TOMS RIVER, NJ-Investors have a strong taste for self-storage properties right now, says Marcus & Millichap's Richard A. Schontz, who specializes in selling the property type. He handled a deal earlier this month in which a 480-unit facility here traded for $5.2 million.
“Despite the fluctuation in interest rates, the self-storage sales market remains red hot,” he says. “We received several bids for this asset within two weeks at or near the asking price, with the winning bid coming at the asking price with very strong terms.”
The 45,630-square-foot facility at 1864 Route 9 (Lakewood Rd) was picked up by a REIT, NJ Strategic Storage Trust, making its second buy in Toms River.
“I can't imagine the market will remain this way forever,” says Schontz, whose company closes more self-storage transactions than any brokerage firm nationally. He says it is an excellent time for those considering selling a property to act.
“The reality is that interest rates are more than likely go up, creating less return for investment buyers,” the broker. “That will make the value of property go down.” Buyers, says Schontz, are interested in what the property value will be in three-to-five years.
The capitalization rate for the Toms River deal was below 7%, Schontz says. However, in another recent deal for a facility not far away, the rate was in the high 7 percents, he notes.
“There is cap' rate compression in our product type because of the amount of money chasing the product,” he says.
While there has been virtually no development of self-storage properties over the last three years, M&M is starting to see companies begin projects in the region. “Any time anybody is moving, self-storage does better. As the housing market picks up, it does better,” says Schontz.
Michael Fasano, New Jersey Broker of Record, also assisted with the Toms River deal, along with Christopher Munley of M&M's Philadelphia office.
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