The concept came about a couple of years ago, says Stephen Rimel, EVP of CT Realty. Now, in addition to buying office, industrial and multifamily properties for a three- to five-year holding period, the company projects it can earn an 18% to 20% return, on average, from developing and holding the storage facilities over 30 years.

"As we discussed it with our investors, we realized it offered us a nice balance," Rimel says. "Doing the development side gives us an effective balance against lesser opportunities on the acquisition side."

Last year, the company formed a new investment fund called the CT Self Storage Fund LLC, with an initial offering to CT's shareholders and investors for $3.8 million. The money is earmarked for building four storage facilities this year including sites in Bellflower, Huntington Beach and the new one in South Gate, along with one more site. A second fund totaling $5 million is planned for an additional five sites. Due to a complicated entitlement process, and the rour to five months involved in constructing a site, Rimel believes the company will be able to build an average of three to four sites per year.

CT Realty has entered into an agreement with Southern California Edison to lease a number of unused sites around Southern California. The South Gate site is 7.7 acres of easement property owned by Edison. Storage Outlet has signed a 30-year lease of the property valued at $4.5 million. The new 83,000-sf facility houses 735 self-storage units and 60 recreational vehicles.

The storage units themselves are modular prefabricated steel construction built in China to Storage Outlet's specifications. The units are impervious to weather and can be placed anywhere by forklift. The units range from 40 to 300 sf. Each facility is built with greater setbacks than those required by the municipalities where they are located in order to accommodate landscaping and wall configurations, which allow the units to be hidden within the landscaping.

"We looked at markets in general and found that most markets tend to be underserved. A large part of the reason is the entitlement process. Cities are looking for retail as a primary focus, and self-storage doesn't generate sales tax opportunities like retail does. Some cities have unreal expectations. But the land we're looking at is not suitable for retail," Rimel says. "They are infill sites that are environmentally impacted, [like landfills and railroad rights of way]."

Storage Outlet is looking to sign long-term leases with other property owners like Edison and other utilities. CCA Associates of Newport Beach, an experienced storage-facility contractor, is one of the outside firms CT Realty is working with.