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Self-Storage Conversions Expand in U.S. Cities as Demand Surges

Across U.S. cities, self-storage providers are repurposing industrial and retail buildings, now making up 9% of the nation’s storage space.
CRE Daily Newsletter

Self-Storage Conversions Expand in U.S. Cities as Demand Surges

Across U.S. cities, self-storage providers are repurposing industrial and retail buildings, now making up 9% of the nation’s storage space.

Together with

Good morning. In the U.S., self-storage providers are increasingly converting industrial and retail spaces into storage facilities, contributing 191 million square feet—around 9%—of the total self-storage inventory nationwide.

Today’s issue is brought to you by SPI Advisory.

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Market Snapshot

S&P 500
GSPC
5,705.45
Pct Chg:
-1.81%
FTSE NAREIT
FNER
825.33
Pct Chg:
+0.88%
10Y Treasury
TNX
4.28%
Pct Chg:
+0.014
SOFR
30-DAY AVERAGE
4.96%
Pct Chg:
0.0%

*Data as of 10/31/2024 market close.

MARKET REPORT

Self-Storage Conversions Drive Growth in Urban Markets

Across U.S. cities, self-storage providers are repurposing industrial and retail buildings, now making up 9% of the nation’s storage space.

By the numbers: According to a recent report from StorageCafe, ~78% of converted storage facilities were once industrial buildings, and 16% were retail. More than 1,100 U.S. cities now host these transformed warehouses, factories, and big-box stores. Chicago and New York City lead the way, with 7.3 million and 4.6 million square feet of converted storage space, respectively, concentrated in areas rich in industrial history.

Cost-effective conversion: Converted storage facilities are slightly cheaper for consumers, averaging $141 per month versus $144 for purpose-built storage, and are often located within city limits. In 49% of markets, converted units provide more affordable rates, attracting price-sensitive renters in densely populated urban areas.

Adaptive Reuse Conversion

Regional dominance: Cities with rich industrial histories, like Chicago, St. Louis, and Philadelphia, lead in conversions. Chicago tops the nation, repurposing 7.3 MSF, nearly half of its self-storage inventory. New York City’s boroughs follow closely, leveraging former industrial buildings to expand storage options amidst limited available land.

➥ THE TAKEAWAY

Why it matters: Adaptive reuse in self-storage is reshaping urban real estate, adding 191 MSF of storage by converting underused industrial and retail spaces. These conversions offer affordable, accessible options in crowded cities, revitalizing old buildings to meet modern storage demands.

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✍️ Editor’s Picks

  • Texas housing crunch: The Texas housing boom has only intensified the state’s housing shortage, which stood at 320K homes in 2022 due to rising prices and higher rents in major Texas cities.

  • Under pressure: With declining demand for traditional office spaces, regional banks are seeing a rise in non-performing office loans, while smaller community banks are faring better.

  • Revitalizing real estate: REITs will allocate $120.9B for property reinvestment in 2023, focusing on upgrades that boost value and revenue streams.

  • Investor influence: Wall Street landlords are upping their stake in US single-family housing, leading to rising home prices and rents in some neighborhoods.

  • Builder setback: D.R. Horton's (DHI) underwhelming 2025 revenue forecast, coupled with high mortgage rates and consumer uncertainty, spurred a steep drop in homebuilder stocks.

  • Empire building: Kushner Companies' value has nearly tripled since 2016 to $2.9B, surpassing Trump's, due to rapid growth in its real estate ventures.

  • Art world assist: Sotheby’s secured a $1B investment from Abu Dhabi's sovereign wealth fund, ADQ, to reduce debt and expand, giving the Emirati fund significant strategic influence.

🏘️ MULTIFAMILY

  • Rent rumble: A Manhattan judge allows Cooper Union to collect rents from the Chrysler Building amid a lease dispute with RFR Holdings.

  • Affordable dreams: Boston Financial raised $170M for an affordable housing fund, aiming to create 1,418 homes in 16 communities across 13 states.

  • Senior housing deal: Bow River Capital sold two senior housing properties in Colorado, The Lodge at Greeley and The Lodge at Grand Junction, totaling 140 units, for $30M.

🏭 Industrial

  • Infrastructure innovation: Industrial occupancy correlates with infrastructure investments. Experts predict speculative development will slow as occupied space grows amid changing freight patterns.

  • Hyper-growth: Equinix (EQIX) posted its 87th consecutive quarter of revenue growth, driven by a $15B hyperscale data center expansion in partnership with GIC and Canada Pension Plan.

  • Data evolution: Data center Asset-Backed Securities (ABS) are projected to reach $75B by 2027, providing a new securitization pathway for income-generating data center assets.

  • Bay Area exit: JLL Income Property Trust (JLL) sold Pinole Point Distribution Center in Richmond, CA, for $132.5M, yielding a 50% gain.

  • Motoring forward: Four Springs TEN31 Xchange acquired a fully leased 1.1 MSF industrial asset in Monroe, MI, for $139.5M, financed by Colliers (CIGI) for $76.7M.

🏬 RETAIL

  • Recipe for expansion: Chipotle (CMG) is planning a record-breaking expansion, aiming for 300 new restaurants by year-end and reporting strong Q3 revenue growth.

  • Mall marvel: Queens Center Mall, a 968 KSF shopping mall in Elmhurst, NY, and a decades-old icon of Queens retail, secured a $525M loan at a 5.37% fixed interest rate.

  • Farewell, Big Lots: 255 Big Lots (BIGGQ) leases are up for auction as the retailer plans to close over 500 locations.

🏢 OFFICE

  • Insurance innovates: American International Group (AIG) leased 180 KSF at Perimeter Summit, creating a 1.2K-employee innovation hub, signaling a resurgence in large office leases in Atlanta.

  • Conversion boom: Office-to-residential conversions in Manhattan are ramping up, with these projects set to add around 7.5K rental units by 2028, representing over 40% of new rental inventory.

  • Pricey purchase: The Orange County Transportation Authority bought a 220.5 KSF office building in Santa Ana for $54.5M, paying around $247 PSF.

  • Making waves: Mattel (MAT) secured a new 60 KSF lease in El Segundo for studio ops, boosting its beachside presence despite a recent sales dip.

🏨 HOSPITALITY

  • Southern kickoff: BD Hotels secured a $75M construction loan for the first Florida hotel in West Palm Beach's NORA district, featuring 201 rooms.

📈 CHART OF THE DAY

Source: Trepp

Commercial mortgage-backed securities (CMBS) special servicing rates climbed to 8.79% in September, marking the ninth consecutive monthly increase, with office properties leading the surge due to higher distress levels across the sector.

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