08 May 2025
James Mclean caught up with Thaddeus Campbell of Safe Storage USA to talk about the rise of Small Bay Industrial Flex, why it's booming, how it's filling critical gaps left by traditional storage, and why it's becoming the next big thing in CRE. Flex space demand is surging. Supply? Still way behind.
Watch to hear how Thaddeus is staying ahead of the curve, and why he's not alone.
James McLean: Hey everybody, back at ISS, and we're actually here with Thaddeus Campbell. So guys, this is someone I love catching up with every time I have a chance to. So Thad, what are you seeing in the self-storage space, and more specifically, you've kind of become a pop-culture icon for flex-based storage. Can you talk to me a little bit more about that asset class?
Thaddeus Campbell: Yeah, I love to. I was just literally just joking with the guys behind us about faking it till you make it. You know, we decided at Safe Storage USA about a year ago, like right after ISS a year ago, to start exploring this alternative asset class of SmallBay Industrial Flex. You know, I think everyone's well aware of the challenges in storage. Your site is an amazing resource for us, but as a ground-up developer, it's been really hard to go on Radius+ when I find a site that I love for storage and see three blue dots in a three-mile radius. How do I, with good conscience, go try and raise money on a project like that? So we started really doing a deep dive on this SmallBay Flex Industrial. We realized that in many markets in the United States, this stuff hasn't been built for 30, 40, 50 years, and it makes perfect sense because storage has been a better use of that land over the course of those 30, 40 years, and somebody building storage can go vertical. They could pay more money for the land, get a higher NOI, and so what you're seeing now is the market demand catching up with the lack of supply. You’re seeing capitalism at work, where now SmallBay Industrial Flex rental rates are skyrocketing because small businesses don't have a place to go. They don't have those outlets for their business to move when the husband or wife comes home and says, hey, I don't want you working out of our garage anymore. They don't have a place to go, especially with third-party logistics having taken up so many spaces, right? I heard something yesterday that was crazy. Amazon and Walmart, the two biggest direct suppliers, they know they're losing 25% of sales if they can't deliver same day or next day. They believe that that number is gonna become 50% next year, that if they can't supply that product within 24 hours, they're losing their customers, so that proliferation of last mile has eaten up a lot of those spaces that used to be your local plumber, your local HVAC guy, your Brazilian jiu-jitsu school, for those of us that are martial artists, and so as we've dove into this asset class, we just get more and more excited about it. Super challenging! Because we don't have the wealth of information that storage developers have, but I love that because it's a barrier entry, and it makes it that much more challenging for other people to come in and compete, which I love. That being said, it's still a lot of the same demographics that we're looking for, and quite frankly, to pump you guys up, what I love is slight difference. We're not so much worried about a three mile, your drive time mapping, and the ability to say, hey, how many customers can I go service from these buildings in a 15 minute drive, or a 20 minute drive? Far more valuable to me than what I was looking for in storage, so still able to utilize Radius Plus in a way that is incredibly helpful.
James McLean: Well Thaddeus, you and your team have just always been so creative in finding solutions in these challenging environments. You touched on something very interesting to me though, and in this world of e-commerce and fulfillment, is that gonna create a bigger need for flex space, but more importantly, how soon do you think it's gonna be before capital markets groups and bigger firms start investing in this asset class, and it becomes a major food group the way storage has?
Thaddeus Campbell: So I think that this idea that it's a brand new thing, it's been around for a long, long time. Public storage had a section of their REIT that owned and operated Small Bay Industrial Flex called PS Business Parks, I think was the name of the company. So this is not a new asset class in any way, shape, or form. We're just seeing it come back into the forefront again because of capitalism, because of supply and demand. When you don't build something that's needed in the market for 40 years, rates are gonna go up. That's just the way capitalism works. And so what we're seeing now is the proliferation. I've had 10 people in the one day I've been at ISS come up and talk to me about this space, which I laugh at, because we haven't even gotten site plan approval on our first development yet, right? I'm like, what are you asking me for? I'm still trying to figure this stuff out. But the amount of people that are looking into it, it's indicative of two things. Number one, the people are seeing the rates are going up and that, but nobody can tell you that storage isn't facing some challenges right now, right? It's just challenging. It's very, very hard to find storage development deals or acquisitions that make great sense.
James McLean: Absolutely, Thaddeus. And for anyone who doesn't know, Thaddeus is very active on social media, especially LinkedIn. So if anyone is interested in the asset class and flex space, I highly encourage you to reach out to Thaddeus and just catch up with him. He's a wealth of information, always.
Thaddeus Campbell: Love you, brother. Thank you so much.
