In the Twin Cities metro, storage space is king. In today’s consumer economy, people and businesses need space that is accessible and convenient. The demand for this type of space is becoming increasingly competitive as this trend continues to gain momentum throughout the metro.
Whether space is needed for a store’s merchandise, a contractor’s tools or a consumer’s excess collectables, storage space is a lucrative investment. Storage space is especially coveted in downtown and urban areas where the square footage of a residence’s outside land is much less than its rural counterpart.
Outside storage real estate at an all-time high
Outside storage real estate is becoming difficult to come by in the Twin Cities metro as land becomes increasingly developed. This is leading tenants to look further outside of the metro for sufficient solutions to their storage needs. Many of the tenants searching for outside storage are having to go miles away from their desired location just to find a suitable spot to place equipment or materials.
Business owners from across the country looking to store outside equipment often take into consideration a number of key variables. The city zoning ordinances must deem the land a form of industrial-use in order to store heavy machinery and outside equipment. In many cases, accessibility is hard to come by when the city or county government owns the existing right-of-way land near major highways. Local governments often are not interested in selling or leasing this type of land due to public opinion of the space. Additionally, larger acreage of outside land is often owned by multiple entities, creating a number of issues when attempting to buy or lease the space. In a recent transaction, a client who had experienced exponential growth was looking for a larger storage facility to accommodate their expansion plans in the Twin Cities metro. As with many tenants, they were hoping to stay centrally located near major interstates. Since their relocation to their new facility in Edina, the client has received multiple offers from interested buyers to purchase the facility due to its great location and high demand.
Self-storage and the consumer economy
Not only is outside storage real estate in high demand, but selfstorage in the United States has become a billion dollar business. According to IBISWorld, the estimated revenue of storage facilities in 2016 was $32.7 billion. Converting industrial properties and malls into mini-storage facilities has become a more frequent investment as our consumer economy continues to grow. Another reason why investors look for mini-storage opportunities is the fact that buildings are easy to build and require little staff to maintain.
In contrast to outside storage, mini-storage investors are looking for locations that are in outside suburbs with growing populations. The high demand of mini-storage properties has created a strong market for investors who are considering property that is practical for storage.
See the full report here: Q2 Colliers MSP Industrial Market Report
Colliers International | Minneapolis - St. Paul
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