Carriera Regan

Finding Leverage in the Self-Storage Market

self storageEvery property sale has a story and every story has a theme. The details of four recent transactions composed of class “A” storage facilities are each unique, but the shared theme of these stories is leverage — that is, how these sellers were able to leverage Marcus & Millichap’s experience, data and powerful marketing in order to realize the greatest returns on their investments.

Creating a buyer pool

Take for example the recent, groundbreaking sale of a 643-unit self-storage facility in Wellington, Florida. The seller of this property was offered multiple unsolicited offers prior to listing but opted to work with Marcus & Millichap’s Mele Storage Group to develop the market for the property.

A targeted marketing campaign generated eight qualified offers within the first month. The seller benefitted from the Mele Group’s long-term relationships with investors and extensive database. By giving the property the broadest possible exposure, the Mele Group was able to intensify competitive bidding among interested parties, ranging from national REITs to private regional investors, ultimately securing the $11.4 million sale.

Long-term relationship

The sale of Gandy @ 4thStreet Storage in St. Petersburg was the culmination of a relationship between the seller and the Mele Group that began long before the property was listed. As a member of Mele’s strategic advisory program, the seller had developed clear disposition goals for the property. The Mele Group kept him apprised of developments in the self-storage market, provided regular financial analysis and recommended the best time to list the property in order to fully capitalize on his investment.

When it was time to sell, expertly targeted marketing brought in six offers within the first month. The winning bidder was compelled to pay a premium and offered a quick closing timeline to secure the deal. Once under contract, the sale closed in 45 days at an unprecedented sub-5% capitalization rate and per-square-foot rate of $143.46 — remarkably high for a secondary market.

Looking beyond the unsolicited offer

The owner of the Kingston and Route 111 Self Storage in Kingston, New Hampshire, received an unsolicited offer on the property. Instead of leaping at the offer, the owner decided to research possibilities for the potential sale.

Some self-storage owners may believe that they are able to save either time or money by not listing their property exclusively with a broker. However, this owner saw value in creating a competitive pool of buyers for the property. Listing exclusively with the Mele Group paid off for the New Hampshire client. The marketing program the Mele Group initiated garnered four offers, resulting in a sale to a regional investor for $6.4 million. Even after closing costs, the seller received more net proceeds than from a direct sale.

These sellers were able to see the value in Marcus & Millichap’s marketing platform. Because they chose to leverage the Mele Group’s unmatched data resources and vast network of investor relationships, they were able to realize higher net profits, even after closing costs, than if they had sold direct. Give us a call to make sure the story of your sale follows a similar theme.

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