Investment advisory co-founds self-storage fund

FWR Staff

20 March 2007

Matrix Capital, JSM Venture debuts Matrix Midwest Self Storage equity fund. JSM Venture, a Chicago-based self-storage development firm, has tied up with investment advisory Matrix Capital Advisors to launch Matrix Midwest Self Storage, a real-estate equity fund linked to the development and operation of institutional self-storage properties in and around Chicago and Milwaukee.

"My experience developing self-storage properties combined with Matrix Capital Advisors' real estate investing acumen brings synergies that will lead to profitable developments in the years ahead," says JSM principal John Mengel.

Fancy

Despite talk of overbuilding in the self-storage market generally, there are still prime locations in Milwaukee, while Chicago is "by most measurements" decidedly underserved, adds Mengel.

Matrix Midwest gets off the ground with Country Club Hills Storage in the eponymous Chicago suburb -- a three-story facility that will provide storage and business-center amenities in a building that will look, inside and out, more like a small two- or three-star hotel than the typical set of storage bays. Scheduled for completion this summer, Country Club Hills Storage will be part of a new 70-acre mall featuring a large Wal-Mart store and a Loews Cinema theater.

The partnership is an indication of the emergence of self-storage as a niche property type with stable returns, which can help diversify a portfolio and stabilize cash flows. "Institutional money is finding self-storage because the returns are quite high, the failure rate is quite low and it's a mainstream business now," says Michael Mele, senior director of Marcus & Millichap's National Self Storage Group. "Self-storage is no longer just little dirty warehouses. It's a viable option and a very profitable one, especially as other product types, like multi-family, are bringing in lower returns."

Christopher Burke, managing director at Chicago-based Matrix, likes the self-storage sector "for the same reasons that institutions and high-net-worth investors have been investing in the space," he says. "Our commitment to this fund is more about the confidence we have in John Mengel and JSM to identify and acquire great sites, build state-of-the-art facilities and bring them in on time and within budget." -FWR

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