Like many of you, I have been watching the volatility in the stock market closely in recent weeks as uncertainty surrounds the COVID disruption, the new CARES Act and how effective it will be. I’m still not sure if it is a good idea or a bad idea, but I am concerned about the overall market and the fact that real estate loans are getting tougher to find. After twenty-plus years in the real estate business I thought I had seen everything that a market could throw at us, but this time it has thrown everything at once!
The economic environment of the last several weeks has been devastating not only to the stock market but also to the commercial real estate market. Few self-storage owners realize the full extent of the devastation this market disruption has had on self-storage projects because unlike the stock market, there are no daily quotes to tell you what is happening in the self-storage world. While I can’t tell you exactly how much your property value has declined, I can tell you that the average property value is down between 0%-25%, simply based on the change in market sentiment and investor confidence. If your revenues are down as well, the value will also be down by roughly the same percentage as the revenues in addition to the above declines.