QuadReal Property, Store Space Self Storage Ink $1B Partnership

Global real estate firm QuadReal Property Group has committed to a $1 billion investment partnership with self-storage operator Store Space Self Storage. 

QuadReal will commit the majority of the capital for the partnership, the companies said in a joint statement. The partners’ value-add and core-plus investment strategy was seeded with the $200 million acquisition of a 13-property, 1.1 million square foot portfolio including both stabilized and recently developed self-storage assets in seven states.  The partnership has a “significant acquisition pipeline” in place and also recently closed an off-market deal in New Jersey.

“The self-storage sector offers steady growth. Further, it has shown resiliency and demonstrates consistent fundamental and demographic tailwinds that align closely with QuadReal’s core investment convictions,” said QuadReal’s Jameson Weber, Managing Director, International Real Estate, Americas, in prepared remarks.

The self-storage sector’s growth has been fueled by changing consumer demand in the wake of the COVID-19 pandemic. Demand has stabilized as of late, with analysts at Marcus & Millichap positing that oversupply concerns are pretty much in the rearview. The firm predicts rents, which rose by 13% on average nationally since the onset of the pandemic, will moderate over the course of this year as some of the demand drivers decrease.

The sector has enjoyed the most rapid growth across satellite cities and the Sun Belt, all of which has benefited from pandemic-related in-migration. But analysts note that new construction of units will likely continue to be “well below” recent peaks as materials and labor shortages continue to plague the building industry.