SAN JOSE — A veteran real estate firm hopes to take the mundane out of self-storage with a new San Jose complex that offers state-of-the-art facilities in a high-profile location.
Silver Creek Self Storage, created by Toeniskoetter Development, opened in two phases this year, with the most recent segment opening a few weeks ago.
“This doesn’t look like a self-storage center,” said Chuck Toeniskoetter, chairman of the development firm that bears his name. “This is a very distinctive facility.”
The complex, located at 5878 Silver Creek Valley Road in south San Jose, contains slightly over 1,100 units and consists of two buildings that offer a combined 107,400 square feet of space.
A portion of the center is tucked into a hillside and one building that’s next to Silver Creek Valley Road features glass facades. Toeniskoetter said he hopes the new center, perched along a curve of the road, can serve as a gateway to that section of San Jose.
Ultimately, however, it all comes down to demand for the units.
About 180 of the 1,123 units are leased, which is a 16% occupancy rate. The first phase opened around July and the second phase opened in November.
“The demand appears to be there,” Toeniskoetter said. “We are very encouraged by the demand we are seeing.”
Still, some softness has appeared in the self-storage market, according to research reports from Yardi Matrix, which provides an array of research reports related to commercial real estate, including the storage sector.
Among the challenges for self-storage: Home sales have begun to wobble in the face of fast-rising interest rates.
“Home sales, a major driver of storage demand, have slowed sharply in recent months as rising mortgage rates have made homebuying less affordable,” Yardi Matrix stated in a report on the self-storage industry that the company released on Nov. 17.
Additional obstacles could confront the self-storage industry, however.
“As inflation persists and a recession is increasingly likely, households are cutting expenditures on non-essential items such as storage,” Yardi Matrix stated in its report.
Nationwide, in the South Bay region, and in the Peninsula and East Bay region, monthly rents for self-storage units fell in November compared with October, Yardi Matrix surveys show. The survey measured average monthly rents for self-storage units that are 10 feet by 10 feet in size.
During the one-month period, rents fell by 1.4% nationally, 1.1% i the South Bay area and 0.5% in the Peninsula/East Bay area, according to Yardi Matrix.
However, compared with about a year ago, rents are rising in the South Bay area and other regions.
Over the approximately one-year period, self-storage rents are up 7.1% nationwide, 2.2% in the South Bay region and 2.4% in the Peninsula/East Bay area, a Bay Area News Group review of reports from Yardi Matrix shows.
The project has been several years in the making.
In 2014, Bay Area developer Mark Lazzarini convinced the San Jose City Council to rezone the property so a self-storage complex could rise on the site. Eventually, Lazzarini sold the site to a Toeniskoetter affiliate.
Despite the potential headwinds, Toeniskoetter said he remains confident in the new storage facility’s prospects.
That confidence occurs partly because of the state-of-the-art features in the complex.
Toeniskoetter says 1,086 of the units are climate-controlled. The complex also has three elevators and is solar-powered. Climate controls in the units ensure temperatures that range from 55 degrees to 75 degrees.
High-security cameras dot the facility. Door alarms that are coded to individuals can provide real-time information on who accesses a unit and when.
“It’s moving along very nicely,” Toeniskoetter said. “We are right on schedule with how leasing is going.”