"I Love L.A." - Randy Newman

I was visiting Mobile, Alabama – which is a good self storage market with institutional players – helping a friend with a couple different storage projects, and the architect we were working with asked me to grab lunch.

Driving there, night before, I was tired of driving and pulled off a couple exits before hitting the city (i.e. north of town) where they had some decent hotels and retail. The next morning, at the architect’s suggestion, we ended up at Wentzell’s Oysters right by my hotel and he mentioned casually that we were sitting in a suburb called Saraland that many people were moving to due to good schools etc.

I perked up and drove around, noticed a fairly new Publix-anchored center, a Starbucks, a Walmart along the same road, etc. I checked the storage rents at the one nationally-branded store in the area and boom – they were hot. High enough to spend the money on new construction.

I’d been bouncing ideas around with a friend of mine in the storage biz, whom I met off twitter (Ryan Auger), regarding the possibility of building storage together and I had a feeling we could make something work in this area. It was one of those moments where I was just slammed and didn’t have a ton of time to go hunting for it. So, I asked him if he wanted to go find something and get it under contract.

And so he did. The property he found was almost directly across from the aforementioned Publix and it had already been mostly cleared (of trees) and given a thumbs up by the city for boat/RV storage, so I wasn’t worried about zoning risk. It was priced fairly, which was rare on that corridor – as long as we were okay with being “behind” an outparcel-type retail pad, which we all got comfortable with given the high elevation (and therefore strong visibility) of where our building would sit.

It was really the best spot in town (town meaning Saraland). It was on the busiest road. It was on the “growth-y” side of the interstate instead of the older part of town. And there was basically 0 storage on that side of the interstate, regardless of which exit you took. 

Some might argue that it might be helpful to be located amongst the rooftops of all the new subdivisions, which were to the North of this retail corridor, but he’d already picked over that whole area – there was a lot of flood plain, nothing buildable left outside that, and no retail to speak of.

As we started to get the PSA signed, I went back and checked the entire area, focusing on the busiest couple roads, calling a couple off-market property owners to see if they would sell. It was time to stop questioning the location – it wasn’t going to get any better than ‘storage on a hill’ overlooking the 29,000 cars/day of State Route 158.

Before tying it up, I checked with the family office representative - we’ll call him Chad - who’d been funding all my deals to that point. “Am I good to add another project to the pipeline?”

“You’re in a good spot. Go for it.”

Fast forward a few months, after we’d done a bunch of DD, Russia had launched a full-scale invasion of Ukraine, starting an inflationary war, and then Powell started his famous Bataan death march of rate hikes.  

Chad sat down and went back on what he’d said a few months earlier: he wasn’t going to be able to fund at least half the projects I’d teed up over the months. They’d allocated way too much money into storage, not just through me. 

As we went through the list, one of his comments on Saraland was, “My friends across the water in Fairhope say Mobile County is where deals go to die.” This infuriated me. Of course those pricks would say that … Fairhope is arguably nicer, but guess what? Storage rents were higher in Mobile than in Fairhope. Self-storage demand doesn’t give a fuck that the restaurants are fancier in Fairhope; storage is what it is.

I insisted this was the one that penciled better than any other. A rare combination of high rents and low costs.  Single-story layout. Booming corridor with limited competition. Still, he said they were out. 

[to be continued]