Mike Sunnucks, Senior Reporter Phoenix
June 26, 2017
This use could breathe new life into empty stores, zombie shopping malls
Denise Nunez is seeing a new use go into former big-box stores and fitness centers. Shane Albers is seeing the same thing in closed furniture stores and empty shopping centers.
The latest adaptive-reuse project for the dying retail developments are self-storage projects. Albers — chairman and CEO of real estate development firm 1784 Capital Holdings LLC in Scottsdale — and Nunez — a commercial real estate broker with NAI Horizon — are experts when it comes to self-storage projects and where they are landing.
Albers’ firm specializes in developing self-storage projects and is in the midst of a $250 million national push for such projects. Nunez specializes in self-storage projects in Phoenix and other markets.
Both see the projects filling some empty retail spaces as an overcrowded marketplace, changes in shopping patterns and Amazon.com Inc. (Nasdaq: AMZN) take their toll on Sears (Nasdaq: SHLD), J.C. Penney (NYSE: JCP) and others.
There have been retail spaces opening with the demise of Sports Authority, furniture stores as well as other chains and department stores.
Some spaces locally have been taken over by Mountainside Fitness, but others are being eyed for self-storage.
They also see continued growth in self-storage projects in Arizona and across the U.S. Nunez said there are 50 new self-storage developments being built or proposed in Arizona.
Nunez said she gets increasing calls from retail brokers asking to see if their projects might be able to house self-storage facilities.
Albers has been developing self-storage facilities for 20 years. He said the real estate segment and business performed well during the most recent downturn, and that trend has continued. Self storage benefited in part because millennials put off homeownership, empty nesters downsized and more people were living in apartments.
“It’s a great performing asset,” Albers said.
Part of the appeal for developers and their investors is to build a project and then sell it to a big self-storage company and real estate investment trusts such as Public Storage Inc. (NYSE: PSA), CubeSmart (NYSE: CUBE), ExtraSpace Storage (NYSE: EXR) and Life Storage Inc. (NYSE: LSI).
U-Haul parent Amerco (Nasdaq: UHAL) also is increasing its self storage footprint.
Nunez said she is seeing signs of an over-saturation of storage facilities in some markets.
Albers also is charting a unique path as he looks to develop more self-storage facilities. He is focusing on tough-to-enter markets where real estate can be expensive and zoning and neighbors can be tough.
Other developers and builders may shy away from markets such as Los Angeles and other parts California, the Washington suburbs and Seattle because of barriers to entry.
Albers is focused on those markets arguing once he can get a self-storage facility built there it will have a big share in a lucrative market.
The Scottsdale firm is redeveloping a property in Montgomery County, Maryland, outside Washington into a self-storage project.
Albers and 1784 Capital Holdings Executive Vice President Kelly McKone said they went through a lengthy entitlement and neighborhood lobbying effort to get the Bethesda project approved.
“That is really our type of project,” Albers said.
Albers' group has new self storage developments planned in Scottsdale and Oro Valley near Tucson. Those are two of Arizona’s most affluent areas.
The developer said the newest generation of self-storage facilities are nicer than stereotypical storage parks. They are climate controlled, have increased security and don’t look like storage facility.
“It really looks more like an office building,” Albers said.
Nunez said she continues to see infill storage projects being built or proposed in places such as north Phoenix, and plans are accommodating tighter spaces.
“You just go higher or you one or two [levels] below,” Nunez said.
Mike Sunnucks writes about stocks and financial markets, real estate, government and sports business.
About 1784 Capital Holdings, LLC
Scottsdale-based 1784 Capital Holdings is a leader in the development and ownership of institutional quality self-storage facilities. The company’s priority is to fulfill the growing demand for quality storage in metropolitan markets, developing new self-storage facilities and strategically acquiring existing storage properties while also acquiring and repositioning existing big-box retail properties. To learn more about the company, visit www.1784Capital.com.
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1784 Capital Holdings LLC
Shane Albers, Chairman and CEO
8777 N. Gainey Center Drive, Suite 191
Scottsdale, AZ 85258
Plans, specifications, included features, available options and elevations are subject to change without notice. All dimensions and square footages are approximate. Renderings are artist conceptions. Plans an renderings are the copyrighted property of 1784 Capital Holdings LLC and Bakken Communities. Reuse of plans is strictly prohibited.