Self Storage: Rentals thriving despite economy

Developers find market in apartments, storage.

Finding little demand for new subdivisions and retail centers, Memphis-area developers have turned to two types of projects that have remained marketable even during the economic downturn: self-storage units and apartment complexes.

In recent months, two large-scale storage facilities and two major apartment complex projects have been proposed by developers in Shelby County.

The Germantown Storage Planned Development, off German Creek Drive south of Walnut Bend, has been approved by the Memphis City Council. The Land Use Control Board has endorsed another self-storage project as part of the Cordova Ridge Planned Development on Macon near Houston Levee.

The council also has granted approval to a project containing 432 apartments and 140 independent senior-living units at Forest Hill-Irene near Shelby Drive. And this week, the Land Use Control Board could decide on a major apartment complex proposed at U.S. 64 and Reid Hooker in Eads.

Developers have shifted toward self-storage and apartment projects amid a mortgage and foreclosure crisis that has killed demand for new subdivisions.

“There’s no demand for residential. … We have not done a residential development now in almost two years,” said Wesley Ashworth, vice president of Prime Development Group, which is working with owner Jack Johnson on the Germantown Storage project.

Johnson, whose facility will feature 340 inside units and 115 outside spaces, said demand for storage units remains fairly solid during recessions.

Some renters have downsized to smaller homes or apartments and no longer have space for their belongings, he said.

Other storage customers are business owners who previously rented office space, Johnson said. With the tight economy, they’ve shut down their rented offices and moved their supplies to storage units, where they can have access to them at any time.

“In some cases, it’s people who move their office to their home … and put all their supplies in a storage unit,” Johnson said.

Other self-storage projects could be coming to the area as well.

“We’re even having out-of-town groups come to Memphis to do mini-storage,” said Cindy Reaves, a partner with SR Consulting, which works with developers.

The apartment complexes planned for the $36 million Forest Creek Planned Development at Forest Hill-Irene and the Rockgate Center Planned Development in Eads both will be high-end facilities marketed to young professionals and older empty-nesters, developers say.

Both will feature lakes, trails, trees and other features making them environmentally and pedestrian friendly.

The demand for apartment projects has varied sources.

Reaves said some residents are moving to complexes after losing their homes to foreclosure or because they want to downsize to cut costs.

Marshall Gordon, who plans to build the 150-unit Rockgate complex, said the downturn in the home-construction market has driven more people to rent.

“People would love to have a single-family home, but there’s no financing,” Gordon said.

by Tom Charlier for Memphis Commercial Appeal

[commercialappeal.com]

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