REAL ESTATE NEWS

Growth across the self-storage sector has been muted over the last 36 months relative to historical norms, mainly because of historically low housing sale volume. However, the California market is primed for more activity.

Brian Somoza, senior managing director and JLL capital markets self storage group leader, told GlobeSt.com that as the yield curve continues to normalize and the housing transaction market rebounds, the sector in the Golden State will see a wave of additional pent-up tenant demand.

Momentum Expected to Continue Into 2026

“These potential factors help investors forecast a return to historical norms for storage fundamentals and performance, Somoza said. “JLL is seeing more and more exciting investment opportunities in the sector, and we expect this momentum to continue through the end of 2025 and into next year.”

There is a significant amount of new supply, currently being built and in the pipeline, according to Charles Byerly, CEO of Westport Properties.

He told GlobeSt.com that the California self-storage market is currently steady, but under some stress.

“It has historically been a tough market to develop in, but with the pause in other product types over the last couple of years, more supply has been approved, which is not good for existing facilities,” Byerly said.

“There have been several ‘state of emergency’ and other pieces of legislation that have potentially capped the amount of rent increases that can be pushed through to tenants.

Additionally, in areas such as Los Angeles, these provisions have limited the asking rate amount that tenants can be charged.

“This is on top of a challenging demand profile for the storage industry since mobility and housing have slowed the past couple of years,” Byerly said. “We anticipate the challenges continuing until housing picks back up and the state of emergencies expire.”

But overall, California remains one of the strongest self-storage markets in the US, according to Tyler McKee, development director of DXD Capital. He highlighted the high rental rates and strong occupancy levels.

“Developers face significant barriers to entry due to strict zoning laws and a complex entitlement process, which keeps new supply limited," he said.

“This shortage of new projects means many markets remain undersupplied despite growing demand. As a result, operators can maintain premium pricing and stable performance.

Recent Transactions

Among the state’s recent transactions, Gelt Venture Partners acquired a 678-unit self-storage property at 1025 Golden Gate Drive in Napa. The property, formerly known as Southgate Mini Storage, will be rebranded as Public Storage under the new ownership.

Built in 1975, it has 653 drive-up, non-climate-controlled units, 23 RV parking spaces, a site office, a house and a manager’s apartment. It is situated off Highway 29 and is 90% occupied. The property has a total of 18 single-story buildings, comprising 72,400 square feet spread across 4.27 acres, and will be managed by Public Storage. Storage unit sizes range from 50 to 360 square feet, with an average size of 106 square feet. Matthews Real Estate Investment Services represented the seller, a Napa-based private, family-owned developer/operator in the transaction. Gelt was self-represented.

Additionally, Intercontinental Real Estate Corp. and LaTerra Development acquired a 784-unit self-storage facility in Santa Clarita for $27 million from a local property investor. The acquisition is Intercontinental’s entry into the self-storage sector. The 100,000-square-foot facility, built in 2000, sits on 4.18 acres at 23715 Carl Court. The asset, EZ Access Self Storage, comprises nine one-story storage buildings, a separate office and a residential unit used for on-site management. It will be rebranded as Public Storage. Tenants are staying, on average, for six years, taking advantage of its convenience as a single-story property with an abundant number of drive-up units (222 or 28% of the unit mix).

Intercontinental and LaTerra plan to enhance value with a modest capital improvement program that includes improving entry security, modernizing the management office, adding new landscaping and upgrading hallway lighting.

“LaTerra’s team brings both local market and self-storage expertise to the partnership, and we look forward to working with them to execute on our shared vision for the property,” Los Angeles-based Jessica Levin, who serves as the managing director and head of West Coast for Intercontinental, told GlobeSt.com.

Renters comprise approximately 30% of local households in Santa Clarita, the third-largest city in Los Angeles County.

Only five square feet of self-storage product exist per capita within the LA metro, according to Intercontinental, far less than the national average of 10 to 13 square feet per capita.

Source: GlobeSt/ALM