Packin’ up: Self-storage spaces grow into new places in Metro Detroit
Posted By: The Detroit News on August 14, 2023. For more information, please click here to read the source article.
Metro Detroit’s self-storage industry is growing in unorthodox places as people look for places to store their stuff. Once located off the beaten path, these facilities are now more visible in repurposed buildings, as the need for other types of development, such as retail and office space, shrinks.
Examples: the Albert Kahn Building in Detroit’s New Center area will house self-storage on the first floor and the basement, the former Wimbledon Racquet Club in St. Clair Shores is being outfitted for self-storage, and the former Plante Moran building in Southfield will become a self-storage facility.
“I’d say over the last like five years, we’ve had a really big increase in new construction of self-storage and demand,” said Jared Friedman, executive managing director of Friedman Real Estate.
Warren, Livonia and Sterling Heights have seen consistent self-storage activity, with an additional 100,000 square feet annually, according to StorageCafe, a nationwide storage space marketplace powered by Yardi. In the last five years, additional storage facilities have opened in Troy, Westland, Farmington Hills, Flint, Rochester Hills and Southfield, according to the firm. Warren and Canton Township are expected to see the most storage-space growth in 2023.
Overall, an estimated 781,000 square feet of storage space is expected to be completed in the Detroit area by the end of the year, a more than 250% increase over the 219,000 square feet added in 2022.
A once ‘overlooked’ market
The Metro Detroit area is an interesting self-storage market because of the diverse ages of its rental population, said Doug Ressler, manager of Business Intelligence at Yardi-Matrix.
“As you get around the peripheral, the borders, what we call the exurbs, there’s more of a proclivity to be able to engage with self-storage,” he said. “And also, because developers from a standpoint can also get land around the exurbs from a permitting, zoning and cost standpoint, which makes a much more reasonable price point for the users, the demand than say in a downtown core.”
Friedman said that traditionally, the self-storage market was largely made up of mom-and-pop operations and that national developers who got into the business targeted high-growth areas such as Charlotte, Denver and Florida.
“I think a lot of the national developers overlooked Michigan as a market historically, because it’s Michigan and there wasn’t a lot of growth going on here,” he said. “But I think a lot of people realize that we had a lot of good demographics.”
“We’re a very large place to live,” he said, pointing to Metro Detroit’s population of roughly 4 million people. “The automotive companies have done really well over the last few years. So I think a lot of things have changed for the better and Michigan became more relevant market for a lot of development of self-storage.”
When Farmington Hills-based Pogoda Companies built a storage facility at Eight Mile and Lahser in 1999, there was 2.5 square feet of storage per person within a three-mile radius, said Adam Pogoda, president of Pogoda Companies, which owns or manages 70 self-storage facilities, including 50 locations in Michigan. Now that figure is 13 square feet per person, he said. Several sit along a stretch of Eight Mile, including a 1-800 Self Storage facility in Oak Park.
“It’s just exploded,” he said.
Converting nontraditional spaces
Construction is underway for self-storage at the Albert Kahn Building on Second Avenue in Detroit’s New Center area.
Owners Matthew Sosin of Northern Equities Group and Adam Lutz of Lutz Real Estate Investments purchased the building in 2018 and renovated the upper floors to contain 206 apartment units. Sosin said they explored uses for the first floor and basement before deciding on self-storage.
“We’ve talked about a variety of uses in the lower level,” he said. “A gym, which we eventually moved for our residents to the second floor. And so storage was kind of a natural use down there. I think the highest and best use of that space there. And I think it’s needed in the neighborhood.”
There will be 250 storage units available by the end of the year, Sosin said. Pogoda Companies will manage the facility.
Friedman Real Estate, which owned the former Plante Moran building on Northwestern Highway, considered other uses, such as apartments and offices, before getting the site rezoned and selling it to Devon Self-Storage at the end of last year. The company has seven self-storage facilities, mostly in the Grand Rapids and Holland areas.
“They wanted to convert that building to self-storage because Southfield is obviously an extremely dense area,” Jared Friedman said. “Close proximity to a lot of households. And the visibility off the freeway was unlike any other, and I think that’s really important for a lot of these groups is they want people to be able to see where they are.”
A need for proximity
Customers prefer to be close to the storage facility they use, Pogoda said, and what’s considered a prime location has changed over the years.
“In the ’90s, you wanted to be on (Interstate) 75, 94,” he said. “You wanted to have your facility visible from the highway so the most eyeballs could see it. Now, you really want to be on a high street in a high-traffic area. Much closer to where people live and where people have apartments and condos.”
Who’s most likely to use a storage facility? People ages 46-65 are the most predominant group, making up half of all users throughout 150 cities, Ressler said.
“What we see people doing is not really moving per se, but reconfiguring the home and ergo needing space to store things that heretofore may have been in a bedroom or things like that,” he said. “The overall proclivity of people is to not get rid of things.”
One recent Friday, Waterford Township resident Alec Berlingieri visited National Self Storage in Pontiac to pick up camping gear for the weekend. Berlingieri said his family rented two 5-by-10 units more than a year ago in preparation for a move. When those plans changed, they decided to keep the units and use the extra space to store kitchen equipment and household items.
“It has been kind of nice for some things to just be out of the house and not have to worry about it,” he said.
One of the biggest benefits is not having to carry heavy items into the basement, he said.
“It’s been convenient for organizing, too,” he said. “Where we’re just like, ‘all right, we’ll pack up stuff we want to keep in the storage unit,’ even when we’re rearranging the house and things like that. It’s kind of just nice to get things completely out of the house.”
Pontiac resident Marlene Marion uses National Self Storage to store items for her church’s youth department. She previously kept the items, including inflatables and Christmas trees, in her basement.
“It started getting overwhelming in my basement,” she said. “We have a little room at the church, but it was best to get the storage here.”
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