Intercontinental Real Estate Corporation Acquires $27 Million Self-Storage Facility in Los Angeles

What's Happening?

Intercontinental Real Estate Corporation, in partnership with LaTerra Development, has acquired EZ Access Self Storage, a 784-unit facility in Santa Clarita, California, for $27 million. This acquisition marks Intercontinental's entry into the self-storage sector, highlighting the growing institutional interest in this asset class. The facility spans 100,000 square feet across 4.18 acres and includes nine one-story storage buildings, a management office, and an on-site residential unit. Originally developed in 2000, the property has shown long-term stability with an average tenant retention of six years. The acquisition is part of a strategic plan to capitalize on Santa Clarita's growth market, driven by a 2.7% annual population increase and strong residential development.

Why It's Important?

The acquisition underscores the increasing demand for self-storage facilities, driven by urbanization and changing consumer lifestyles. Self-storage has outperformed other real estate asset classes over the past 25 years, offering flexibility during life transitions such as moving or downsizing. With only five square feet of self-storage space per capita in the Los Angeles metro area, compared to 10 to 13 square feet nationally, the market is significantly under-supplied. This imbalance presents a lucrative opportunity for investors like Intercontinental and LaTerra Development to capitalize on the sector's growth potential.

What's Next?

The joint venture plans to implement strategic improvements to the facility, including modernizing the management office, upgrading lighting, enhancing landscaping, and improving security systems. The facility will be rebranded under the Public Storage name, with the world's largest self-storage operator managing day-to-day operations. These changes are expected to enhance operational efficiencies and tenant experience, further increasing the property's value. Intercontinental's move into the self-storage sector signals a strategic expansion into alternative real estate markets poised for continued growth.

Beyond the Headlines

The acquisition reflects broader trends in real estate investment, where institutional investors are increasingly looking at alternative sectors like self-storage to diversify portfolios and mitigate risks associated with traditional asset classes. The growing demand for self-storage is linked to evolving consumer lifestyles and urban space constraints, factors that are expected to continue driving the sector's expansion.