Self-storage developers eye prime real estate in Wake

Concert-goers might wish they could walk in any direction from Red Hat Amphitheater and eat dinner or grab a beer in a part of downtown that is expected to see big changes in the coming years.

So Raleigh leaders and some neighbors are criticizing a developer’s plan to build a self-storage facility on South Street, about a block away from the music venue. They say the roughly 1-acre site, which has a tax value of $2.4 million, is deserving of something more exciting.

“This doesn’t seem like the kind of development that fosters a dynamic area around the amphitheater,” said Josh Marlow, president of the Boylan Heights Association, which represents the historic neighborhood. “I think we’d like to see something more vibrant ... not just something to occupy the space.”

Developers are seizing promising real estate in Raleigh and suburban Wake County towns as part of a growing business trend: self-storage facilities.

While the land near downtown Raleigh and other towns is pricey, some say the facilities are high-yield investments because they don’t cost a lot to operate and they address a need for people in areas where space is at a premium.

But some residents who live in the downtown cores of Wake County say they want to see more restaurants and retail stores instead.

Along with the South Street site, self-storage businesses are slated to rise on Capital Boulevard just north of Peace Street near downtown Raleigh and on Chapel Hill Road near downtown Cary.

Both Raleigh properties are within the boundaries of the city’s 10-year vision plan, which elected leaders adopted last year in an effort to help rejuvenate more of downtown.

Meanwhile, Cary has spent millions of dollars to breathe new life into its downtown, including construction of an urban park.

There are about a dozen storage facilities inside the Beltline, but the one planned for South Street might be the first so close to downtown Raleigh.

The plan complies with the site’s existing zoning, so there’s little that city leaders and residents can do to prevent it.

Equator Capital Management filed a site-review application to the city’s planning department in June. According to the plan, the group wants to demolish an auto center at the site and build a four-story self-storage facility with some retail space on the ground floor.

Tim Sivers of Horvath Associates in Durham, who is listed as the contact for Equator Capital, said developers aren’t ready to talk about the project.

But some city leaders are speaking out.

“This seems like a missed opportunity and an under-utilization of valuable downtown property that is ripe for redevelopment,” Raleigh City Council member Mary-Ann Baldwin said. “It’s disappointing.”

‘National trend’

Storage facilities are a side effect of growth, said Dan Barbour, marketing director for Lampe Management, which manages Ample Storage sites around the Triangle.

Ample is currently building two new locations near downtown Raleigh, on New Bern Avenue and Atlantic Avenue.

People who move to the Triangle often need extra space to stash the stuff they can’t fit into their new homes, Barbour said.

“I’d say most of our business is people who move from out of state and they have a little while until their place is ready,” he said.

The economy is improving, and there has never been a better time for self-storage investors, said John Lindsey, treasurer of the North Carolina Self Storage Association and co-founder and president of the Lindsey Self Storage Group. The company owns and operates 10 locations in North Carolina and is closing on a site in Nashville, Tenn..

“It’s not just a Raleigh, Durham or a North Carolina trend,” Lindsey said. “It’s a national trend. This is the hottest the self-storage business has ever been.”

The facilities require minimal oversight and can charge higher rates in fast-growing areas where people need some extra space. Ample, for example, keeps one or two employees on duty at a time and charges between $45 and $200 a month per unit, Barbour said.

Profit margins average between 30 and 35 percent, Lindsey added.

“If you’re 65 percent full and all of your tenants are paying rent, you’re breaking even, so anything over that is gravy,” he said.

Changing look

Some residents say they like self-storage facilities because they generate less traffic than some other types of development.

That’s part of the reason why Cary Town Council member Lori Bush, a longtime storage critic, cast the deciding vote last month to approve developers’ plans at 9021 Chapel Hill Road.

She also liked that Bee Safe Storage planned to build what she called the “Cadillac of storage units” that will be equipped with climate-controlled rooms, wine storage and recorded video surveillance.

Lindsey, the storage advocate, noted the industry’s shift to nicer buildings to make them less of an eyesore. New facilities often look more like office buildings and less like warehouses.

Regardless, residents say self-storage doesn’t belong downtown – or near their homes.

About a dozen people showed up to protest as Fuquay-Varina leaders in July considered a storage facility near the entrance to the South Lakes neighborhood off N.C. 55. The town’s Board of Commissioners approved the facility after the developer agreed to hide it using evergreen buffers.

“I didn’t want something we had to hide in a mixed-use community,” said Dan Klausner, who lives in South Lakes. “I wanted something we could go to with our kids after a day at work and hang out at with our friends – not something pretending to be a retail building or hidden by landscaping.”

Reporters Kathryn Trogdon and Henry Gargan contributed.

This story was originally published September 5, 2016 at 5:58 PM with the headline "Self-storage developers eye prime real estate in Wake."