10 Self-Storage Companies to Watch in 2017

As we head into 2017, self-storage operators look to make their mark in an increasingly competitive industry. Based on their past performance and future plans, here are 10 companies expected to make headlines this year.

Reprinted with permission from the "SpareFoot Storage Beat.”

As we head into 2017, self-storage operators are looking to make their mark in an increasingly competitive industry. Based on their past performance and future plans, here are 10 companies expected to make headlines this year.

1. Baranof Holdings, Developer, Dallas

2016 accomplishments: Broke ground on nine facilities in four markets: Austin, Texas; Portland, Ore.; Raleigh, N.C.; and Seattle. Facilities will be completed one per month beginning in March and represent 650,000 square feet of rentable storage space.

2017 goals: Six to eight new storage developments in high barrier-to-entry markets.

Greatest strength: “Baranof is well-capitalized, and from the outset of our company, a purposeful internal set of systems and procedures were designed to move quickly throughout the development process, particularly in otherwise difficult to develop markets,” says Andy Hendricks, managing partner.

Biggest challenge 2016: “Increasing competition in the development market has had a major impact on almost every aspect of the process,” Hendricks says. The biggest day-to-day challenges were getting enough time with busy vendors. Forming long-term strategic relationships with vendors has helped strengthen commitments, he adds.

Biggest challenge 2017: Rising construction costs will place higher premiums on site selection, as well as partnering with the right design and build professionals.

2. Brookfield Asset Management/Simply Self Storage, Global Alternative Asset Manager, Toronto; Operator, Orlando, Fla.

2016 accomplishments: Acquisition of Simply Self Storage by Brookfield in March. Under Brookfield, Simply has acquired about $600 million in assets, going from 90 facilities to 175 owned properties by year-end. The company closed on developments and lease-up facilities at a projected cost of $125 million that will expand its footprint in Florida, Metro New York, Southern California and Texas.

“Many of the acquisitions marked Simply’s entrance into new markets, thereby adding sufficient scale for the company to perform competitively in these markets while pursuing smaller deals to fuel future growth,” says Kurt O’Brien, CEO of Simply. Brookfield also obtained $750 million in securitized loans to refinance existing debt, finance new assets and purchase additional facilities.

2017 goals: Continue aggressive growth through acquisition of operating and Certificate-of-Occupancy assets in addition to ground-up development. Invest in revenue management and digital marketing technology to further drive customer demand.

Greatest strength: Brookfield has made a long-term commitment to the sector and provides sellers great comfort in its ability to close quickly with certainty, and enhances Simply’s already strong reputation in the industry among brokers and other industry players.

Biggest challenge 2016: The biggest challenge for Simply in 2016 was implementing Brookfield’s reporting requirements and policies and procedures. Brookfield’s policies and procedures now have Simply operating in the same fashion as a public company.

Biggest challenge 2017: The aggressive growth strategies can stretch its resources. The biggest challenge will be to ensure the company can continue to invest in people and processes to execute the strategy, official say.

3. Closetbox, Valet Self-Storage Provider, Denver

2016 accomplishments: Achieved seven times its growth year-over-year and expanded nationally to reach 70 percent of the U.S. population, with service in 40 of the top 50 metro areas.

2017 goals: Partner with self-storage operators to help them expand service offerings. “Closetbox presents a unique opportunity for the most forward-thinking and innovative self-storage operators to gain a competitive advantage by partnering with us,” said Chris Griego, vice president of partnerships.

Greatest strength: Its devotion to exceptional customer service, proprietary technology and unique ability to help customers anywhere in the United States, officials say.

Biggest challenge 2016: Overcame many challenges by doing hard things well.

Biggest challenge 2017: Finalizing partnerships with select self-storage operators.

4. Monolith Group Development, Self-Storage Owner and Developer, Scottsdale, Ariz.

2016 accomplishments: Entitled and developed five self-storage facilities totaling more than 550,000 square feet.

2017 goals: Seven projects comprising 800,000 square feet are under contract and finalizing entitlements. Two more projects closed escrow and are ready to start construction in February. The company has the capacity for two more development projects.

Greatest strength: Thirty years of industry experience and vertical integration of acquisition, development, entitlement, brokerage and construction, and the ability to build facilities faster and more economically than others. “The fastest we have built an all-concrete masonry-unit building was five months from the moment we put a shovel in the ground. That building was 105,000 square feet. I won’t tell you what my cost was because nobody would believe us,” CEO Tony Ardizzone says.

Biggest challenge 2016: Working with municipalities to build near residential areas. “When you are building a 100,000-plus-square-foot building directly next door to a residential neighborhood, you need to envision your own family living in that house that you are impacting. You need to take yourself out of the developer/investor mode and acquiesce to the concerns of your neighbors,” Ardizzone says.

Biggest challenge 2017: “Lenders appear to be restricting the advantages we saw in the last 24 months. There is still plenty of lending options, but the right lending partnership is crucial to a successful project,” Ardizzone says.

5. Prime Group Holdings, Self-Storage Owner, Saratoga Springs, N.Y.

2016 accomplishments: Acquired more than 80 locations and entered five states. Portfolio now totals 124 facilities in 19 states.

2017 goals: Add 50 to 75 more locations, approaching portfolio of 200 facilities.

Greatest strength: The carefully chosen people who not only have excellent skill sets, but also care about others and the industry as a whole, officials say.

Biggest challenge 2016: Adding 80-plus locations while maintaining solid infrastructure.

Biggest challenge 2017: Finding properties that meet criteria.

6. Space Shop Self Storage, Self-Storage Developer and Owner, Atlanta

2016 accomplishments: Acquired or started construction on seven new storage properties as well as opened three new sites in metro Atlanta.

2017 goals: Seven ground-up development projects are on track to open. Several acquisitions of existing properties with improvement and expansion capability are also in the process.

Greatest strength: “Discipline. Performing detailed, thoughtful market due diligence and choosing to walk away from mediocre deals to find great deals,” says Cliff Hite, vice president of operations.

Biggest challenge 2016: Rising construction costs and increasing new supply in overheated markets. “Construction costs have elevated the overall cost of doing a new development to a point where conservative rental-rate projections many times do not justify moving forward,” Hite says. Willingness to walk away from deals that are just “good” and waiting for ones that are “great” is critical to success.

Biggest challenge 2017: Operating multiple facilities in multiple states undergoing lease-up. “Keeping an eye on unit rates and balancing concessions and growth—this is where we excel, and we have put systems in place to help maximize our success,” Hite says.

7. Storage Pros Self Storage, Self-Storage Owner, Farmington Hills, Mich.

2016 accomplishments: Acquired 13 properties and started three development projects. Completed portfolio repositioning involving the sale of 54 assets over a two-year period.

2017 goals: Complete two to three developments in progress and carefully examine other opportunities. “If we could match 2016’s production, that would be terrific,” CEO David Levenfeld says.

Greatest strength: “We think that for a while now, we have been the largest company in the industry without pre-determined equity source that has a hand in our investment decisions,” Levenfeld says. This allows Storage Pros to be nimble and quick when it comes to decision-making, and the freedom to consider strategic exits in response to market conditions.

Biggest challenge 2016: Transformed from a self-managing operator of 70-plus assets to a company utilizing third-party management (CubeSmart). This change in business model resulted in a substantial restructure of the organizational chart and day-to-day focus. On the acquisition front, there was intense competition for desirable properties and high asking prices. On the development front, there was an extremely difficult, costly and lengthy permitting processes.

Biggest challenge 2017: Continued disciplined growth at this part of the cycle.

8. Store Here Storage Management, Owner and Management Company, Orange, Calif.

2016 accomplishments: Four acquisitions, two expansions/remodel projects, 15 facilities rebranded and four facilities were sold. The company also launched a call center system of 70 facilities.

2017 goals: 10 acquisitions, four new development projects and an expansion of the call center to serve 150 facilities.

Greatest strength: “The owners/principals are highly involved in every aspect of the business; from acquisitions, operation, accounting, tenant insurance and call center, we handle all business internally and limit outsourcing. We use state-of-the-art tracking and revenue management to maximize returns to our investors and partners,” says James Hanrahan, managing partner.

Biggest challenges 2016: Finding deals with solid upside, with a preference for off-market direct deals. “It can be a ton of work, but we have found the deals in the areas we wanted with a bit of tough digging,” Hanrahan says.

Biggest challenges 2017: Finding the right deals to expand into regions where the company isn’t doing business. Also, anticipating capitalization-rate trends and the lending environment.

9. Wentworth Property Co., Self-Storage Developer and Owner, Phoenix

2016 accomplishments: Since late 2015, the company has accumulated a portfolio of 15 existing facilities and development projects in four states: Arizona, California, Nevada and Oregon. It currently has nine facilities in operation and six under construction, representing 1.2 million rentable square feet.

2017 goals: Close on one project a month and surpass 2 million rentable square feet. Grow into several more states.

Greatest strength: “With a lot of help from the rest of our company, David Brown and I pride ourselves on not getting out-hustled. We’re a small team that [is] willing to wear a lot of hats,” says David King, vice president of self-storage.

Biggest challenge 2016: Sourcing good opportunities and being able to get debt that makes sense. “Having great partners that can move fast is also really important,” King says.

Biggest challenge 2017: “Getting the doors open on all of our current development projects and replicating what we did in 2016,” King says. “Finding the right kind of debt is also a challenge.”

10. Westport Properties Inc./US Storage Centers, Self-Storage Owner and Management Company, Irvine, Calif.

2016 accomplishments: Acquired 25 new facilities in four states and began construction or entitlements on eight new sites. Expanded brand and market presence.

2017 goals: Continue to acquire and develop well-located facilities. Capacity to do as many good deals as the market allows. Starting year with “very full” pipeline of prospective acquisitions and development deals, officials say.

Greatest strength: “What differentiates us competitively is our entire team and company culture. Our late founder and industry pioneer, Barry Hoeven, created a culture of being results-driven, accountable, respectful and of giving back to the community. Also, we have a very deep bench with dedicated departments for acquisitions, development, marketing and operations,” officials say.

Biggest challenge 2016: Market shift made deals more difficult to get done. “We still got all of our deals done but, just not with the ease of 2015. I know many of our peers experienced this as well and it’s probably for a variety of reasons,” officials say.

Biggest challenge 2017: Finding quality deals in good markets due to heightened competition compared to recent years.

Alexander Harris is a reporter covering the business of self-storage. He obtained his degree in journalism from Virginia Commonwealth University. He loves reading Elmore Leonard novels and listening to classic country music. You can call him Al. For more information, visit www.sparefoot.com/self-storage/news.

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