Building space for stuff: Alberta sees self-storage investments as demand outpaces supply

It's not your imagination: More self-storage facilities are popping up in Calgary and across Alberta.

And there's a host of reasons behind it, but the underlying driver is demand. Because, well, people can't and don't want to get rid of their stuff.

Store & Go, at 1216 10th Ave. S.W., is in the Beltline on the edge of Downtown's West End. It was an early office conversion that Strategic Group took on in 2017, transforming a cheque-cashing facility into something the community now uses a lot more: self-storage.

Ken Toews, Strategic Group's senior vice-president of development, says it's a bustling place. And looking around at the highrises nearby, it's clear why.

People are living in smaller spaces.

"It's either 100 per cent leased out or 97 per cent leased out. They just keep filling it up," Toews said. "Which is great for us, but it also shows there's more demand for storage in the area, and that's going to continue as more apartments are developed in the city centre."

The customer base is surprising. It's not just for people with an extra bedroom set, clutter, sporting equipment or inherited dinnerware pieces. Contractors are keeping their valuable tools in storage, picking them up every day before heading to the job site, and other businesses are using the facility daily.

This facility is a convenient space serving the inner city. It's something that Toews said Calgary will see a lot more of as the city densifies and grows, especially in the core, where empty downtown office space is being converted into apartments.

Coun. Gian-Carlo Carra moved his own single-family home into a condo, so he has seen the need first-hand.

"Sometimes your condo has a storage room, but sometimes you're a renter or sometimes you're in transition or sometimes there's an estate sale or you inherit something and you're going to move into something somewhere," the Ward 9 councillor said. "The point is, people have a lot of stuff. And as we're living more and more in walkable urbanism and less and less in drivable suburbanism … self-storage has to respond to that."

The City of Calgary's planning and development office has seen a steady stream of development permit applications for self-storage facilities over the last five years, but 2021 stands out. In that year, it received 46 applications — more than double what the office saw in 2020 and 2022.

"Storage facilities can certainly play a role in supporting the needs of everyday life, especially as people choose different types of homes and places to live," said Lisa Khan, leader of the Land Use Bylaw department. "There are also opportunities for businesses who focus on storage to open up shop in places outside of the traditional industrial areas, depending on the market demands, especially closer to where people live."

Carra said the trick to more self-storage will come with ensuring that these facilities fit into the community. That can be accomplished by creating alleyway loading bays, integrating uses that create one-stop shopping, pairing storage with a car rental place or a registry, and keeping an active streetscape with businesses at the ground level intact.

"We're going to continue to have a lot of stuff, and managing it differently as the city changes is something that's been on the agenda for several years now," he said.

Three years ago, Bluebird Storage Management CEO Jason Koonin said the company was a Toronto-centric operation. That has since shifted. Within Alberta, he said, the company now operates 10 stores, and 10 more are in the wings awaiting permitting and construction.

Toronto company shifts focus to new markets

"Calgary, as an example, there's just a tremendous amount of home building going on," Koonin said. "The quality of the existing structures is not the latest and greatest in terms of modern buildings and amenities, and it's, it's pretty full. You know you're going to have over 80 or 90 per cent occupancy."

Canada's self-storage market, Koonin said, is about 20 years behind its counterpart in the United States. With approximately nine square feet of supply per person available in the U.S., in the Canadian market, there are only three square feet of supply per person.

Pandemic pressures have also shifted investor interest in the self-storage market, Koonin said. Online shopping shifted demand on brick and mortar retail stores, along with a shift in office needs, he said. That means some are looking to redeploy capital.

"If I went back 12 to 18 months, we were getting about one or two inquiries a month from people who wanted to either build self-storage or invest in self-storage," Koonin said.  "We've now gone from one or two inquiries a month on our website for investment and development to one a day."

In the U.S., the industry is lauded as recession-proof, pandemic-proof — able to weather many storms. And for Clive Bradley, in charge of self-storage valuation and advisory services for CBRE Canada, that rings true north of the border, too.

"The bottom line is there are demand drivers in the self-storage market in bad times as well as good times," Bradley said. "That's not to say, however, that self-storage investments are not negatively impacted by recessionary conditions, just not as harshly as some other real estate classes."

Calgary demand stronger after pandemic

Across the country, Bradley said, there was a heightened demand to build self-storage facilities during the pandemic. That, he said, has since levelled out because of caution in the market and rising interest rates.

Calgary, he added, is coming out of COVID years with a stronger self-storage demand.

"Five years ago … the impact of oil prices in Calgary had a negative impact on storage for a while," Bradley said. "It was my understanding that bounced back pretty well. Now there's pretty strong demand in Calgary."