“Access the Self-Storage Landscape,”
Ken Schutter, December 2017
For more articles on
the self-storage market
View these articles and more at
“Making Space for Self-Storage Properties,”
Michael A. Mele, November 2015
“SBA Taps the Self-Storage Market,”
Joe Cacciapaglia, November 2011
— increasingly are selling management services to
smaller self-storage facility owners. The big operators
have technology infrastructure that enables them to
maximize revenue by improving online search placement and fine-tuning rental rates to shifting supply
Even Public Storage, one of the largest owners of
self-storage properties in the U.S., announced this
past February that it’s getting into third-party management in a bigger way. Having an experienced
third-party manager on board can help a small
self-storage owner appeal to lenders, many of whom
are still new to the space and still getting familiarized
with the property type. In addition, banks are generally becoming more cautious about the deals they
make because of how far along we are in the commercial
real estate cycle.
Self-storage properties, on a relative basis, however, do better during recessionary times than other
property types. Even if the economy slows down,
self-storage operators, like apartment landlords, have
the flexibility to lower rents to keep units occupied.
Americans like to consume and they like to hold onto
their possessions. That means self-storage demand is
likely only going to grow. n
Bulking up value
Borrowers typically need to show a property has a
track record of producing income to qualify for conventional financing. It can take three to four years to
bring a self-storage facility to stable occupancy, but
the owner might need capital in the meantime.
Like landlords everywhere, self-storage property
owners are adapting to keep pace with new technology. Savvy landlords are investing more in amenities,
such as electronic-gate access, pest control and unit
alarms, or sprucing up sites with fresh doors.
Many smaller owners also are trying to buy more
sites and amass portfolios they might resell to a national operator or investment fund. Of the more than
44,000 self-storage facilities in the U.S., less than
20 percent are owned by the six largest publicly traded
companies, according to the Self-Storage Almanac.
Publicly traded operators of self-storage facilities
face perennial pressure to increase revenue. Acquisitions are one way, although it can be hard to find
properties because many owners are reluctant to sell
an investment that generates such dependable cash
flow. If a buyer needs to move quickly to close a deal,
private lenders can help facilitate that transaction.
In addition to the self-storage sector expanding
through acquisitions, the big real estate investment
trusts — such as Extra Space Storage and CubeSmart
that may be
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