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Why Self-Storage Investors Are Heading Outside the City

The self-storage market is growing in areas 50 minutes outside of a city where pricing is cheaper and tenants still have access to their goods through on-demand service.

By Kelsi Maree Borland | Updated on January 09, 2018

Los Angeles Los Angeles

The self-storage niche isn’t as prone to location as some other asset classes, thanks to new on-demand services. On-demand self-storage includes pick-up and drop-off services for tenants, allowing operators to occupy facilities outside of the city where pricing is cheaper. Locations aren’t merely miles outside of the city limits, but can be 45 minutes to an hour away. As a result, investors are beginning to look for locations in secondary markets where they can operate on-demand facilities at a fraction of the cost of properties in similar markets.

“We have stayed away from prime markets because the cash flow isn’t as significant,” Hunter Thompson, founder of Cash Flow Connections, tells GlobeSt.com. “The markets that are 30 minutes outside of a city don’t have as much of a differential as markets that are 50 minutes outside of the city, because the population density and the demand for the product isn’t as significant.”

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