Buchanan Street Aims for $500M Self-Storage Portfolio
Buchanan Street Partners is well on its way to meeting its goal of amassing a $500M portfolio of institutional quality self-storage assets throughout the Western U.S.
The Newport Beach-based developer has acquired an Inland Empire medical office building that it plans to demolish and replace with a four-story self-storage facility.
Buchanan Street paid $6.25M for Inland Medical Plaza, a 36-year-old MOB located at 1382 East Foothill Boulevard in Upland. The firm is planning to build a 1,180-unit self-storage facility on the two-acre site, according to a report in the Orange County Business Journal.
The deal for Inland Medical Plaza is Buchanan Street’s fifth investment in the self-storage sector. To date, the company has invested $225M in self-storage assets, including properties in Santa Clarita, Auburn, Chino Hills and Mesa, AZ, encompassing a total of 6,800 units.
Self-storage units are more cost efficient than multifamily or industrial rents on a per square foot basis, Robert Brunswick, chairman of Buchanan Street, told the Business Journal.
As it develops its self-storage portfolio, Buchanan Street is aiming to invest in facilities valued at $10M to $50M, the report said.
“The Upland transaction follows our thematic approach to investing in well located self-storage properties in highly sought after Western U.S. markets with favorable supply and demand metrics,” said Ferooz Yacoobi, Buchanan Street Partners VP, in a statement.
In the largest self-storage deal of the year in Southern California, Hines last month bought a 260K SF Extra Space Storage facility in Cerritos for $91M. The three-story facility, located at 17900 Crusader Avenue next to the 605 Freeway, was sold by Manhattan Beach-based Capital 360 and Barings, based in North Carolina.
The self-storage sector experienced a huge surge in demand during the pandemic as people moved away from cities and cleared out space for home offices, with the overall transaction volume in the sector in the U.S. from 2020 to 2022 totaling $50B, according to a report from Cushman & Wakefield.
Fueled by large portfolio investments by institutional capital, investment sales of self-storage facilities in the U.S. peaked at an all-time quarterly high of $13.5B in Q4 2021.
After peaking at $172 per SF in the second quarter of 2022, self-storage valuations declined for six consecutive quarters, to an average of $139 per SF in Q2 2024, according to Real Capital Analytics.
Post-pandemic transaction volume in the U.S. self-storage market has normalized, totaling $3.36B during the first half of 2024, less than 1 percent higher than the total for the first half of 2023, C&W’s H1 2024 report said.
“Despite a near-term softening of self-storage property markets, investor interest remains high, with a significant amount of dry-power diligently seeking investment opportunities,” the C&W report said.
Source: GlobeSt/ALM