One of the largest self-storage operators in the U.S. has gone international.
“We formed that company and raised our first capital last April,” said Jay Harron, president of Metro subsidiary Metro Storage International LLC. Harron declined to disclose investment figures.
The first facility opened earlier this month in São Paolo, Brazil’s largest city, and a second facility in the city is slated to open this summer.
“Our goal is to continue to develop and acquire at some point, but there is not too much to acquire in an emerging market like Brazil,” Harron told The Storage Facilitator.
Brazil, with a population of about 200 million, has about 75 self-storage facilities, Harron said. That’s just about as many as the 78 facilities Metro Self Storage owns in the U.S. Harron said mom-and-pop operators that own one or two facilities dominate the Brazilian market.
“It doesn’t take a genius to see there might be more room for more storage capacity,” Harron said.
The new MetroFit facility has been outfitted with all of the modern amenities you’d expect to find at the best facilities in the U.S. The 75,000-square-foot facility has 500 units and features wine storage, 24-hour security and drive-through access.
“Our goal is to become the biggest and best operator in Brazil. Having a compelling product to offer investors is critical to that regard,” Harron said.
Without giving exact numbers, Harron said the newly opened location is leasing up aggressively. One challenge the company faces is that most people in Brazil aren’t familiar with self-storage. Many passers-by have stopped at the big yellow MetroFit facility in São Paolo just out of curiosity.
“Part of the lease-up process is educating consumers about what the product is,” Harron said.
One thing that helps is American reality TV. “Storage Wars” airs on Brazilian TV, and MetroFit runs commercials during that program.
“The show is about defaulted units and is not particularly educational about what self-storage is, but it is still a good marketing tool for us,” Harron said.
Hatching the Idea
Before joining Metro Storage International, Harron worked for the international private equity firm Equity International, where he underwrote potential investment opportunities in various countries, including Brazil.
“I came across a self-storage company there in my travels and thought to myself, ‘That’s an interesting business’,” Harron said.
He eventually left Equity International and brought the idea to Metro Self Storage, which hired him in 2012 to lead the international expansion.
“We can only do so much based in Chicago. We needed to partner with a local development company that could provide knowledge and capital markets,” Harron said.
“In more emerging economies where there is growing consumerism in the middle class and economic growth among all income classes, self-storage will work,” Harron said.
Harron said the company is looking for more sites in Brazil and continuing discussions with capital partners for the next round of facilities. However, there isn’t any set number of facilities or a timetable for development.
“Our view is to take it slow and steady,” Harron said, “and make sure we don’t sacrifice expansion at the behest of operational excellence.”
As for opportunities in other parts of the world, Harron said operators from other countries have reached out to Metro Storage International. Harron said his company isn’t ruling out entering other markets, as long as it doesn’t distract from the Brazil expansion.
“That market to us is our priority by far. Whatever we do going forward will not take away from that focus,” Harron said.
MetroFit will need to stay focused as others seek to compete in Brazil. Harron’s former employer, Equity International, owned by billionaire Sam Zell, bought a 70 percent stake of Brazilian self-storage operator GuardeAqui in 2011. The stake cost $58 million, and GuardeAqui had just three facilities at that time. The company has announced plans to open 50 facilities in Brazil by 2017, with a total investment of $15 million to $20 million for each facility. Other U.S. investors are looking at the Brazilian self-storage market as well.
“We would be naive to think that competition won’t occur,” Harron said. “But this is a big market, and we look forward to competing with local competition and possible foreign investment.”