Investment Overview

Storage Zone is a 62,820 net-rentable square foot facility comprised of 165 non-climate drive-up units, 154 individual uncovered parking spaces, and three uncovered parking “lots”. The storage units were built between 2002 and 2003, and they rest on approximately 7.03 acres of land distributed between two non-adjacent parcels both zoned heavy-industrial (which allows for self-storage by right, should a new owner want to expand the facility’s self-storage footprint on the raw land upon which the uncovered parking spaces and “lots” are currently located (approximately 3.65 acres)). Although neither of the two parcels in this offering actually front South Mayhill Road, years ago the seller and his neighbor to the immediate south (Kukahi Corporate Solutions Inc., Denton CAD Parcel ID #331376) established a “gentleman’s” lease agreement giving Storage Zone’s owner the right to build a monument sign and operate a leasing office on her frontage parcel in exchange for $1,000 per month rent. The neighboring property owner is willing to let a new owner assume that existing lease (modified gross + electric, no expiration date), thus safeguarding the facility’s existing visibility from the recently-expanded S. Mayhill Rd (upon which approximately 19,000 vehicles travel each day). The S. Mayhill Rd. expansion is just one of many infrastructure projects designed to help the city of Denton keep up with the unprecedented population growth it’s currently experiencing. Denton (which is part of the Dallas-Fort Worth Metroplex, the fourth largest MSA in the country) saw its population grow by 65 percent between 2000 and 2025. Phase I of the S. Mayhill Rd. project (completed in 2022) expanded the street from two to four lanes, and it has already significantly reduced traffic congestion in front of the facility. The project’s second phase (located approximately two miles south of Storage Zone) – a $140,000,000 reconstruction of the Mayhill Rd. / Interstate-35 East interchange – has also been designed to accommodate the street’s rapidly growing traffic demands, while “future-proofing” Denton’s southeast corridor against the influx of residential and commercial development projects that are either currently underway, or on the immediate horizon. In fact, more than 3,000 multifamily units, 1,500 single-family residences, and 450 student housing units are in various stages of development within a three-mile radius of the facility. While impressive in their own right, these data points represent a mere portion of the larger growth narrative that has become inexorably linked to the Dallas-Fort Worth Metroplex as a whole. Indeed, a thriving job market, attractive living conditions, wage increases, and an affordable cost of living has driven more than 560,000 new residents to the region since 2020. As for Denton in particular, the city’s lifestyle has also proven to be an attractive draw. That lifestyle is largely cultivated by the 38,000 students currently enrolled at The University of North Texas. The public research university is renowned for many of its programs, including a medical school, business school, and an internationally-known college of music. Storage Zone not only benefits from its close proximity to University of North Texas, but also the city’s biggest high school, Denton Ryan (0.75 miles). More than 2,300 students, teachers, administrators, and parents regularly use S. Mayhill Rd. to get to-and-from the Class 5A school whose classification will almost certainly rise to 6A in the near future in an effort to accommodate demand from many Denton Independent School District elementary and middle schools that are reaching, and in some cases exceeded, their functional capacity. Even though the current owners have operated the facility at a day-to-day level for more than 20 years, a number of unrelated personal issues have prevented them from implementing the operational changes needed to capitalize upon the “fertile ground” the market conditions, demographic trends, and growth patterns mentioned above collectively represent. This is precisely where a new buyer’s opportunity lies. To be sure, Storage Zone’s current tenants have occupied their unit(s), on average, for 82 consecutive months, only 9.89 rentable-square feet of storage supply exists within a three-mile radius of the facility, the facility’s March 2025 (weighted) street rates are approximately 25 percent below market (although that figure may actually be too conservative (see broker for details)), and the facility is 96 percent physically occupied (rentable-square footage). Lastly, but perhaps most importantly, on a weighted average basis, Storage Zone’s existing effective rates are either (depending on the calculation used (see broker for details)) 11 percent, or 22 percent below the facility’s current street rates. This equates to approximately $27,000 in lost annual revenue on the low side, and approximately $54,000 on the high side. At a purchase price of $4,350,000, a new owner will be purchasing the asset for its approximate replacement cost at $69.25 per rentable-square foot, with a realistic opportunity to reach unleveraged yields in excess of 5.25 percent by Year One, and 9.05 by Year Five.