Bluebird Self Storage has acquired what may be the oldest self-storage facility in North America and plans over the coming year to update the Victoria property to modern standards.
Bluebird Storage Management chief executive officer Jason Koonin told RENX the four-storey, 16,000-square-foot building at 824 Johnson St. was built in 1901 and originally boarded horses, with a freight elevator used to get them to the upper floors. It’s been a storage facility since 1920, which Koonin said might make it the oldest of its kind on the continent.
It also effectively completes the company's efforts to create a coast-to-coast network of self-storage facilities under one owner and brand.
Terms weren’t disclosed for the acquisition of the City Centre Storage Ltd. building, which closed on Nov. 2.
Bluebird will update the property’s interior and amenities and replace its existing lockers. The site will remain open through the improvements, which will be undertaken in stages.
Victoria is Bluebird’s first B.C. location
It was difficult and time-consuming to find an available property on Vancouver Island that met Bluebird’s needs, and much time was spent on diligence for the 824 Johnson St. building due to its age, according to Koonin.
“There's limited amount of storage supply on the island and, combined with the growing residential development nearby, it’s definitely an area where the demand will continue to grow and supply will be somewhat constrained,” he said.
The Victoria building has become Bluebird’s first in British Columbia. The company had been in negotiations to acquire a Vancouver property before deciding not to move forward with it.
“I didn't think it was an ideal location for our business,” said Koonin. “I thought it was difficult to access and to get to it.”
Koonin said Bluebird is in discussions to acquire other existing self-storage facilities and development sites in B.C.
Bluebird now in six provinces, with more coming
With locations now stretching from Victoria to Halifax, Bluebird has become Canada’s first coast-to-coast self-storage brand with all owned properties under the same banner. It operates facilities in B.C., Alberta, Ontario, Quebec, New Brunswick, and Nova Scotia.
“We feel it's critical to be able to deliver a consistent level of service nationally,” said Koonin. “Each province has its nuances, but generally our quality of facilities and services are extremely scalable.
"It's really important for us to be able to have people who may be looking for storage, or are relocating from one area to another, to be able to recognize the brand.”
Toronto-headquartered Bluebird is capitalizing on the growing consumer demand for modern class-A self-storage facilities, as it continues building and buying assets across Canada.
Self-storage is a growing real estate sector as municipalities continue to push urban densification and population centres grow.
Koonin believes Bluebird is Canada’s fifth largest self-storage company in terms of square footage and seventh in number of locations. Its portfolio consists of approximately 2.5 million gross square feet and more than 20,000 storage units.
Bluebird also has several projects under construction, which will increase its portfolio to more than four million square feet.
Bluebird has 40 facilities operational or in the planning stages, with plans to add 20 more over the next two years.
The per-person amount of self-storage space available in the U.S. is about three times that of its neighbour to the north, so Koonin and others in the sector believe there’s room for significant growth in Canada.
Bluebird's ownership team has developed more than 120 self-storage locations totaling approximately 10 million square feet in Canada and the U.S. since 1983 under various strategies and brand names.
Other new properties are on the way
Bluebird Self Storage's new Mississauga facility at 1600 S. Sheridan Way. (Courtesy Bluebird/Robert Lowdon Photography)
Bluebird Self Storage's new Mississauga facility at 1600 S. Sheridan Way. (Courtesy Bluebird/Robert Lowdon Photography)
Bluebird opened a new 169,000-square-foot location with 1,246 climate-controlled units at 2068 S. Sheridan Way in Mississauga in October. It also plans to expand at least three existing properties in the Greater Toronto and Hamilton Area by building a second phase at 1450 Don Mills Rd. and 7 Ingram Dr. in North York, and at 1770 Appleby Line in Burlington.
The company has six self-storage facilities in Calgary under development, as well as projects underway in the Maritimes, Montreal, and Quebec City.
“The province of Quebec is quite the opposite of Ontario, which has lots of new, modern, large class-A stores,” Koonin said. “Quebec typically has smaller, older, and generally industrial-type buildings.
“Many have been redeveloped, but there's almost no purpose-built storage from the ground-up in the whole province.”
In Winnipeg, Koonin said two developments are in the works and Bluebird is in negotiations to acquire an existing property. The company also has plans to expand into Saskatoon.
Bluebird uses localized strategies
While many Bluebird locations are in larger cities, Koonin said the company has also done well in smaller markets like Red Deer, Alberta. It focuses on studying very localized demographics and supply and demand factors when considering where to open facilities.
“We don't pay as much attention necessarily to the name or the size of the city as much as we do the radius for the site,” said Koonin.
“For very urban locations, that may only be a three-kilometre trade area. For very rural locations, we might be looking at 10 kilometres. We’re doing a very local market analysis and we're not constrained by only large cities.”
Shifting economy is opening opportunities
Owners of properties who may not have been willing to sell a year ago are now approaching Bluebird, according to Koonin, which is expanding its potential acquisition pipeline.
While it’s more difficult to raise money now than earlier in the year and rising interest rates are making some people nervous, Koonin said the rents Bluebird can get at new properties still make it feasible to move forward with acquisitions and developments.
The self-storage industry has historically been recession-resilient, which is good news for companies like Bluebird since many economists are predicting Canada is headed for a recession in 2023.
“You may see some modest declines in occupancy or rates, but they're not too significant,” Koonin said.
Bluebird saw a small drop in occupancy and rents that fell by about 10 percent during the early stages of COVID-19, but Koonin said rents now exceed pre-pandemic levels.
Bluebird’s Greater Toronto Area properties rented two to three times as many storage units from August to October this year as in 2021, according to Koonin.
“The growth of our brand awareness and our digital marketing is more than offsetting a bit of an economic slowdown.”
Occupancy rate is almost 65 percent
Bluebird measures occupancy by the amount of area occupied as opposed to the number of units and its rate now sits at almost 65 percent. Some recently opened locations remain well below that number, while others are close to 95 percent full.
Eighty-five percent occupancy is considered a stable and profitable level. If it exceeds 95 percent, Koonin said the company probably isn’t charging sufficiently high rents.
It often takes four years for a new property to stabilize, he added.
Bluebird also receives multiple inquiries every week regarding its third-party management services.
“We were only managing three properties two years ago and now we've got almost 30,” said Koonin, whose goal is to reach 300 Canadian properties under management via direct ownership or third-party management.
Partnership with Shelter Movers
Bluebird donates storage space to Shelter Movers, a national volunteer-powered charitable organization that provides moving and storage services at no cost to individuals and families fleeing abuse.
“They're typically not able to bring all their stuff to a shelter,” said Koonin of people in these types of situations.
Koonin believes the number of Bluebird storage units being used by Shelter Movers is more than 50 and growing.
“Part of our mission is to not just turn a profit for our investors, but to use our resources for good in our communities,” he said.
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