V-2016 Shedding Light on Self-Storage Values
by Tom de Jong
Today’s marketplace consists of many times more Buyers than Sellers for self-storage properties. These buyers vary widely and include institutional buyers (primarily public and private REIT’s and large operators), high net-worth buyers, exchange buyers (trading from another real estate sale) and other new entrants into the marketplace. This excess of Buyers has driven prices to record levels and today’s prices typically include some level of “proforma” adjustments to occupancy levels, income and expenses.
IV 2016 – Succession Planning
In today’s highly competitive self-storage marketplace, companies that continuously cultivate the next generation of leadership enjoy a business advantage. Every company needs a good succession plan, it is critical to ensure the protection of the company’s future for the investors, employees, and with regard to partnerships and family owned firms, for its successor-owners, too.
III 2016 – Commercial Real Estate Financing Update
The mortgage banking community recently gathered in Orlando to discuss the state of the commercial real estate industry. This is the largest annual gathering of commercial lenders and mortgage bankers and the tone this year was upbeat yet cautious. While lender allocations are generally higher for 2016, the mortgage-backed securities market faces some significant headwinds.
II 2016 – Exit Strategies: Luck Favors the Prepared!
What a great time for the self-storage industry. We have experienced a record number of transactions over the last several years and each year we seem to be breaking records with regards to low cap rates, rental rate growth, NOI growth, per square foot prices and actual value for every dollar of net operating income. Many are calling it a generational high in values!
I 2016 – Looking Ahead to 2016
As we kick off 2016, the business of buying and selling self storage properties in the U.S. has never been more competitive or complex. We believe that the value of professional guidance from an Argus broker pays big dividends as buyers and sellers benefit from industry knowledge in today’s very fast-paced and dynamic market. Due to the robust performance of the self storage industry over the last several years, we are seeing more buyers than ever in the marketplace, and for the first time since the early 2000s, we are seeing meaningful development of new self storage projects around the country.
XII 2015 – Everyone Is Happy…For Now!
Sounds like good news – and it is! Never before have prices been higher for self-storage properties – either in absolute dollars or in relation to the income they produce. Over the last 3 years or so, selling prices of self-storage have risen dramatically. A typical owner could look at their facility and find that their value (without any increase in rents or occupancy) went up by about 27%; even more if your operating results improved.
XI 2015 – Love It or List It! Now Is the Time!
As self-storage brokers we spend a lot of time talking about cap rates, interest rates, market fundamentals, new development and the overall investment market. These indicators are suggesting that we may be reaching a time in the real estate cycle that allows self-storage owners to reposition their assets for long-term prosperity and continued growth. This process involves “weeding” your portfolio to sell some of the assets that are less attractive and less profitable to your operations.
X 2015 – Reputation Management: It Pays to be Proactive
Everyone has an opinion. This statement has always been true, but in today’s ultra-connected, social media-oriented world, opinions are much easier to share (and harder to erase). Why is this important to self storage operators? The image that you project online is one of the primary reasons that people will choose to rent from your facility.
IX 2015 – Tenant Insurance: What is it Really Worth?
For the last several months we have been talking about the uncertainty in the self-storage investment market, due to stock market volatility, looming interest rate hikes, a new development pipeline, and the ever-changing financing market. By most measures the self-storage rental business is reasonably steady, if not booming today. However, over the last several years the self-storage industry has been able to grow and prosper because of its ability to continue to find “bolt on” revenue streams.
VIII 2015 – What does a Fed Rate Hike Really Mean for CRE?
There are widespread expectations that the Federal Reserve will raise rates later this year; in fact, many think it’s going to occur next month. So exactly how will this increase in rates affect commercial real estate? The better question is why are interest rates rising?
VII 2015 – Mid-Year Tune Up
Over the last 10 years, I have realized that complacency is a major problem in self-storage, particularly as we all have enjoyed the recent strong performance of the industry. At one time or another we have all looked at our to-do list and thought “I can do that next month.” Reviewing your operating expenses, however, is not one of those things you can afford to put off until next month.
VI 2015 – What Is Your Investment Horizon?
Today we find ourselves in a unique position in the self-storage industry. Capital appreciation, combined with strong fundamentals, increasing demand and STILL low interest rates have made the traditional transaction more accommodating so that both the buyer and seller can achieve their goals without hurting the other party’s position.