Luxury storage condos being built today are a distinct departure from storage units people rent to stash their extra stuff. Today’s storage condos are climate controlled, feature custom cabinetry and lighting, premium finishes, polished concrete floors, hook up to water, Wi-Fi access and 24/7 security. They are complexes that also now include a community clubhouse and public restrooms. Units are not rentals, they are available to purchase, which is quickly becoming a new class of real estate for ownership and an investment opportunity.
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Major cities across the U.S. including Greater Phoenix are seeing a surge in demand that is attracting potential owners and investors interested in purchasing these upscale storage spaces, which, in turn, is spurring an increase in development. The question is why? What is the story behind the growing trend in luxury storage condo ownership?
The storage evolution
The concept of luxury storage condos was initially introduced in 1999 to fulfill a need for personalized storage that went beyond housing boxes and home furnishings. The shift is not only about storing collectible cars, sports memorabilia and recreational vehicles, it is also about building community. Toy Barn was the first to test the trend in Scottsdale in 2010. While many were skeptics, the unique storage concept sold out almost immediately. Since then Toy Barn, along with other luxury garage condo community developers such as MG Storage Condos have expanded across the Valley.
Entrepreneur and MG Storage Condos developer, Tony Mangat states, “We are seeing incredible demand for secure, climate controlled, customizable storage space that is exceeding our expectations. We are getting as many as 2 to 3 calls daily for our Glendale condos.”
Changes in lifestyle
There are several factors contributing to the growing demand. In 2023, the National Association of Home Builders (NAHB) recognized that the median single-family home square footage decreased to 2,200 sf, the lowest since 2010. According to a local moving company more homeowners are moving from larger to smaller homes in Arizona daily. As one of the fastest growing cities and states – it is significant indicator of changes in lifestyle. Other notable lifestyle changes include:
- Millennials waiting to purchase a home or living in condominiums and townhomes
- More residents opting for apartment living
- Homes with HOA restrictions that prohibit additional garage or storage space
- Influx of second homeowners and snowbirds
- More single adults due to divorce or choice to marry later or not at all
In addition, demographics show an active aging population with U.S. residents 75 years and older expected to increase by 45 percent over the next decade.
With residents opting for smaller living spaces that require less maintenance, they are forgoing the larger homes with the three-car garage, which means less room for storing “toys” and other goods. But that does not mean they are ditching their recreational vehicles, collectible cars and other beloved items. Men and women continue to enjoy a wide mix of hobbies, interests and entertainment that inspires the need for additional storage. There is also a growing number of people opening small businesses that contribute to demand for additional space. According to a recently released report from WalletHub, Arizona ranks sixth in the nation for entrepreneurs looking to start a business.
Who are the core buyers
The opportunity to customize garage condos so they can fit specific needs, interests and lifestyle appeals to potential buyers. The possibility of turning the space into a “man-cave” or “she-shed” is another trend influencing demand for luxury storage condos. Another contributing factor is smaller home lots and/or HOA restrictions that contribute to the increasing interest in owning an offsite space that is customizable.
The mix of individuals in the pool of potential buyers’ interest cover a wide range of demographic and psychographic traits. They include:
- Millennials that are remaining renters longer or purchasing townhouses, condos and smaller homes
- Snowbirds spending the winter season in warmer climates such as Arizona
- High net worth individuals needing more space for multiple cars, other vehicles, toys, collectibles and treasures
- Individuals with disposable income looking for an affordable real estate investment
Weighing the option to own vs. rent
Storage units for rent continue to remain an option, but most rentals lack the amenities and features available in a luxury storge condos to own. (unless you rent directly from a luxury storage condo owner). Renting space is a minimal financial commitment and it can typically be a month-to-month agreement. Purchasing property vs. renting space, like most real estate investments, offers the opportunity to build equity and take advantage of tax benefits. Ownership allows the ability to personalize and enhance the storage space and provides potential for community connections to others with shared interests. With real estate prices significantly increasing over the last decade, entry into the market for some is challenging. Buying a luxury storage condo is significantly lower in cost than purchasing a home or commercial property. Also, if an owner/investor chooses, they can choose to rent the space as a means for generating income.
Mangat adds, “I am confident that the trends we are seeing in growing demand is here to stay. Our luxury storage condos are designed to cater to the changing needs of our buyers and fill the void and an optimal solution for much needed space.”
To explore options, it is best to speak with a buyer’s rep or commercial broker familiar with the garage storage condo market and tour local properties to compare.
Author: Andrea Davis, CCIM, is the owner and designated broker of Davis Commercial AZ, representing buyers, sellers, tenants and landlords in commercial transactions. Davis is also the author of two books, “SimpLEASEity” and “Simply Own It! The American Dream.”
