On Aug. 16, the South Florida Business Journal reported that publicly held Public Storage paid $141.7 million for nine self-storage facilities in Palm Beach County, FL. These facilities are among 29 in the U.S.—including 21 in Florida—that Public Storage is buying in the third quarter, which ends Sept. 30.
Ben Vestal, president of the Argus Self Storage Sales Network, said Public Storage’s move in Florida makes sense, as the Sunshine State continues to see population growth—particularly among baby-boomer retirees. As for Palm Beach County, Vestal pointed out that it’s part of the country’s eighth largest metro area.
“Florida’s economy has rebounded pretty strongly over the past year,” Vestal said.
‘A Great Property Type’
According to data collected by SelfStorage.com partner SpareFoot, Public Storage has about 200 facilities in Florida among about 2,000 across the U.S.
The estimated price tag for the 29 facilities being purchased by Public Storage: $374 million. By comparison, Public Storage spent about $570 million on acquisitions during the previous 3½ years.
Vestal said that driven by attractive demographics, Public Storage and other self-storage operators are making a “big push” to buy facilities in the southern tier of the U.S., from Southern California to the Carolinas.
“Self-storage is a great property type, as it just continues to puke cash,” Ron Havner, chairman, president and CEO of Public Storage, is quoted as saying in a new report on the self-storage industry from MJ Partners Real Estate Services.
In an Aug. 2 conference call with Wall Street analysts, Public Storage Chief Financial Officer John Reyes said the current seller’s market—buoyed by favorable cap rates and other positive financial conditions—is resulting in the availability of high-quality facility portfolios.
“We’re actively looking at those and obviously acquiring some of them,” Havner told Wall Street analysts. “We’re flexible. We buy properties that are zero percent occupied and fill up. We’re buying stabilized properties. We’re buying properties that have been under-managed.”
Havner said the facilities being purchased during the third quarter aren’t “as good” as acquisitions Public Storage made in 2010, “but they’re really good properties, and we’re really happy with them.”
Zeroing in on Palm Beach County
In Palm Beach County, eight of the facilities snapped up by Public Storage were affiliates of Southern Self Storage, based in Palm Beach Gardens, FL, according to the South Florida Business Journal. The ninth facility was part of a partnership managed by a Southern Self Storage affiliate.
In all, the nine facilities in Palm Beach County contain more than 872,000 square feet. The per-facility price tags ranged from $9 million to $27 million.
Palm Beach County is in the Miami-Fort Lauderdale metro area. According to the 2013 Self-Storage Almanac, that region had 717 storage facilities in 2012, or 5.95 square feet per person. By contrast, the national square footage per person was 7.55 last year.