In a recent episode of America’s Commercial Real Estate Show, the host delved into the intricacies and future prospects of the self-storage sector in the commercial real estate market. The show took a detailed look at the self-storage industry.
The host’s guest, Tyson Huebner, Director of Institutional Research with Yardi Matrix, provided valuable insights into the sector, starting with the surprising stability of the self-storage market. Despite fluctuations in the real estate market across various sectors, self-storage has consistently fared well.
In the conversation, it was revealed that obtaining permits for self-storage facilities can prove challenging in some markets, creating a scarcity that drives demand and lowers cap rates. With demand sometimes outpacing supply, this presents opportunities for investment and development.
The host and Huebner also discussed the impact of the COVID-19 pandemic on the self-storage sector. The industry saw record performance, largely driven by people relocating and requiring temporary storage space. However, the sector also faced challenges in the past two years with a shift in rental rate strategies and slowing demand leading to declining revenue, occupancy growth, and rent growth.
Despite these challenges, the future of the self-storage sector appears promising. Huebner shared that signs of a turnaround are evident, partly driven by slowing supply due to rising interest rates and construction costs. He expressed a cautious optimism for the sector’s outlook for the coming year and a more robust optimism for subsequent years.
The conversation also touched upon cap rate trends, rental rates, and the factors driving positive performance in the self-storage sector. Huebner highlighted how a multitude of demand factors contribute to the sector’s resilience, including people moving, downsizing, or needing more space at home, the growth in e-commerce, and commercial demand.
Huebner also shared that the industry is excited about several positive trends, including stabilizing occupancies, reaccelerating rent growth, and declining new supply. He further noted that investors are showing increased interest in self-storage, a trend that is expected to continue.
Towards the end of the show, Huber provided some strategies and tips for operators looking for better performance or value-add properties. He suggested focusing on trade areas that one knows well and relying heavily on data providers like Yardi Matrix for rental rate trends.
Hawkins Commercial Realty Local Insight
It’s worth noting that self-storage development in the Miami area mirrors these national trends. The city has seen a surge in demand for self-storage facilities, driven by its growing population and the increase in e-commerce. With its vibrant real estate market and favorable demographic trends, Miami is generally considered attractive for investment and development in the self-storage sector.
In essence, the self-storage sector in the commercial real estate market has demonstrated resilience amidst market fluctuations and the challenges brought about by the pandemic. With promising future prospects, stabilized occupancy rates, reaccelerating rent growth, and increasing investor interest, the self-storage sector is poised for a bright future.
The post Video: Yardi Matrix Director of Institutional Research Tyson Huebner Discusses Self Storage Sector appeared first on Hawkins Commercial Realty.
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