Most of these factors have increased as a result of the damage caused by COVID-19, driving the demand for self storage to new heights in many regions of the country, particularly New York City.
The New York subway region added roughly 3.2 million square feet of fresh self-storage inventory last year, making it the most active market in the country, according to data Yardi Matrix Data, but it is still viewed as a lack of supply market.
In Manhattan – a somewhat barren landscape for the asset class compared to the outskirts – Ramrock real estate and self storage development company Mequity company plan to launch a new warehouse in its dense Flatiron District.
Cerberus Capital Management owed the joint venture USD 35.1 million to convert a four-story parking garage in 41-47 East 21st Street – Between Park Avenue South and Broadway – for self storage, according to city sources and sources knowledgeable about the business.
Mequity, which develops, builds, and operates self-storage facilities primarily in and around large metropolitan areas across the country, bought the building for nearly $ 32.2 million for the first time in March 2019, according to the city.
The project plans to convert the former four-story 24-hour parking garage into an air-conditioned warehouse operated by the Self-Storage Real Estate Investment Trust CubeSmartaccording to data from JLLwho arranged the transaction on behalf of the borrower.
CubeSmart operates more than two dozen facilities in the five boroughs of New York, but only has one facility in Manhattan 444 West 55th Street in Midtown, according to information from his website.
JLL’s Steve Klein, John Rose, Geoff Goldstein and Mitchell Kaliner arranged the funding.
An illustration of the facade of the new warehouse at 41-47 East 21st Street. Courtesy JLL
Klein said in a statement that the deal represents a “unique opportunity to bring a premium asset class in a limited supply market that is geared for future growth,” adding that the sponsors’ understanding of the New York self- Storage market helped get the deal over the line.
When completed, the asset will have eight stories and will increase in area from approximately 50,000 square feet to more than 64,300 square feet, according to JLL. It will provide secure, controlled access; Online and touchless rental options; and also two cargo holds off the road and a smaller additional cargo area. As part of the development, Ramrock and Mequity will add two elevators and install new sprinklers, plumbing, electrical, roof and heating, ventilation and air conditioning systems.
While the asset is essentially expanding, a source with knowledge of the development plans said Ramrock and Mequity are not directly increasing the height of the existing garage but are “working with the existing structure to create more stories” by “including” one Part of the existing main roof and an increase in the height of a lower part of the building by one floor. “The developers will also remove parts of the second floor, convert it into a new mezzanine, and then“ move ”the area from the second floor to the main roof, over which a new roof surround will be added. There is also an underground level for development.
New York is the third largest self storage market in the country with over 66.3 million square feet of inventory. Despite the size of the market, the storage space available per person is only 3.2 square feet, which is less than half the market’s US benchmark figure of 7 square feet per capita, according to Yardi data compiled by StorageCafe.
According to Yardi data, there are 55 facilities, approximately 4.4 million square feet, expected to be shipped to the New York market this year.
New self-storage construction slowed last year from 56.3 million in 2019 to just under 49.5 million square feet. Coupled with increased demand, rates rose 3.5 percent in December 2020, although rental rates in most of the other major self-storage markets fell slightly per yard. Rent in New York; Seattle; and Washington, DC, rose largely due to the fact that demand in these areas exceeded supply in 2020.