Tech Helps Landlords Add Mini-Storage for Unused Space
From pricing a new facility to partnering with a third party to reposition existing space as infill self-storage, technology is giving landlords options in a strong CRE sector.
At times of uncertainty and displacement, self-storage becomes a hotter commercial real estate sector. Even as the pressures from the recession have begun to wane and demand has stabilized, the sector still has plenty of run room. Look at World Class Holdings’ sale of a 64-property self-storage portfolio to CBRE and facility operator William Warren Group/StorQuest for $588 million. That’s a lot of spare mattresses, old bicycles, and boxes of books that are waiting for transport to a new location.
There are clearly areas where self-storage is overbuilt. But many more where more could be used, or older systems upgraded. For landlords, there is an option that seems like a building owner’s equivalent of a rideshare transportation service—leverage an existing physical asset to make money you might not have otherwise.
A company called Stuf works in a handful of cities and partners with landlords who have some extra room. The company turns the space into self-storage units. They cover setup costs, recouping the investment inside of eight months. After that, Stuf pays the landlord a percentage of revenue.
Not just any space, of course. They want 2,000 to 10,000 square feet—so an empty garage, basement, set of retail storefronts, or perhaps a motel or small office building. Floors have to be level and finished, with a direct entry path and elevator access if available. Units range from 3×3 to 5×10. Access doesn’t have to be 24 hours, 7 days a week, but it allows higher charges. A 5,000 square foot storage space would get about 5 to 7 user visits a week, according to Stuf.
While there is an app for people renting storage, there also is a dashboard for landlords so they can see how things are going.
A case study the company has shows a former restaurant space that underwent a two-week conversion into 53 units, and which reached 90% occupancy in five months.
That doesn’t mean there’s no responsibility, by any means. In addition to building and grounds maintenance, the landlord would need to know legal requirements, like what happens if someone doesn’t pay and abandons their property? What local ordinances might hold sway? Given how the company works, it would seem reasonable to expect some area of expertise in the cities in which they operate.