What’s Happening Around the Country in the White-Hot Self-Storage Industry?
more than 100 properties that are
planned, being developed or have
opened in the last three months
in the four major MSAs in Texas.
Buyers should always be mindful of
the potential for new development
near an acquisition opportunity.
Bobby Loeffler, Real
Estate Broker in the
Western US Region
In 2009, Mr. Loeffler formed The
Loeffler Self-Storage Group – a
commercial brokerage firm directed
exclusively at representing the
buyers and sellers of storage
properties throughout the West. He
has closed transactions ranging
from a $33,000,000 lease-up
portfolio to an $800,000 selfstorage facility. Since 2002 he
has sold over $280 million worth
of commercial properties. Prior
to forming LS-SG, Bobby was a
Vice President of Investments
for Marcus & Millichap and was
based out of their Roseville office.
He was a Director of the National
Self-Storage Group and received
various sales awards including:
National Achievement Award (2005),
Sales Plaque Recipient (2003,
2005, 2007), Seven-Figure Club
Member (2007), Member of The
Marcus & Millichap Self-Storage
Advisory Group (2006- 2009), and
Association of Commercial Real
Estate Broker of the Year Nominee
(2005, 2007, 2008). Prior to working
for Marcus & Millichap, Bobby
was a member of the Acquisitions
and Development Team for
AvalonBay Communities (NYSE:
AVB) in Santa Clara, California.
Bobby frequently contributes articles
for self-storage trade publications.
What are the 2015 trends
for new development in
the Western US compared
to recent years? Which
submarkets are most active?
New construction activity is on
the rise. Several of my developer
clients have secured multiple sites
in Northern California. This activity
has been fueled by our sector’s
www.theSBOA.com
steady growth coupled with the lack
of available existing assets listed
for sale. Many operator/developer
clients have given up on acquisitions
as pricing has continued to escalate
despite the looming interest rate
hikes. Additionally, developers enjoy
economies of scale through new
construction and with favorable
take-out financing they can obtain
yields that far exceed leveraged
returns on existing assets.
I believe that we will see an uptick
in new construction this year
compared to previous years when
construction financing was largely
unavailable or had unfavorable
terms. In most locations, prerecession level occupancies
have returned, and the last shoe
to drop in the recovery will be
an increase in rent levels by
another 10%-15%. Almost all new
construction in the storage sector
has followed those cities and
MSAs which have demonstrated
the largest gains in job growth (e.g.
SF Bay Area and San Diego).
Would you recommend the
use of outside due diligence
services to buyers?
As a broker working with buyers,
I would say that it always makes
intuitive sense to make the most
informed decision you possibly can
during your due diligence period.
That said, I believe some firsttime buyers can be misguided in
the selection of their consultants.
Someone may come from the
multifamily sector and may wish to
use their contractors, appraisers,
managers, etc. Storage really is a
different animal and I have seen
transactions crater when buyers
insist on using people who are not
qualified to operate in our sphere.
Is the old adage, “location,
location, location” as
important in purchasing selfstorage facilities, or do you
see the Internet contributing
to the “democratization”
of locations?
Nothing beats the strength of
a solid location. I would take a
well-located asset over the best
marketed facility any day of the
week. As evidence, look at the
storage properties that went back
to the lenders during the Great
Recession. Those were almost
exclusively assets that were located
in tertiary markets that probably
should have never been built.
Alternatively