DECA Companies secured critical financing for a self-storage construction project from Affinius Capital and Axonic Capital.
The $45.2 million debt will fund construction of a 1,600-unit Extra Space self-storage development at 2270 McKinnon Avenue, Commercial Observer reported. Talonvest Capital’s Kim Bishop arranged the deal.
The development will span 175,000 square feet across five stories. The ground floor will have light industrial space, while the top four stories will have self-storage. National self-storage company Extra Space will manage the property.
The project, in San Francisco’s Produce Market neighborhood, is one of just two self-storage developments approved in San Francisco since 2002, Multi-Housing News reported. The city banned the development of new purpose-built self-storage facilities in 2006 after the city eliminated storage as a permitted use in most districts.
DECA got its foot in the door by finding a zoning technicality in San Francisco’s southern industrial area, which includes the Produce Market district.
It secured entitlements for the project through this loophole. San Francisco removed the city’s Industrial Protection Zone designation for the area three years ago, closing off any future development opportunities. As such, DECA’s project will be the last self-storage development in the city for the foreseeable future.
The San Francisco metro has a limited supply of self-storage space, relatively speaking. There are about 24.1 million square feet of rentable space across 405 facilities in the region. That works out to about 2.8 square feet per person of rentable space. Nearly half of San Francisco’s 4.7 million residents are renters.
The self-storage sector has added 547 million square feet over the past decade across the country.
The growth is largely concentrated in cities high in multifamily construction, and specifically in regions where the share of residents living in apartments grew while home ownership decreased.
As San Francisco sees an influx of renters in the ongoing artificial intelligence boom, the city must wrestle with its anti-development sentiments among residents and officials while working to meet its state-mandated goal of 82,069 new housing units by 2030.
