Fort Lauderdale Self-Storage Portfolio Hits the Market
OCTOBER 9, 2013
Self-storage investors looking to gain a foothold in the competitive South Florida market may find an opportunity with the recent listing of an eight-property portfolio in Fort Lauderdale.
The Best Florida Storage portfolio hit the market in mid-September with an Oct. 18 deadline for bids.
“Interest has been extremely high, from REITs down to individual players,” said Michael Mele, first vice president of Marcus & Millichap’s Mele Group in Tampa, FL. Mele is marketing the portfolio on behalf of the owner.
The 854,831-square-foot, 7,180-unit portfolio doesn’t carry a price tag. However, it is expected to sell for a cap rate below 6.5 percent, which would put the sale price close to $100 million.
The eight self-storage facilities are within 15 minutes of each other in the Fort Lauderdale area. They have a physical occupancy rate of 82.4 percent and an economic occupancy rate of 71.9 percent.
“We don’t have the brand-new, state-of-the-art facilities, but they are solid properties with a history of cash flow,” Mele said.
Especially in South Florida, it’s rare to see a portfolio of this scale that offers cash flow, he said.
Florida: A Strong Market
“South Florida is one of the strongest markets we have in the (region),” said Brenda Scarborough, head of business development for the Southeast region at the William Warren Group Inc. in Lutz, FL.
Since launching its Southeast expansion in May, the William Warren Group has 22 properties under management in Florida and is in the process of acquiring two more.
Scarborough isn’t surprised by interest in the portfolio. Florida was hard hit by the recession. However, in the past 24 months, the self-storage sector in Florida has seen occupancies improve, rental concessions decline and a development activity pick up. On average, industry data shows, self-storage occupancies in the Sunshine State have rebounded from 72 percent in 2012 to 80 percent in 2013.
Strong investor demand for self-storage portfolios nationally has helped prompt more owners to sell. In this case, the Best Florida Storage properties are owned by someone who has built the portfolio over many years, is ready to take advantage of current market pricing and wants to move on to the next stage of his life.
“Florida is a good market, and as the market opens up, we’re seeing a lot more chatter of people wanting to both buy and sell,” Scarborough said.
That increased investment activity has brought compression in cap rates. During 2012, cap rates averaged 7.5 percent, compared with 6.4 percent this year.