We are fortunate to have several great sources of information to help keep us updated on market trends within the self storage industry. Yardi Matrix is one such source who puts out National Self Storage Reports monthly as well as holds online webinars quarterly. On September 17, 2020 they presented their Self Storage National Outlook | Fall 2020 webinar where several topics were discussed including Macroeconomics within the Industry, The Self Storage REITS, Self Storage Fundamentals in both Major Markets and Next Tier Markets and Multifamily vs. Self Storage Fundamentals. Below are some key takeaways from Yardi Matrix’s industry update:
- Recovery from the COVID-19 induced recession is beginning, but consumer confidence remains very low with consumer behavior shifting to goods from services/experiences
- Restaurants, hotels and experience related industries will continue to struggle until a widespread vaccine adoption is available
- S. continues to stumble forward towards recovery with continued volatility likely
- Political disruptions are causing further uncertainty and volatility
Self Storage Market Takeaways
- Street rates fell dramatically immediately following COVID-19 outbreak but started to stabilize in June and July and began improving in August
- Construction has slowed down with fewer projects breaking ground and an increase in project abandonments
- Deliveries are expected to fall by roughly 10% in 2020 and by about 40% over the next five years as short-term construction delays and long-term financing/permitting issues slow development, although a decrease in supply pressure may be welcome in many markets
- Occupancy has held up amidst the pressure of new supply and the economic downturn as new drivers of demand emerge
- The domestic migration trend is out of Gateway Metros and into Secondary Cities
- The slog in self storage continues for the next 18 to 24 months, with some emerging upside
- The REITS expect to see stable street rates and possible growth month-over-month for the remainder of 2020
- There is confidence in the demand for storage as evidenced by the public markets valuing self storage REITS above estimated net asset value
- Overall, the self storage industry has held up well despite the economic fallout caused by COVID-19.
If you own a self storage property or a portfolio of self storage properties and would like to further discuss today’s self storage market, please reach out to Tom Gustafson 216 409 3186 or Matt Davis 440 570 9003 with Colliers Self Storage Group. We would be happy to help with a FREE VALUATION of your property and/or portfolio if you are thinking about selling. The growing number of self storage investors remain very hungry for opportunities to buy properties across the country. Interest rates remain at historic lows, allowing today’s investor access to great financing option. In turn, it allows them to offer and pay strong prices. Let our expertise help get you the maximum price the market will pay !!!