Sunday, May 26, 2024

Self-storage projects land prime downtown spots

This might be the best-looking self-storage building you’ll ever see. Planned for Charlotte’s South End neighborhood, it will have two stories, a cellar for storing wine and an ‘industrial chic’ feel. Courtesy of  Development Management.

By Spencer Campbell

Self-storage facilities were once built on unsightly pieces of property on the edge of town where land was cheap and crime plentiful. The buildings were low-slung, one-story structures with barbed-wire fencing and roll-up doors for protection. “In the old days, if you needed storage, you would go and find it in the seedy area of town,” says Stephen Overcash, principal of Charlotte-based Overcash Demmitt Architects PLLC. “And they were pretty ugly.”

Maybe, but they didn’t need to be pretty. They were mostly used by craftsmen as cheap warehouses or families looking for a place to stash seldom-used goods. “We would see [tenants] when they moved in and when they moved out,” says Dave Benson, president of Morningstar Properties LLC, a Matthews-based self-storage company founded by his father, Stephen, in 1981. “There was no traffic in between.”

But in recent years, self-storage units have become destinations unto themselves. Baby boomers have taken to downsizing from 4,000-square-foot McMansions to smaller houses and condos that are easier to maintain but have less room for grandma’s china. Millennials are flooding urban centers where the rent is high but space is short. They can’t afford apartments large enough to stash bikes, backpacks and other millennial paraphernalia.

To meet growing demand, North Carolina storage providers have embarked on a building binge. Raleigh has at least 60 self-storage facilities, with applications for 23 new or expanded sites, according to the city. “It’s the perfect storm,” Overcash says. “And who knows how long it will last?”

One wrinkle: Previously out-of-the-way storage facilities have moved into prime locations closer to downtown. Most of the proposed Raleigh sites are in areas the city designates as urban centers. Overcash, whose firm designs self storage for Morningstar and a half dozen other storage companies, refers to them as “urban closets” — the idea being that millennials will visit the facilities on a weekly basis to retrieve gear.

To be welcomed along Main Street, storage companies have gussied up their designs. Morningstar, which has 55 properties from Virginia to Texas, opened a five-story facility in Charlotte’s South End that boasts a modern look, complete with steel and plenty of glass, as well as retail on the ground floor. “To be close to millennials, storage facilities need to match the aesthetic of downtowns,” Overcash says. “To be a good neighbor.” While Morningstar’s South End project features modern touches, an Overcash design in Alexandria, Va., hews traditional. “That’s what makes it fun,” Overcash says. Also in South End, Charlotte-based Development-Management Inc. plans a 120,000-square-foot self-storage site with a charming red-brick exterior and wine cellar — the latter being a feature also incorporated into Bee Safe Storage’s three Greensboro and single Raleigh locations.

Nevertheless, some city leaders are wary of storage sites in downtown districts. “I’m not sure it’s the highest and best use for prime property,” says Raleigh City Councilwoman Mary-Ann Baldwin, noting storage doesn’t increase population density or foot traffic in up-and-coming urban locales. She’s asked Raleigh city staff to study whether the zoning code can be changed to limit the areas where self-storage can be built.

In certain parts of Charlotte, such as South End or downtown, there are more stringent requirements mandating ground-floor retail. “Storage [centers are] a good addition to busy corridors because they don’t add a lot of traffic,” says Morningstar’s Benson. Morningstar facilities average about 20 visits per day, he says.

Imposing tougher regulations on new projects may not matter. The industry may be due for a downturn, though self-storage vacancy rates in Charlotte are hovering near a five-year low of around 10%, according to Marcus & Millichap, a California-based real-estate brokerage firm. “There’s too much being built,” Benson says. The industry faces increasing land prices, companies such as PODS Enterprises LLC offering an alternative storage model, and the potential use of autonomous cars likely to free more space in garages. “I think we’re in a supply bubble,” Benson says. Should that happen, self-storage might find itself relegated back to the ’burbs.

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