Advertisement

Investors willing to pay top dollar for self storage in Lake County

Investors willing to pay top dollar for self storage in Lake County
Self storages such as this one in Clermont are selling for higher prices as investors embrace what analysts say is a low-risk/high return investment. (Teresa Burney)

Flashy high-rise downtown towers, large shopping centers, high-end multi-family developments and town centers are all popular investments today, but some investors are willing to pay top dollar for a far less sexy investment – self storage.

In the past month in Lake County there have been at least four sales of storage properties in Lake County and two of them sold for about twice what they were bought for in 2010.

Advertisement

Various LLCs, all starting with TJC, bought three storage facilities in South Lake County.

One at 200 E. Division St. in Minneola sold for $6.1 million, about $83.85 a square foot. The same property was bought in 2010 for about half that at $3.2 million.

Another TJC LLC bought a storage property at 18286 Apshawa Rd. in Clermont for $5.9 million, about $68 a square foot.  In 2010 it sold for $3.8 million.

A third project in Clermont on south Highway 27 was purchased for $8.8 million. It was not clear how large that self-storage unit is so it was not possible to determine square footage cost.

A fourth storage unit in Leesburg, a less populous market, was purchased for almost $64 a square foot by another entity. It sold in 2008 for just under $38 a square foot.

The popularity of self storage properties is not isolated to Lake County. More investors are turning to them for profits. Various real estate investment trusts (REITs) have developed departments for the investments.

Self-storage companies, which rent units to small businesses and consumers, produced the best risk-adjusted return among 10 U.S. real estate investment trust indexes in the past decade, according to Bloomberg's riskless return ranking. "They had the highest total return and the third-lowest volatility, for a risk-adjusted gain of 10.6 percent," Bloomberg reported.

Marcus & Millichap recently released a report on the sector with the headline, "Few Headwinds in sight to Impede (Self-Storage) Upswing."

It seems that the consumer-driven economy has caused many households to collect more than they can store at home, creating demand for self storage. At the same time, construction of new self-storage units is "anemic," the Marcus and Millichap report says. The cost of land where the facilities are needed are climbing and cities aren't keen on permitting them.

As a result, vacancy rates for storage units are at the lowest level in the past three years after falling to 12 percent in 2014. Rents for climate-controlled units rose 3.0 percent to $151 a square foot in 2014.

Properties that changed hands in 2014 increased, carrying an average price of $70 a square foot, more than 20 percent higher than the year before, the report said.

tburney@growthspotter.com or 407-420 6261

Advertisement
Advertisement