Economics Points Buchanan Street to Self-Storage in the IE

One OC developer has decided to deal with current economics by focusing on one asset class: self-storage.

Buchanan Street Partners has bought a medical office building in the Inland Empire with plans to replace it with a 123,000-square-foot self-storage building.

The Newport Beach-based developer paid $6.25 million for the 6,200-square-foot Inland Medical Plaza at 1382 East Foothill Boulevard, in Upland, the Orange County Business Journal reported.

Plans call for bulldozing the 36-year-old medical offices on 2 acres and replacing them with a four-story, 1,180-unit self-storage facility.

The development deal marks Buchanan Street’s fifth investment in the self-storage sector, with purchases in Santa Clarita, Auburn, Chino Hills and Mesa, Arizona totaling 6,800 units.

Robert Brunswick, co-founder and chairman of Buchanan Street, told the Business Journal that self-storage facilities are more cost efficient than multifamily or industrial rents on a per square foot basis.

“Investors in general view self-storage much like multifamily as it provides for spread of risk with its diversified tenant base and a great hedge against inflation with the nature of its short-term leases,” Brunswick told the newspaper.

The company plans to build a $500-million-plus portfolio of “institutional quality self-storage assets throughout the Western U.S.” To date, it has invested $225 million, executives say.

The firm aims to invest in self-storage facilities valued at $10 million to $50 million.

“The Upland transaction follows our thematic approach to investing in well located self-storage properties in highly sought after Western U.S. markets with favorable supply and demand metrics,” Buchanan Street Partners Vice President Ferooz Yacoobi said in a statement.

He said a premium self-storage facility would fill a void in the marketplace in Upland. Pending approvals, construction could be completed by 2026. The cost of the project was not disclosed.

— Dana Bartholomew