the state of self-storagedevelopment in a unique geographical area. Suggestions for "hot spots"to be examined should be sent to [email protected].

I haveseen very few markets like Orlando, Fla. I recently had occasion to study thecity's east side. Typically, in a three- to five-mile radius of a market I find10 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 potentialnew sites at the 34 mark.

One fact is certain about Orlando: There are some great competitors in themarket. 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 doingthere for Public Storage. Market sophistication was increasing with each newstore design. Since then, the multistory, climate-controlled, state-of-the-artfacility has become commonplace. Let's see what a few of the Orlando locals haveto say about the market...

Mike Mikkelson, a development partner with Shurgard, comments:

Orlandois experiencing a softness in occupancies. Our year-to-date occupancy reportshows we are down from an average of 83 percent to 73 percent from the previousyear. I attribute this to a tremendous increase in new facilities constructedover the past several years. I don't know what is motivating developers tocontinue flooding this market with product. The new projects are being absorbedat 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 toyear two, while other new ones have been opened for more than three years andhave not surpassed the 75 percent to 80 percent mark.

I also spoke with Marc M. Smith of Shader Brothers Corp., which operates asPersonal Mini Storage among other names. Shader Brothers manages 30 locations inFlorida, with 24 in the Greater Orlando area, and has developed four locationsin the last three years. Smith has lived in the Orlando area for 12 years andhis wife, Laurie, is an Orlando native. They both understand this market verywell. According to Smith:

Occupancies are softer than they have been in the past. Increasedcompetition has definitely hurt overall occupancies and has restrictedrental-rate increases in most of the Greater Orlando market. We continue to seedevelopment of new projects, which, in my mind, means occupancy growth andincreased rents per square foot are going to be many months away. As toeastern Orlando, Smith says, There has been a high concentration ofpopulation growth, as well as self-storage development. Some of the softestsubmarkets 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 anumber of areas (primarily east and west). Certain areas are being overbuilt,such as the University of Central Florida (UCF) and Kissimmee area. There havebeen five new projects in the UCF area in the last three to five months. TheKissimmee area is experiencing occupancy in the mid to low 80th percentile downfrom the high 80s to low 90s. It seems people (developers) are not spendingenough time at the local municipalities checking with planning, zoning andbuilding departments to determine what is in the pipeline for new projects.

Larry Anderson of Stor-All has been developing in Orlando for the last threeyears. He shares his views:

Stor-All has always tried to select locations in niche markets--gaps wherethere is limited competition. Our first project in Orlando, on Goldenrod, wasnot an "A" location, but we purchased a project with entitlements inplace, which gave us speed to market. From there, we chose a site in Longwoodthat has superior exposure compared to the competitors. We looked near KirkRoad, but there was too much activity at that location. We chose a site inOviedo that is several miles from competition in either direction, and in closeproximity to the mall and big box retailers. We are very excited about our UCFlocation, with its proximity to shopping, apartments and the university. We maybe the only self-storage facility on University Drive--exactly the kind of nichelocation Stor-All seeks. We have looked at several other opportunities, but feelwe are going to hold with what we have (unless something really spectacularcomes along).

Overall, my assessment is that Orlando--particularly eastern Orlando--appearsoverbuilt. I looked for pockets of opportunity and simply did not see many"A" sites available. There is a lot of population growth, and it seemsthe supply is slightly outpacing the demand. Look for more favorable marketconditions in the next few years if building slows down a little.

RK Kliebenstein of Coast-To-Coast Storage, Boca Raton, Fla., providesfeasibility studies and market analyses for self-storage projects, in additionto financing and consulting with self-storage owners. A well-known author andspeaker to the industry, Mr. Kliebenstein will be sharing his market expertisewith Inside Self Storage readers. He may be contacted at 561.367.9241.

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