Peterson Cos. launches self-storage division – Washington Business Journal – Washington Business Journal

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It was probably 2015 or 2016 when Milt Peterson walked into Jim Mertz‘s office with a big idea.
The late patron of real estate developer Peterson Cos. spent his whole career bringing big ideas to Washington, but this latest one wasn’t what you’d expect.
“He said, ‘Peterson needs to be in the self-storage business, and I need you to look into it and get us into that product type,'” remembers Mertz, who at the time had just joined the company from Dallas-based Carbon Thompson Development.
Mertz had come aboard to lead work on Peterson’s Promenade at Virginia Gateway in Gainesville and the Topgolf at Commonwealth Center in Ashburn. So, self-storage wasn’t the first use type that came to mind. But Milt’s idea, as was often the case, proved percipient.
Now the company is standing up a self-storage division to be led by Mertz as senior vice president. It’s overseeing half a dozen projects in the company’s first foray into a new real estate type in 35 years.
A few years after that brief meeting in Mertz’s office, Peterson Cos. opened its first self-storage facility, a 136,000-square-foot property in Ashburn, in 2018, followed by a 132,000-square-foot facility in Gainesville. A third one, at 110,000 square feet, has since opened in Stafford. This month the company broke ground on its fourth, this time in Frederick. A development team including R.W. Murray construction company, BWD Architects, Lingg Property Consulting and Daft McCune Walker Engineers will deliver the new building next year. 
Mertz’s first thought was of the old-school self-storage space: A cinder block-strip lined with corrugated metal garage doors, often by a highway. But that kind of construction has gone by the wayside in modern times. Today’s properties are climate-controlled and have multiple layers of security and a lot of lighting. CubeSmart has been picked as manager for all of the Peterson facilities.
“This is the kind of facility your mom would be very comfortable going to at 10 p.m. at night to get something out of,” Mertz said.
A few factors are at play in the self-storage boom, Mertz said. Pre-pandemic there had been a trend toward smaller apartments and people waiting longer to buy a home, so needed a separate space to store some things. But the pandemic has led to occupancy growth too — Mertz suspects people are making more room in their homes now that they spend more time there.
Indeed, Yardi Matrix research shows self-storage demand in the D.C. is spiking — rent growth for climate-controlled properties was up 16% year-over-year in July in Greater Washington, reaching $154 a month for a 10-foot by 10-foot unit. And yet, per Yardi Matrix, new property construction is not happening as quickly as in other high-demand markets.
Fair Lakes-based Peterson Cos. is one of the region’s largest commercial real estate developers with a local portfolio of 9.51 million square feet and another 717,000 square feet under development, according to Washington Business Journal research. Most of that has been retail centers, big office and residential developments. Mertz said that expertise will help as it pursues this new use — self-storage facilities often face resistance in the entitlement process due to the perception they’ll be big, empty boxes.
Jon Peterson, CEO of the Peterson Cos., said several more sites are in the pipeline. Mertz couldn’t say how many would be built or at what cost, only that the company was looking in areas with a high volume of residential. Each would be between two and six stories, typically 100,000 to 120,000 square feet and within a three-mile radius of a big residential base.
“The apartment sizes are getting smaller, but it’s just the fact that we as Americans are buying and keeping more stuff and we need a place to put it,” Mertz said. “The demand is created by a lot of life events, from parents downsizing to people moving, and we’re seeing it in the occupancy.”
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