John Gilliland, like many people in the self-storage industry, comes from a completely different background. He was born into a family of farmers and intended to follow in their footsteps, as he recalls, graduating with a degree in dairy sciences from California Polytechnic State University. “I went to school for dairy science. However, some tax law changes happened with the federal government in 1986, my senior year of college, that made it really tough to make a living in the dairy business. So, I decided to get into the commercial real estate brokerage business and started selling commercial real estate in Southern California in the late 80s.”
Gilliland moved back to his homestead in Pennsylvania in 1992 and ran a few brokerage firms until 1997. “In 1997, I listed two self-storage facilities in Hanover, Pa., and sold them to the Amsdell family, who was one of the largest self-storage operators in the country at the time under the brand ‘You Store It,’ the predecessor firm for CubeSmart, one of our public companies now,” he explains. “They said they loved self-storage and that’s what they were looking to buy. And that they would love to buy every other one I could find.”
That particular interaction gave him the idea to start his own business: a brokerage focused on finding self-storage spaces appropriate to meet the growing demand for the industry. “I opened [Investment Real Estate Group of Companies] in 1998 and started selling self-storage facilities.”
Not too long after, Gilliland, alongside his dad, decided to invest and build a self-storage facility. “My father and I bought a piece of land, and we built our first facility in the fall of 1998, near Penn State University in Pennsylvania.”
The company, called Moove In Self-Storage, is a nod to their background in dairy farming. Early in the business, he made a conscious decision to keep both ventures separate, building facilities for Moove In and keeping the already built spaces opportunities for his brokerage clients. “I didn't want to be competing with my brokerage clients. So, I didn't buy existing self-storage facilities; I just built them. I also made sure to only build if there was excess demand in the marketplace to not hurt their business at all.”
Moove In Self-Storage now has over 70 locations throughout the Northeast, Mid-Atlantic, and Midwest regions. “I built almost all of the facilities that I owned up until about 2015. In 2015 is when we really started buying existing facilities,” he states. “Now we build about four to five properties per year from scratch; the rest of the properties are acquired existing facilities.”
Investment Real Estate Group of Companies’ brokerage division was dissolved in 2022, but during the seven years when there was somewhat of a conflict of interest, he mentioned he would choose to incorporate facilities with a great location that were fixer-uppers. “I would look for buildings where I could expand the facility, raise the rents, or somehow increase the value significantly over the next three or four years that we own the property; those are our favorite properties to buy,” he states. “I love to buy the properties that maybe haven’t been managed to the maximum that they could do, or they needed to be expanded or needed to be fixed up a little bit, and the existing owners just didn’t want to spend $400,000 to put new grooves on all the buildings.”
For owners looking to sell, as a real estate expert, he mentions maximizing revenue is the key to getting the big bucks. “If you are going to sell a property, you always want to make sure that you’re maximizing the revenue that that property is making because that obviously gets a higher sale price for me and my partners, which is very important. We want to make sure that our partners are well compensated for their investment,” Gilliland says, pointing out the importance of keeping the facility’s maintenance up to date. “We always want to make sure all the deferred maintenance is taken care of. [Things like] painting and the paving must be in great shape. It’s just like when you have a house that you’re selling; you want to make sure that when people come to look at it, everything is in order just like it should be.”
Another important factor that will drive up prices is low delinquency rates. “We [also] do a really good job making sure all the tenants are paying, and we don’t have many delinquent tenants. It’s always important.”
For investors planning to sell a facility a few years ahead, he mentions the best advice is to take the time to maximize the income of the space to the best of their abilities. “It’s really all about the income. These are income-producing properties; it’s all about maximizing that income you can get from the store,” he states. “It’s only appropriate because our taxes, insurance, utilities, cost for the manager, and all those expenses are going up every year. So, you have to make sure that you’re increasing the tenants’ rents appropriately over that period to make sure that they are at market.”
Gilliland goes on to say, “A lot of times people will put rent increases in, but they’re very small ones, maybe only $5 a month or something like that. And that’s not really keeping up with the market. We’re just buying a facility next week in New York, and the property is currently achieving $18 per square foot in rents, but the market for that three- to five-mile market around there is actually $30 a square foot. So really, the people we’re buying it from are leaving a lot of value on the table by simply not raising the rent for existing tenants to $30. The property would be worth another million and a half dollars in value had they done that.”
For owners looking to expand their business, Gilliland suggests doing a feasibility study to make sure there is a lot of demand in that market. “The most important thing is to make sure there’s excess demand in the marketplace to support an additional self-storage facility. There’s lots of construction happening across the United States these days, and we all worry about getting into an overbuilt market where we build too much self-storage and can’t fill it. Or we can fill up, but we have to fill it at rents far below what we were projecting when we first built the property.”
Gilliland also broke down a timeline for those considering building from scratch. “If you want to build a self-storage facility today, it’ll take a year to a year and a half to get all the approvals. Then it takes another six to nine months to actually build the facility plus three to four years to fill it up. So, you know, all of a sudden, you’re looking at a six- or seven-year timeframe until you can get the property to a point where you can sell it, and that’s a big commitment. Most people don’t understand the risk that developers take to build these things, but to invest $15 million and take seven years before you see a return, that’s a big risk.”
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Victória Oliveira is a senior writer with over a decade of content experience under her belt. Her work has been featured on Darling Magazine, Elite Daily, The Culture-ist, Matador Network, and more.