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Episode 50 | Self-Storage Industry: Market Fragmentation, Risks, & Raising Capital with Jacob Vanderslice

Episode Summary: 

In this episode, Craig Fuhr, Jack BeVier, and Jacob Vanderslice discuss the self-storage industry and its diverse players. They examine the market’s fragmentation, with competition between large public companies, mid-sized operators, and mom-and-pop businesses. They also address challenges in competing with large private equity firms and REITs in widely marketed deals. The conversation covers development risks, office-to-storage conversions, and capital-raising strategies. Jacob Vanderslice shares insights on the importance of marketing, transparency, and investor relations, emphasizing the ongoing learning required in the real estate business.

Overview of Episode 50

Jake Vanderslice of Van West Partners joins Real Investor Radio to discuss his path from single-family investing to the self-storage industry. As the industry gains traction, it’s shifting from a niche market to a mainstream investment, driven by increased institutional interest.

Key Players and Competition in the Self-Storage Market

In the self-storage industry, large players like REITs and private equity firms dominate while smaller operators still own around 40% of the market. Despite this, competition remains intense as institutions enter, often outbidding smaller firms. Most of Vanderslice’s acquisitions, however, result from strong broker relationships and “off-market” deals.

Innovations and Development in Self-Storage

The self-storage industry faces both acquisition and development challenges. While development projects carry risks like rent uncertainty and cost overruns, strategic acquisitions and automation are shaping the industry. Van West Partners also explores specialized storage options like wine storage to meet evolving consumer needs.

Raising Capital

Vanderslice discusses capital-raising challenges, noting that institutional investments provide significant funding but can limit sponsor autonomy. His team uses a blend of institutional and individual investors to support growth, highlighting the importance of diversifying capital sources.

Learning and Growing in the Industry

The self-storage industry offers substantial opportunities, though challenges like deal flow and capital remain. Vanderslice emphasizes that success in self-storage demands hands-on experience, with each project providing valuable insights for future growth.

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