NYC MSA 10-Property Self-Storage Portfolio Opportunity – Brooklyn, The Bronx & Queens
This portfolio presents a unique opportunity to acquire ten self-storage properties located in New York City. The portfolio consists of 612,095 rentable square feet of Class-A self-storage in high-visibility locations throughout Brooklyn, the Bronx and Queens, New York. The ten state-of-the-art facilities were completed between 2019 and 2022. As of May 2023, eight of the ten properties were approaching stabilization, with physical occupancy ranging from 70% to 86%. The two newer facilities were still in early lease-up, with occupancies at 28% and 39%.
The demand drivers and market fundamentals for self-storage within the subject properties’ trade areas are among the best in the nation. New York City is home to over 8.8 million people, making it the most populous city in the United States. It’s large and diverse population, high costs of living and small living spaces bolster consumer demand in an underserved market with high barriers to entry. These factors give owners substantial operating leverage and signal above-average market rent growth for the foreseeable future.
Former Governor Andrew Cuomo passed legislation removing self-storage properties’ eligibility to benefit from ICAP tax benefits. This significantly impacts the economic feasibility of new self-storage development in the boroughs. As a result, the portfolio will benefit from a significant reduction in risk from new competition, which will materially increase market rents.
The portfolio offers considerable upside which can be achieved by stabilizing occupancies and bringing existing tenants’ rental rates up to market levels through customer rate increase initiatives. As previously mentioned, new legislation regarding ICAP abatements for self-storage will significantly reduce incoming supply, promoting rapid market rent growth within the subject properties’ trade areas