Our Experience Selecting a Site for a 95,000 square foot Self Storage Development in LA

The principals at Mason Equity Partners have developed over $250 million of commercial real estate in urban metros over the past 25 years. We believe that development presents a compelling opportunity to achieve larger profits than can be achieved from buying existing assets.

The first step in the development process is identifying the right site - read on below for a story on how we selected the site for our most recent 95,000 square foot self storage development in Los Angeles.

What makes a submarket attractive for development?

Site selection entails picking a submarket, setting criteria to screen for the ideal site, and then determining if a deal can be struck to acquire the site at the right terms and price.

West LA has several of the attributes that we look for in selecting a submarket for new development:

• High Barriers to Entry - It’s very difficult to build in Los Angeles. Developers with connections, capital, and know-how can enjoy much larger margins than value-add buyers can achieve.
  

• High Rents - West LA rents range from $3 - $5 per foot, much stronger than the national average of $1.12. We’ve found that facilities need to be at least 80k rsf in order to attract the institutional buyers who pay the highest prices for storage assets. High rents justify the higher costs of mid-rise construction, allowing you to build facilities of sufficient scale on small urban infill sites.
  

• Appealing Demographics - West LA has a high population density with a high % of renters. Incomes are high, apartment starts are strong, and the job market is strong. With plenty of people continuing to move in and out of the city, the demand for storage is strong, as evidenced by the high rents and low vacancy of competing stores in the submarket.
  

• Sponsor Experience - This is the most important one. We knew our operating costs, we had pre-existing relationships with key development team members like land use attorneys, and we had a performing asset we could point to as proof in our ability to get a project done. This track record is crucial for assembling the debt and equity financing needed to complete a development project.

How to identify a good site within your desired submarket

Once we selected our submarket, we looked for sites where zoning allowed for storage and where the lot size was large enough to accommodate a multi story building of sufficient scale, whether by right or through a conditional use process.

Given our prior track record in entitlement, we were comfortable including sites that required conditional use authorizations in order to build. High submarket rents justified the costs of a mid-rise construction design, allowing us to consider sites as small as 20,000 sf.

Finally, we looked for sites on high traffic thoroughfares with good visibility to major roadways.

With our criteria set, finding the site was simply a matter of entering our zoning and lot size criteria into loopnet and looking at all sites West of the 405 freeway that met our requirements.

Striking a Deal

We ended up identifying an old mortuary site on a ¾ acre lot. We were able to offer $1 million more than other by-right buyers and still remain within our development budget. The seller chose us over other offers with a lower price and shorter close, and agreed to a long escrow to give us the time we needed to entitle the property prior to close.

This asset is scheduled to deliver in November of 2024. We are currently selling shares to fund interest expenses and cost overruns incurred over the course of 3 years of construction. Investors who participate in this $1,100,000 offering can expect to receive mid to high teens returns over a 42 month hold period.

If you are an accredited investor that is interested in learning more about this offering, please feel free to send an inquiry to [email protected] or reach out to John Mason directly at 408 590 8577.

Thank you for reading,

Shane Mason

www.masonequitypartners.com