THE BUILD-OUT: Peer-to-peer storage disrupting
U.S. self-storage market
In this article NXTSTOR speaks with the Florida Times Union about the benefits of peer-to-peer storage as opposed to traditional self-storage.
Dubbed the Airbnb or Uber of self-storage, the concept of peer-to-peer storage connects property owners with extra space in their homes or on their land with people looking for a bargain when storing personal items. Aimed at disrupting the more than $30 billion traditional U.S. self-storage market with lower prices and flexible lease-term options, it’s also having an impact in the real estate and rental markets.
It’s difficult to determine exactly when the phenomenon began, but it has only recently picked up steam. StoreAtMyHouse.com reportedly started a decade ago, according to its website. Rooster is another pioneer in the industry, starting in 2014 in San Francisco. It was acquired by Australia’s Spacer in 2017, which itself began operations in 2015. On their heels came Utah-based Neighbor.com in 2017, started by two Brigham Young University students.
A smattering of competitors have since cropped up, some also begun by college students or recent grads, often winning campus-related “Shark Tank”-type competitions. That includes NXTSTOR out of Ohio State University (2017); Roo Storage out of the University of Missouri (2018), Miami-based ShomerApp.com, cofounded by a University of Florida grad (2018); and Nook, from Bates College in Lewiston, Maine (2019).
A recent search at Neighbor.com found only a handful of spaces available to lease in the Jacksonville area, including a 10×10 garage for $40 a month and an RV pad for $51 a month. In Tampa, a 23×10 bedroom could be had for $100 a month. For traditional self-storage, rates can range from $100 or more a month for a 10×10 climate-controlled space.
Neighbor.com offers hosts $2 million in coverage for personal liability and property damage, while renters get a $25,000 guarantee for property protection. The site handles all transactions.
One way peer-to-peer storage makes an impact on real estate is in property values, according to Preston Alder, the 27-year-old cofounder of Neighbor.com.
“For example, some municipalities are up in arms about short-term tenant rentals,” he said. “But for property management and rental companies, they love us, because we don’t increase foot traffic to an area, but we can increase the value of a home, because now it’s extra unused space that becomes an asset that generates income.”
In addition, real estate investors see that the extra space can increase the value of a property and its rental cash flow significantly. Adding an RV pad rental spot can add additional income every month, Alder noted.
Meanwhile, real estate agents will text Alder to mention that someone is sitting on the fence, deciding whether to buy a larger, more expensive home. They might pull the trigger on it if they realize they can subsidize the larger mortgage payment by renting out some of the additional space in the new home.
“It’s leveraging the property you have to generate more income,” he said.
On the flipside, a person looking to downsize might be inhibited if they know they have to pay $100 or more a month to store some of their extra stuff. But if a more economical storage solution presents itself, it could encourage them to move ahead with their plans, he added.
The company has not officially rolled out in Florida, but Alder says the Sunshine State — with its population and mobility — has a lot of potential. Neighbor.com sees a high percentage of space rentals there even though the supply still remains small.
Mike Gargasz, cofounder of NXTSTOR, agreed that peer-to-peer storage opens hosts up to the possibility of offsetting rental costs by listing their unused space.
“While we don’t see our platform disrupting the multi-family industry, property management groups can now help reduce their losses on unrented units by listing the space for storage purposes,” he said.
Gargasz pointed out another advantage for homeowners looking to downsize is that services like NXTSTOR enable them to store items near their new property while their old house is being sold, “as opposed to traveling to a faraway storage facility.”
His company has been beta testing for about a year, with around 100 users and spaces in Ohio, Pennsylvania, Illinois and Washington. Recently launched, NXTSTOR encourages people to become hosts, due to surging demand for peer-to-peer rental spaces.
According to self-storage technology solutions website storEDGE.com, traditional storage businesses can compete by freshening up their prices; making sure their websites are as easy as possible to use; emphasizing security; offering top-notch customer service; and adding more premiums or amenities, such as valet and business storage, wine or classic car storage, free Wi-Fi, conference spaces and even on-site package pickup and delivery.
In other news:
● Florida median sales prices in March for single-family homes and condo-townhouse properties rose year-over-year for the 87th month in a row, according to the latest report from Florida Realtors.
The statewide median sales price for single-family existing homes was $256,000, up 2 percent from the previous year, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. Last month’s statewide median price for condo-townhouse units up 3.6 percent over the year-ago figure, at $189,500.
“Along with low mortgage rates, the pressure on home prices is easing due to increased inventory, which is a positive trend for housing affordability and could encourage some buyers to enter the market,” 2019 Florida Realtors President Eric Sain said in a news release. “Statewide, inventory or active listings in March for existing single-family homes rose 9.6 percent year-over-year, while inventory for condo-townhouse properties increased 6.6 percent.”
● The 401-unit Mandarin Apartments has been sold by InvestRes for $36 million, according to Yardi Matrix data. The seller was represented by Berkadia, which secured $27.1 million in acquisition financing on behalf of buyer Kimball Key LLC.
The garden-style multifamily property at 3200 Hartley Road is just off Interstate 295. It was built in 1974 on 20.8 acres and includes 53 two-story buildings.
● Rents in Jacksonville increased 0.6 percent in April, and are up 2.3 percent year-over-year, according to research by ApartmentList.com.
A median two-bedroom apartment now goes for $1,080. The city’s year-over-year rent growth leads the state average of 1.4 percent, as well as the national average of 1.5 percent.
Pembroke Pines has the highest rents in all of Florida’s major cities, with a median two-bedroom rent of $2,420; of the 10 largest cities for which ApartmentList.com has data statewide, Fort Lauderdale was the only major city to see rents fall year-over-year (-0.3 percent). Tampa, St. Petersburg and Jacksonville have all experienced year-over-year growth above the state average (2.4 percent, 2.3 percent and 2.3 percent, respectively).
However, Jacksonville remains affordable, the website states. Its median two-bedroom rent of $1,080 is below the national average of $1,180. Other cities nationwide saw even larger rent increases than the River City, including Phoenix (+3.9 percent) and Atlanta (+2.4 percent). According to an ApartmentList summary report, renters will find more reasonable prices in Jacksonville than most other large cities. For example, San Francisco has a median two-bedroom rent of $3,100, which is more than two-and-a-half times the price in Jacksonville.
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