Bill Gates is best known for being the founder of Microsoft and one of the richest people in the world with a net worth of around $140 billion. But he has recently branched out into a new arena as a significant self-storage investor. He has bought a large stake in StorageMart, which is the largest privately-owned self-storage provider in the world.
Why would he choose storage properties?
Self-storage has become much more attractive to real estate investors since March of 2020 and the resulting “pandemic” that destroyed the retail, lodging and office sectors. As a result, there are only a few real estate asset classes that are appealing in a world of uncertainty and belt-tightening and storage is one of those arenas. The theory is that recessions and depressions lead Americans to store their valuables in a storage unit while they downsize or move, so that they are safe for later retrieval. This is the very foundation of the storage industry from its early roots in ancient China and has been the mainstay of demand in all cycles.
Why now?
Bill Gates is a very savvy investor and is not known to take gambles on areas that are on the decline. Some would say that self-storage in the U.S. is in a tough position due to overbuilding and urban migration to the suburbs and exurbs. He is not refuting this with his investment. Instead, he invested in StorageMart because he believes that the storage industry is indeed in transition. “The self-storage sector is rapidly evolving, and companies that can deploy technology, enhanced operations, and a truly memorable customer experience are going to outperform,” said Cris Burnam, Chief Executive Officer of StorageMart.
Will he succeed in this?
Bill Gates is known to be a fierce competitor in the industries that he invests in. And there’s no doubt that his goal is to do well with self-storage. His background revolves around bringing new technology to old-fashioned methods (think of Microsoft) and his interest in StorageMart reflects his devotion to trying to reinvent a better wheel. Since StorageMart is not committed to the urban core and is seeing the world as its territory (they already have significant holdings in places like England). It’s important to note that the other investor in StorageMart is GIC which is the sovereign nation fund of Singapore.
Will this have an impact on the storage industry?
It certainly will. Having a well-known investor in any asset class gives it greater prominence – just as Warren Buffett gave credibility when he invested $2 billion in the mobile home industry. However, he’s not going to be your exact competitor when you’re looking at buying that storage facility from mom and pop in that suburban or exurban market. So look at his entrance as good news in every regard.
Conclusion
Bill Gates is now a self-storage investor. That’s a good sign for the industry and for those looking at also getting into the storage industry. It will be interesting to see what comes of it.