By Alejandra Zilak

his year’s facility of the year winner, DXD Bristol, is part of a larger portfolio of self-storage facilities across the country. DXD.Capital (DXD) looks for the best self-storage development and acquisition opportunities by closely studying data on supply and demand, costs, locations, and competitors using a suite of proprietary technology.

Messenger’s 2024 Facility of the Year overall winner is DXD’s Bristol, R.I., location. And once you read about how they came to be in the first place, you’ll understand why. One thing that makes this facility stand out was DXD’s unique commitment to the local community; they have served not just the requirements of their investors but also the needs of the local community through both the design of the facility and the construction of a daycare center that supports the wellbeing of families in the area.

They’re also an exemplary testimony of how sometimes, when an opportunity presents itself, it’s wise to pivot and do something that was completely unplanned. In fact, it may turn out to be much better than the original idea.

Spoiler alert: This is a feel-good story that will make you proud of the industry and the good, kind-hearted people who are a common element in many self-storage businesses.

To understand why Bristol has been so successful, we must take a step back to learn how DXD came into existence in the first place. Prior to forming DXD in 2020 to focus exclusively on self-storage, Cory Sylvester worked on advising hedge funds investing in the self-storage space, and Drew Dolan developed other asset classes, including self-storage facilities. While Sylvester was working on an analysis on how many self-storage facilities were being developed in Denver, it was apparent that accurate, relevant information was segmented and, in many cases, inaccurate or unavailable altogether.

Specifically, Sylvester was looking for accurate data on upcoming supply and the active development pipeline as well as current rental rates at existing facilities. Since none was available, he co-founded a platform that could gather all this information and organize it in a centralized location. This is how Radius+ was born. “We’d create the data, sell it, and provide it to the industry,” says Sylvester.

Radius+ aggregated data that hadn’t existed in the industry for all locations in the United States and Canada. The Radius+ platform aggregated where self-storage facilities were located, their sizing, pricing information, a facility’s competitors, and demographics and housing data. This data helped many in the industry make more sound investment decisions about where and when to build or buy self-storage facilities.

Sylvester and Dolan founded DXD in 2020 with the thesis that using data and building a proprietary platform would allow DXD to evaluate investment opportunities at an unprecedented scale and be highly selective about the investments DXD would pursue. As part of DXD’s first fund, they identified that the demand for self-storage in Bristol far exceeded the available space and that, while population density was small, the true trade area was much wider due to the lack of supply. This was due in some part to the many coastal homes with little to no storage and a skyrocketing number of seasonal residents during summer. In addition, students at nearby Roger Williams University needed short-term storage for their belongings when the dorms closed down for the summer. They also had the benefit of Managing Director of Construction Scott Hughes living there and understanding the value of this niche market.

When DXD decided to build a facility in Bristol with 61,600 net rentable square feet, they faced challenges right from the beginning. First, the number of parcels in the area where you could build self-storage, even with a special permit, were few and far between. DXD Bristol is in a residential neighborhood near the historic downtown district, and neighbors didn’t initially desire to live next to a large commercial structure; they were highly concerned with retaining the values of the surrounding homes. This was a significant issue, since sticking with the prevalent aesthetics of exposed bricks, stone façades, cedar impressions siding, dormer windows, faux barn doors, and chimneys would have a significant impact on design and construction budgets.

Understanding this concern, DXD decided to incorporate the same elements into the building and to ensure that its landscaping is always well manicured. It took DXD two years to get it all done, but DXD Bristol now looks like one of the many residential building complexes in the area, instead of a commercial self-storage facility.

“The neighbors are happy with what we built,” says Sylvester. “It’s a really good outcome for everybody involved, and there were really no dissenters in the process of planning and building the facility once they were aware of how we would approach the construction of it.”

Once they got the green light to proceed with the development of their project, they were faced with another hurdle: One of the original buildings on the development site had been home to a local daycare center that had been a staple of the neighborhood for three decades. The easiest thing to do would have been to just wait for the center’s leasing agreement to come to an end. However, DXD recognized the value of such a service for the local community, and they wanted to have a good relationship with their neighbors.

“It wasn’t a requirement for us to keep the daycare,” says Sylvester. “But as a general principle of being decent human beings, we didn’t want to demolish it as collateral damage to the community. We approached it as ‘How can we keep the daycare in existence?’”

Sylvester states that since self- storage is a low-traffic business, it could easily coexist with the daycare use. DXD even decided to incorporate a playground for the daycare. At the new daycare building, DXD installed an event space, door buzzers, security cameras, panic buttons, and an intercom system. Each classroom has its own bathroom with toddler-sized toilets and sinks. Overall, the daycare boasts 2,550 square feet and a 3,000-square-foot, fenced-in playground. The new layout works well as compared to the old, dilapidated facility and prevents noise from traveling from the play area to the nap rooms. DXD wanted to ensure that they preserved this integral part of the neighborhood and that the parents felt even more comfortable with the quality of the new daycare facility.

“Going from a run-down daycare to a brand-new facility has improved both the kids’ and the parents’ experience,” Sylvester says. “We really were able to thread that needle without creating any friction along the way. It’s really been a good outcome for everybody involved, and it put the kids in a much healthier and safer environment.”

As if those first two challenges weren’t enough, local ordinances also required a significantly higher number of parking spaces than what DXD needed for self-storage. DXD worked out a solution with the town called land banking parking spaces, which means some of the landscape is available for parking, as opposed to building an oversized and underutilized parking lot.

“The town had a misconception about the number of parking spaces a facility of this size would need,” Sylvester says. “But we showed them evidence of what’s normally required for self-storage, due to the low traffic of this business model. Luckily, they consented to that view.”

With this final zoning board approval, DXD was able to finalize construction and development and open their doors for business in June of this year.

Finding good talent to help DXD bring their vision of being the best investor in the self-storage space is integral to success. DXD has made it a priority to ensure that their team is supported in all they do. “The company culture drives everything, in our view,” says Sylvester. “It’s oriented around finding the best people and providing all the training and resources they need. Ultimately, they drive the product that we deliver, which in turn is how the customers get a great facility like the Bristol facility.”

It’s been a formula that has served them well in all their locations. “We started during the COVID pandemic,” Sylvester says. “While we have a couple of central hubs, overall, it’s a very decentralized team. So, we focus on a lot of communication, training feedback, and frequent get-togethers to maintain camaraderie and a sense of working as a cohesive unit.”

DXD also fosters creativity and personal autonomy among their team, since they recognize that these factors are crucial in keeping good workers long term.

Making sure that their team has everything they need at any given moment has also been instrumental in providing an outstanding experience for DXD Bristol’s tenants. “We keep our location in pristine condition at all times,” states Sylvester. “We spend a lot of time making sure that there’s no downtime in services and that if there are any issues reported that they are addressed immediately.”

Since New England winters are not always mild, the Bristol team makes sure that the parking lots and entrances remain plowed to ensure easy, year-round access for tenants.

Sylvester is quick to give credit to the entire team when it comes to forecasting reliable lease-up projections. “They’re based on a collaboration between our operators and our experience internally as self-storage developers. We try to take a conservative approach about the time it takes to fill each building up, the amount of money needed to ensure that it’s a self-sustaining entity. Thus far, we’ve been very satisfied with our ability to project them accurately.”

Sylvester explains that they’re aware that rates are a moving target. “While this is true, if you’re conservative in other aspects, you can hedge that uncertainty,” he says. “We sometimes underwrite a longer lease-up to ensure that we don’t run into any unforeseen financial issues because of aggressive projections.”

As for marketing, they stick with typical top-of-the-funnel search engine optimization (SEO) to attract customers. They also set up banners in local community events, such as the Bristol 4^th of July parade. “Nothing extraordinary, but we’ve still found great success with what we’re doing,” says Sylvester.

When it comes to their product offerings, they’ve stuck with what works, instead of embellishing it with unnecessary bells and whistles. While there’s certainly a time and place for that, DXD Bristol hasn’t found the need to include them in their self-storage offerings. “We make it easy for tenants to rent storage space by making online bookings,” says Sylvester, “and we have modern access control systems, but we haven’t found the need to use any specialized electronics for the units themselves.”

DXD Bristol offers access to units during regular business hours since most people don’t need to rummage through their stored belongings at 2 a.m. “What we have done has worked well, and our tenants are happy with it,” he says.

Since DXD was born out of decades of prior real estate and investing experience, we had to ask the question: How has investing in the self-storage industry evolved in recent years? Sylvester is quick to point out that the changes have been significant. “It has come a long way in that a long time ago, it used to be a low value space,” he says. “The product has changed from dusty parking lots hosting storage sheds with roll-up doors to buildings that look much nicer. They are larger and much more sophisticated, so they’re attracting a lot more capital partners.”

This model of developing beautiful, cutting-edge locations has now become the standard. “The quality of the product has evolved, so the interest in the product has grown to not just a niche product but as a central part of what large capital providers want to be a part of,” he adds. This creates more demand for what DXD does. “It also creates a better end product for the customers themselves and a more suitable product for the neighborhoods they sit in.”

Everyone wants to make investments in profitable ventures, but it’s rare to see a company that considers its impact on others. DXD Bristol shines even brighter because, in addition to serving local residents, businesses, and students at nearby Roger Williams University with a clean and secure space to house their personal items, they prioritized the wellbeing of those around them: their neighbors, the look and feel of the building (and its impact on home values), and how they ultimately accommodated the daycare next door.

“The daycare didn’t play into the financial outcome of the facility, but it’s the right way to do business,” Sylvester says. It also lets them showcase that DXD is not driven exclusively by profits at the expense of the environment they will share with others. As Sylvester tells us, the experience gave them the opportunity to showcase what DXD is about. “We’re in business to make money for our investors and build successful projects, but at our core, we have several principles that we don’t waver from. I think that Bristol is a great example of how we were able to accomplish all that.”

This is why they thoroughly deserve the title of 2024 Overall Facility of the Year. We’re sure all members of the Bristol community, especially the parents whose children attend the daycare center, agree!