Self-Storage Snapshot: Canada

April 1, 2005

5 Min Read
Self-Storage Snapshot: Canada

Over the past five years, the Canadian self-storage industry has grown considerably, in some ways mirroring the boom the U.S. market experienced 15 years ago. This can be partially attributed to the maturation self-storage has undergone to meet public demand, but also to local market conditions.

After the crash of the markets in 2000, REITs and other real estate funds experienced a major influx of capital as investors moved their holdings into more traditional brick-and-mortar investments. Low Canadian interest and bond rates (approximately 100 basis points lower than U.S. rates) also spurred industry activity by allowing investors to acquire facilities at lower capitalization rates, which translated into higher sales prices. These factors have contributed to creating current opportunities for self-storage investors in Canada.

Differences by Region

Self-storage growth has not been uniform across Canada, and there remain some startling discrepancies in the price per square foot of rentable space from region to region. In Vancouver, British Columbia, storage owners are averaging $20 per square foot. In comparison, operators in Montreal, Quebec, are collecting considerably less, at roughly $12 per square foot. More tellingly, Montreal facilities are charging the same rental rates as those of similar quality in Sarnia, Ontario, two hours southwest of the Greater Toronto Area (GTA).

Taking into account industrial land values in the respective cities— $370,000 per acre in central Montreal and $50,000 per acre in Sarnia—regional differences become all the more evident. By looking at the macro view of the Canadian market, a new investor can gain a better understanding of what the future will hold for self-storage in the specific city or market he has selected. For example, it’s easy to see the Montreal market has room for an upward shift in price per square foot, whereas the Vancouver market has likely come close to reaching its natural price ceiling.

Different Canadian regions require varying investment strategies. For example, a business model that works in Edmonton, Alberta, may not be suitable for Toronto. The GTA is the most modern and developed Canadian market, and land has become increasingly scarce and expensive. This scenario has led investors to concentrate on conversion projects and create A-class facilities to prosper in the competitive marketplace.

In Calgary, Alberta, however, most new facilities are ground-up developments on the periphery of the city where the land is affordable and readily zoned. As new subdivisions expand the boundaries of this growing area, investors will reap the dual benefits of an increased clientele as well as rising land values. Both provide ideal circumstances for long-term investment.

Montreal, Canada’s second largest market, presents its own, unique investment opportunity. Traditionally low rental rates and the perceived difficulty of entering a predominantly French-speaking market have kept many outside investors from moving into this major city. However, with the maturing of the industry across Canada, Montreal’s low per-square-foot average indicates an opportunity for strong return on the initial investment, as rental rates are certain to increase.

The Birth of Corresponding Business

The storage boom in Canada has spurred the growth of businesses related to the development and management of facilities. These periphery enterprises eliminate many of the stumbling blocks once present in establishing and operating self-storage in Canada.

In recent years, financiers have emerged who focus on securing funding for self-storage as one of their core services. Their experience in the industry facilitates the acquisition of capital, as most lenders are wary of unfamiliar businesses. Also, their willingness to provide financing for sums below the minimum loan amount of most financial institutions allows smaller investors the opportunity to realize their development projects.

Consulting for self-storage is also becoming readily available to owners and investors, offering services such as feasibility and demographic studies—crucial components to any analysis of an investment opportunity. Insurance brokers who specialize in self-storage can be found in most metropolitan areas, tailoring policies to specific facilities and providing advice on reducing the number of annual claims. Finally, there are organizations that specialize in training facility staff in sales techniques, while others offer products specific to the retail side of the industry.

Unclear Indicators

A clear distinction between the United States and Canada in terms of self-storage real estate is the reluctance of Canadian owners to openly list their properties for sale. Last year in the GTA, only one facility was publicly listed. In the entire province of Alberta, two were listed in 2004. In neighboring Saskatchewan, there were none. These numbers in no way reflect current availability in these markets. To the contrary, industry growth is spurring many self-storage transactions, but the majority of deals remain off the open market.

There are many reasons for this peculiarity of the Canadian self-storage business community, including cultural business practices and the relative smallness of the industry when compared with the United States. The fact remains, however, that newcomers to the Canadian market are at a distinct disadvantage because of this lack of accurate indicators. They do not have a true picture of the opportunities available. As the storage market grows and prospers, the demand for facilities will increase, and with it the need for more precise information.

David Anderson and Michael Foy are partners in Anderson Foy (AF), the only brokerage firm in Canada specific to self-storage. They have been in the self-storage and commercial real estate businesses for a combined 22 years. AF offers comprehensive consulting and advisory services, development opportunities, financing, and management sourcing. Committed to helping individuals, corporations and asset managers maximize their self-storage potential, the AF team is expert in pricing assets, investigating financing options, structuring joint ventures, site selection, feasibility studies and target marketing. For more information, call 877.567.3800; visit

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