California Firm Buys Twin State Leasing & Storage in Claremont

Valley News Business Writer
Published: 6/11/2017 12:57:37 AM
Modified: 6/11/2017 12:57:38 AM

Claremont— California investors have acquired one of the largest self-storage facilities in the Upper Valley, underscoring the outside money that is targeting the area’s commercial real estate.

Claremont’s Twin State Leasing & Storage Co., which occupies a five-story, 112,000-square-foot former mill building on Main Street, has been sold to a Palm Springs, Calif.-based limited partnership for $2.2 million, according to Joseph Mendola, a commercial real estate broker involved in the sale.

The new owners have renamed the company Twin State Storage but otherwise will continue to operate the business as had the previous owners, said Dave Bonneville, business manager of the facility. The property and business was previously owned for many years by J.D. Bourdon Realty.

“It’s going to be a storage business, just like it was,” Bonneville said.

The buyer’s identity is masked by a New Hampshire limited liability corporation, but Mendola described it as “a limited partnership out of Palm Springs.” Bonneville also declined to identify the building and business’s new owner.

The deal is the second time in recent months that distant, out-of-state investors have swept into the Upper Valley to buy commercial real estate property. Last fall a Michigan retail property developer, Alrig USA bought the parcel of real estate on which the former Pizza Hut was located on Route 12A in West Lebanon for $1.7 million and are developing the site for a Starbucks and Aspen Dental office that the investors have turned around and put on the market for $4.2 million.

Much of West Lebanon’s Route 12A shopping center strip is already in the hands of out-of-state commercial real estate developers and investors.

Upper Valley Plaza is owned by Boston-based WS Development and Kmart Plaza is owned by the real estate arm of Maine fuel supplier Dead River Co. (which previously owned the Pizza Hut parcel and also owns North Country Plaza and a portion of the Miracle Mile shopping center). PowerHouse Plaza, which leases to Shaw’s supermarket and a New Hampshire state liquor store, was acquired by Massachusetts-based Eastern Real Estate in 2015 for $12.35 million.

But the sale of Twin State Storage marks the first entry by a distant investor into the Upper Valley’s self-storage market and comes at a time when the facilities are reporting capacity occupancy and building new self-storage units to meet the demand.

Space Place Self Storage, which operates two self-storage facilities in West Lebanon and Plainfield, is just finishing converting a 10,000-square-foot warehouse in Enfield into a new self-storage property.

“We got it done just in time for the busy season,” said Chris Aiken, a manager at the business owned by his family, explaining there is typically a rush this time of year as Dartmouth College students look for places to store their belongings over the summer vacation.

He said Space Place’s new Enfield facility offers “synergies” with the company’s affiliated moving business as clients require storage space while they are between residences. And the moving business is closely tied to home sales activity, which has been on a gradual upswing in the Upper Valley in recent years as the economy recovered from the recession.

The Aiken family’s new Enfield facility follows upon last year’s addition of another new self-storage facility in Enfield near Whaleback Mountain owned by Tom Beuschel, who also owns Exit 17 Self Storage in Lebanon.

Beuschel credits demand for self-storage space in part to shifts in the post-recession housing market that has seen more people living in rental apartments as opposed to buying homes.

“More people are renting than buying and renting doesn’t leave much in the way of storage” Beuschel said.

Although the self-storage industry has been consolidating into about a half a dozen large, publicly traded companies, there are still about 26,000 single-facility owner-operators in the U.S., according to the Self Storage Association. The industry’s ability to weather dips in the economy better than other areas of commercial real estate — as well as being relatively immune to “digital disruption” — has helped to attract Wall Street capital into the sector, the association says.

Jake's Market and Deli owner Ed Kerrigan, who owns Lebanon Self Storage, said that when he bought the Miracle Mile storage facility in 2003, “the industry’s average capacity was 85 percent to 90 percent. For the last five years it’s been 100 percent. Yesterday I was in the office and a couple of people came in looking for space and we don’t have any.”

To some extent, Kerrigan’s self-storage facility benefits from his central Lebanon location and the desire among businesses to use the storage units for warehousing stock and tools, but he’s also observed that customers are renting units for long periods of time. When Kerrigan first entered the business, customers often were “transient” and renting the units for a short period of time, but now “storage has become more permanent for a greater percentage of the customers.”

Mendola, the commercial real estate broker, said the reason self-storage businesses are operating at high capacity is due to the differences between boomers and millennials in the residential housing market. As an older generation of Americans sells homes and downsizes, the younger generation is choosing instead to rent apartments over purchasing a first home.

And, although the unemployment rate is low, mortgage lenders tightened up lending practices in the wake of the financial crisis, making it harder for many first-time homebuyers to get a mortgage.

The upshot is that when boomers downsize they put their belongings in self-storage because the apartments of their children are not large enough to accommodate their parents’ former household furniture. The furniture and other belongings eventually will come out of storage when the younger generation buys a home, but that could be years down the road.

“Millennials are renters and the only thing they need room for is their snowboard,” Mendola said.

John Lippman can be reached at jlippman@vnews.com.




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