Self-storage has long been the darling of real estate investors. It has low operating costs, sticky tenants (nobody likes moving their junk), and historically high margins. In New Jersey, the density of the population makes it a prime market.
The Shift to "Class A" Storage
Gone are the days of the drive-up facility on a gravel lot. In dense NJ suburbs, the only way to build is up. We are seeing 3-5 story facilities that look more like office buildings than warehouses. These "Generation V" facilities feature:
- 100% climate control.
- High-tech security (app-based access).
- Retail-like leasing offices.
- Architectural facades that appease local planning boards.
Zoning Headwinds
Despite the demand, many municipalities hate self-storage. They view it as a "dead use" that generates very few jobs and little foot traffic. As a result, we are seeing more towns remove self-storage as a permitted use, forcing developers to seek use variances (the dreaded "d(1)" variance).
Market Saturation?
With so much capital chasing the sector, there are pockets of oversupply. The "3-mile radius" rule is critical. If there are already 7-8 sq ft of storage per capita in the trade area, you are likely walking into a rate war. The best opportunities are now in high-barrier-to-entry markets where zoning is difficult.
Conversion Opportunities
One of the most effective strategies is the conversion of vacant big-box retail or obsolete office buildings. These structures often have the floor load and column spacing needed, and reuse is sometimes an easier sell to the town than new construction.
Conclusion
Self-storage is still a great asset class, but the "build it and they will come" era is over. Success now depends on hyper-local market analysis and navigating a hostile zoning environment.