Gilroy Self Storage Outlet, a project that will cost $12 million when completed by early in 2019, will provide 793 storage units on 4.5 acres at 9080 San Ysidro Ave. The project was celebrated in a ceremonial groundbreaking on March 16.
“We plan to build this and operate it in our family, as an investment we can keep forever,” said Sean Venezia. “We don’t buy and flip or build and sell.”
The principal investors—Ted Crocker, President and CEO of Darme Holding Co Inc., George Huff and Venezia, both managing partners at Veneto West, secured a 12-year 5 percent fixed loan for the project from Newmark Realty Capital.
Regarding security, Newmark sees the South Valley and self-storage to be a safe investment. Newmark, which manages investments principally for insurance partnerships, has built in an interest reserve on loan, giving Gilroy Self Storage the flexibility to pay only the interest rate during construction, along with the time it takes to rent the units.
“We love good locations,” said Newmark Realty Capital Production Associate Tom Dao. “We love Gilroy and we’ve done some financing in Morgan Hill recently. We are very active in Silicon Valley.”
For Dao and Newmark, Gilroy holds several advantages for investors—chiefly, more affordable land along with a growing population. Newmark also sees self-storage as the kind of desirable conservative investment.
“Typically, as a developer, you get your construction financing loan from a local bank, and usually those banks expect you to pay off that loan in a couple of years,” Huff said. “In the self-storage business, it takes a few years to lease out about 800 units. Our rate helps to take some of the pressure off.”
Gilroy Self Storage, described as modern industrial, will consist of six single-story buildings for rentable units and one two-story management buildings with an apartment for the onsite manager. The site will be secured by a surrounding wall, an electric gate and 30 to 40 security cameras. Each customer will have a personal code.
“As people are being driven into smaller homes they will need a place to store their stuff,” Venezia said. “Self-storage has become a necessary product for many people and businesses.”
While most customers will be residential customers, estimated at 80 percent, the rest likely will be small business owners, such as landscaping businesses and plumbers, who are looking for space and security for their property, he said.
With assistance from Gilroy Chamber of Commerce Business Relationship Manager Eric Howard, Gilroy Self Storage managed to navigate through the approval process. Now that the ground has been broken on the $3.2 million property, the company just needs dry weather to get started.
“We were approved pretty quickly, but it took quite awhile to get through the planning process,” Huff said. “We had some issues with PG&E about where we were going to get our power. The entitlement part of it was pretty easy.”