JV Spends $27M to Buy SoCal Self-Storage Facility

While demand for self-storage space outperforms many of its fellow niche asset classes, the recent sale of a facility in Santa Clarita, Calif., is evidence that investor appetite is keeping pace.

A joint venture between Intercontinental Real Estate and LaTerra Development spent $27 million to acquire EZ Access Self Storage, a 784-unit property at 23715 Carl Court. The seller of the property was an unnamed private investor. 

“With a track record of resilient, long-term performance, self-storage has emerged as a compelling institutional alternative investment,” Jessica Levin, Intercontinental’s managing director and head of West Coast operations, said in a statement. “This opportunity marks a strategic entry point for expanding our exposure to what we believe to be a high-performing asset class poised for continued growth.”

As the third-largest city in Los Angeles County, and with renters comprising 30 percent of its population, Santa Clarita is primed for self-storage demand growth, Levin said. The storage facility is in Santa Clarita’s Newhall neighborhood, 31 miles northwest of Downtown L.A.

“The L.A. metro is particularly supply-constrained when compared to the national average,” added Ross Karetsky, Intercontinental’s associate director of acquisitions. “Only five square feet of self-storage product exists per capita within the L.A. metro, while the national average totals between 10 and 13 square feet per capita. The L.A. metro needs more but has less, reinforcing our belief in this asset and its location.”

EZ Access Self Storage, constructed in 2000 by the seller, features nine one-story buildings, an office and a residential unit for on-site management. The JV intends to engage with self-storage giant Public Storage to manage and rebrand the property, and will upgrade the facility’s hallway lighting, landscaping, entry security and management office. 

It’s easy to see why investors are so interested in self-storage spaces, as the asset class has quietly proved itself as one of the most consistently high-performing markets across the real estate industry. One-third of all Americans use self-storage, according to a recent report by Yardi’s StorageCafe, and another 18 percent plan to rent a storage unit in the future.

Late last year, Hines paid $91 million for the 2,500-unit Exxtra Space Storage in Cerritos, Calif., — the largest single-asset self-storage property sale in history, according to brokers at CBRE at the time. 

“Self-storage demand is driven by life transitions — moving, downsizing, and lifestyle shifts that require flexible space solutions,” Bryan Miranda, LaTerra’s managing director for self-storage, said in a statement. “Catering to both renters and homeowners whose living spaces are not big enough for the things they own, it is not surprising that self-storage has outperformed all real estate asset classes over the past 25 years.” 

Nick Trombola can be reached at ntrombola@commercialobserver.com.