D
Despite the difficult economy and market challenges during the past four years,
self-storage as an asset class has continued
to provide solid performance and stable
returns for investors. Once dominated
by mom and pops, or small, independent
owner/operators, the self-storage industry
has evolved into a top-performing asset
class during the past decade.
Paul Edmondson/Glow Images
An Evolving Industry
CCIM.com
Tough once barely on the radars of major
investors, self-storage has taken of among
institutional-level investors in recent years.
Since 2010, real estate investment trusts
have demonstrated an almost insatiable
appetite for properties larger than 45,000
net rentable square feet in the top 25 metropolitan statistical areas. In 2011, self-storage
REITs boasted a handsome return of 35.4
percent — the strongest of any REIT — for
the second consecutive year, according to
the National Association of Real Estate
Investment Trusts.
Despite the changes in the self-storage
industry, approximately 83 percent of these
properties nationwide remain in the hands
of small, independent investors, according
to the 2012 Self-Storage Almanac. Most sellers today are not disposing of their assets to
capitalize on the improving market. Rather,
sellers are ofen driven by life events that
motivate them to sell at a reasonable price.
With afordable capital available through
debt and equity providers, small investors
are starting to take advantage of self-storage
investment opportunities in secondary
markets. Te nearly historical high spreads
between capitalization rates and interest
rates in secondary markets have allowed
small investors to generate very compelling
cash-on-cash returns.
How Does Self-Storage Stack Up?
Self-storage has managed to maintain stable occupancies throughout the economic
downturn. At year-end 2012, only 4 percent
of self-storage commercial mortgage-backed
January | February | 2013
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