Sensing a glut, Charlotte self-storage firm launches $90 million new fund

The booming self-storage industry is headed for a glut, Charlotte-based Morningstar Properties believes, and the company plans to be ready to scoop up properties that don’t make it.

The company said Tuesday that it has secured $90 million worth of private equity funding through its affiliate, Blue Doors Capital Partners. Morningstar will use the new fund to buy and develop self-storage facilities in “major metropolitan markets and strategic secondary markets across the United States.”

Charlotte, like many markets, is seeing a major boom in self-storage. The new development goes along with the record-breaking apartment boom, as more people move to Charlotte – often to smaller apartments – and need a place to store their stuff. Morningstar manages 50 storage properties in 10 states, concentrated in the Southeast.

Developers in Charlotte have snapped up sites over the past year for new self-storage facilities, including high-profile locations in uptown, near Plaza Midwood and at Prosperity Church Road and Interstate 485. Morningstar last month bought a 1.5-acre parcel just north of uptown at 924 North College Street for $1.25 million.

Dave Benson, Morningstar’s president, said he thinks self-storage’s development cycle is running its course.

“After six years of clear growth, the landscape in the storage industry is changing, and changing quickly. Operating fundamentals are softening, and we are facing a glut of new supply in numbers we have never seen before. Not all of these new stores are going to make it,” Benson said, in a statement. “Few major markets will come through unscathed.”

Benson and Morningstar launched their first Blue Doors private equity fund three years ago, seeking to buy up storage facilities around the country. It’s a strategy he’s seeking to repeat in a changing landscape.

“With our latest Blue Doors Fund, we feel we are well positioned to continue our selective acquisition and development program, and will be well poised to take advantage of the displacement we expect in this next phase of the changing storage market,” said Benson.

This story was originally published September 7, 2016 at 11:40 AM with the headline "Sensing a glut, Charlotte self-storage firm launches $90 million new fund."