Self Storage Investing On Rebound In 2017
After reading IRR’s latest report on the national self-storage property marketplace, I was inspired to take a closer look at this dynamic sub-sector. A wealth of commentary and metrics, the 2017 National Viewpoint National Self-Storage Report lifts the veil on this specialty sub-sector’s comeback from the 2008 recession and suggests where the market is headed based on past performance.
The fundamentals of the market are solid, says report author Steven J. Johnson, MAI, Senior Managing Director at IRR-Metro L.A. Coming off of a hot year in 2016, the national marketplace in self-storage saw two huge portfolio deals completing, totaling over $3 billion alone. This in a wider market that sports some interesting drivers and leading indicators:
Only 15% of self-storage held by REITs
Quoting the report as calling the national market “fragmented” and dominated by small groups or mom-and-pop operations, it surprised me to see that institutional investors have thus far left 85% of the self-storage pie on the table. From where I’m sitting, that suggests that, all things being equal, acquisition volume in is likely to rise in 2017. Adding to the heat: cap rates on average are landing between 6 and 6.25% across all class types.
Customer life events drive the self-storage business
Classic drivers of the self-storage industry include marriages and divorces. There were approximately 2.2 million marriages and 800K+ divorces in the US in 2016. This shows basically flat to declining national trends, both trailing downward slightly, which might appear to go against the case for market growth, but remember that buried in these numbers are cohabitation events displacing some marriages. Other important life events include births,
See for yourself: browse Self Storage national property listings right now at CommercialSearch.com
Check out the live national picture in self-storage property right now — click over to this query of self-storage properties for sale at CommercialSearch.com. The current listings count reads nearly 250 properties, located all across the US in primary, secondary and tertiary markets. The range of locations and classes tell the tale: this is an investment property class that has hung out its shingle and is doing business.
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