Just how much storage space do people living in and around the Toronto area really need? A heck of a lot, based on the growth plans of Strategic Storage Trust II, Inc. (SST II).
According to Strategic’s chairman and chief executive, Michael Schwartz, it’s not an overly ambitious or risky buildout, given how Canada is well behind the curve in the storage lifestyle America pioneered.
“The self-storage market in Canada is really in its infancy,” he said in a phone interview from his offices in Orange County, Calif.
Schwartz sees the industry as virtually wide-open in Canada, compared to the U.S. which boasts five or six massive players and a host of regional competitors. In Las Vegas, where he once owned a property, he counted 40 self-storage competitors.
Clearly, Americans like to store stuff, whether as individuals or businesses. In 2009, the Self Storage Association reported that of the 58,000 storage facilities worldwide, 46,000 were located in the U.S. According to SSA, nearly one in 10 U.S. households currently rent a storage unit, up from one in 17 in 1995.
A love for Toronto
SST II, which has a portfolio of more than 22,400 self-storage units and approximately 2.4 million rentable square feet of storage space, covets the greater Toronto market for its dearth of big competitors and some U.S.-style attributes it believes makes it ripe for growth, explained Schwartz.
“There is just a lot of density and sprawl associated with Toronto and there are just a lot of good markets. You have got the core” and surrounding suburbs the American executive was able to rhyme off with the confidence of a longtime resident.
He does note the market has some pretty significant barriers for new entrants, particularly taxes and land costs.
“There are a lot of buildings and land that have really been bid up, so I would say that it is a little bit more difficult today to plan an aggressive overall growth campaign. You have just got to be patient to find the right opportunities.”
About Strategic Self Storage
Last month, SST II purchased three self-storage facilities for approximately $53.1 million in the GTA, comprised of 2,570 units and approximately 232,200 square feet of rentable space in Burlington, Milton and Oakville.
Strategic Storage Trust II is owned by SmartStop Asset Management, LLC, a diversified real estate company with a managed portfolio that currently includes approximately 37,000 self-storage units and approximately 4.1 million rentable square feet.
The company is the asset manager for 59 self-storage facilities located throughout the United States and Toronto. SmartStop Asset Management is the sponsor of SST II and Strategic Storage Growth Trust, Inc. (SSGT), a public non-traded REIT “focused on opportunistic self-storage assets.”
In 2015, executives at Smartstop Asset Management negotiated the sale of SmartStop Self Storage Inc. (Smartstop), a fully integrated, self-administered and self-managed self-storage company, owning and/or operating 170 self-storage properties in 21 states and Toronto to Extra Space Storage Inc.
Read part 2 of this article – Strategic Storage enjoys a Canadian competitive advantage – in the April 14, 2016 edition of Property Biz Canada.