LOOK WHO'S TALKING “There’s not a lot of work when fa-


cilities are 95 percent occupied,” says Tighe. “In many cases they don’t need or want the money; they’d rather have something to do.”


Alternatively, Tighe mentions that


some owners eager to sell their as- sets may end up empty-handed as a result of unrealistic expectations. He recalls a few facilities that were listed but never sold due to inflated asking prices that grossly exceeded market values and baffled potential buyers. Plain and simple: It’s a seller’s market due to the supply shortage, but sellers must be reasonable if they actually want to close the deal.


Nevertheless, Tighe points out


that very few self-storage facilities in Canada get listed on the open mar- ket. And the increase in off-market transactions may persist as national operators continue to seek sellers and independent owners reach out to po- tential buyers. Mini Mall Storage, for instance, was cold calling small opera- tors to secure deals; it now has dozens of facilities in six provinces covering more than 2 million square feet.


Clearly, deals are occurring, but as


of December 2021, supply was scarce in Canada’s six primary markets (those with more than one million residents): Toronto, Montreal, Vancouver, Cal- gary, Edmonton, and Ottawa. “Sup- ply is low, and demand is high,” says Tighe, “especially in Toronto. There are very few facilities for sale in To- ronto. It’s very competitive.”


Tighe, who states that approxi-


mately 30 percent of all self-storage facilities within the primary markets are owned or operated by the larg- est national operators (StorageVault, StorageMart, Public Storage, Smart- Stop Self Storage, Mini Mall, Apple Self Storage, and U-Haul), credits the competitiveness within the country’s primary markets for the increased in- terest in secondary markets.


January 2022 “It will be increasingly crowded,” says Tighe of the self-storage industry in


Canada. “There will be increased demand, even in tertiary markets from both existing and new self-storage owners and investors.”


A Focus On Operations As self-storage demand continues to surge, Tighe highlights the importance of op- erating efficiently to increase valuations. “Moving forward, to increase value, you


With a need to “diversify” their self-storage real estate portfolios, Tighe says


the “spillover into secondary markets” will continue. “They need to expand their horizon and look all across the entire country for opportunities.”


While there are 35 secondary markets in Canada, Tighe mentions that there’s


been major growth within the secondary markets throughout the country but most notably within those markets within 200 kms of Toronto. “There are great oppor- tunities in secondary markets,” he says, adding that demand for self-storage has been on the rise in secondary markets as well.


The uptick in demand stems from a housing shift: More residents are choosing


the suburbs over cities, tolerating longer commutes for more affordable homes. Additionally, demand for self-storage has strengthened as a result of COVID-19 and homeowners repurposing passive spaces once utilized for storage into more active uses such as gyms, offices, theaters, and classrooms.


Since moving, home renovations, and growing populations all fuel self-storage


demand, it’s safe to say that the rentable square footage of storage space will keep inching upward through expansions as well as new development.


Spotlight On Storage


It was the COVID-19 pandemic that pushed self-storage demand and in- vestor interest to new heights. Tighe states that pre-COVID, a significant amount of investment capital in Canada was put into the office sector of the real estate classes. Thanks to the ability to work from home, office buildings have fallen out of favor with some investors and fewer oppor- tunities to allocate money into office may exist.


“Investors are looking to diversify their real estate portfolios and real- locate money,” says Tighe. “There is a shift to ‘pandemic-proof’ assets.”


“Lenders and investors are looking at self-storage closer,” he says, add- ing that both monthly leases and flexible rental rates are attractive to investors. “It’s becoming more of a prestigious asset; it’s shifting to a core, Class-A asset.”


Despite achieving an elevated status, self-storage investments should not be left to chance. Therefore, whether you are looking to buy or sell a self-storage facility, it’s always in your best interest to engage a broker with self-storage experience.


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