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.
In the commercial real estate investment world, one of the most important values to compare potential investment properties is the internal rate of return, or IRR. One way to think of this value is a display of the growth rate the project is expected to generate. It’s a number that, roughly speaking, describes profit after cost of capital is paid for. Real estate investment firms put so much stock into IRR that they commonly use it as a major deciding factor to greenlight a project or not. If a project’s IRR doesn’t meet or exceed the firm’s minimum acceptable return, or required rate of return (RRR), chances are that project is a no-go for the firm.