LOS ANGELES—The millennial demographic is helping to fuel growth in the self-storage industry, according to Fred Cordova, EVP at Kennedy Wilson. Cordova recently represented the buyer in the acquisition of a three-property self-storage portfolio in Los Angeles and Riverside, which GlobeSt.com reported in a previous story, and is an expert in the self-storage sector.
“The global forces affecting the self-storage market are the downscaling of households and how people live,” Cordova tells GlobeSt.com. “The millennials aren’t buying houses, and ownership has dropped down from 65% to 66% to 61%, so you have a huge demand for apartment units. These new apartments are quite small, but people still have their stuff and they need to put it somewhere. Self-storage space is half the cost of living space, so it makes sense to put the items you don’t use that often in storage.”
Cordova explains that self-storage is becoming so popular that larger self-storage investors, like a Public storage, will out bid an office building or retail property for the space. “I have seen it happen,” he says. “The push is for multi-level, multi-story new product.” Location is the most important selling point of the self-storage property. These units need to be no more than one to two miles from apartment buildings, because users won’t drive further than that to access their things.
In Los Angeles, Hollywood and downtown seem to be the most popular submarkets, but Cordova notes that everywhere from Downtown to the 405 freeways is extremely popular. “They are looking for existing warehouse space that they can double-deck or tear down, as long as it is on a main boulevard with good visibility,” he says. “You have to have that.”