As self-storage brokers, we spend a lot of time thinking about the value of self-storage properties. Our conversations are usually focused on interest rates, cap rates, timing of the real estate cycles, loan to value ratios, basis points, cost of capital, net operating income (NOI) and lot of other topics that rarely interest property owners other than when they decide to buy or sell a property. There is a good reason most owners avoid this terminology on a daily basis: they are running a storage business! However, we believe that there is a connection between understating the nuances of what does and does not create value and running a successful business.
Market Monitor
X 2014 – Word to the Wise – A Look at Feasibility Studies
Here comes the self storage development train. After living through two booms and two busts in my real estate career, it has become clear that real estate peaks and troughs are very much accelerated by the development of new product which typically begins near the middle of the real estate cycle.
X 2014 – Word to the Wise – A Look at Feasibility Studies
Here comes the self storage development train. After living through two booms and two busts in my real estate career, it has become clear that real estate peaks and troughs are very much accelerated by the development of new product which typically begins near the middle of the real estate cycle.
IX 2014 – It’s Your Move!
After three years of momentum building in the self-storage investment market, buyers and lenders will place what could be record amounts of capital in to self-storage properties by the end of 2014. Self-storage lending is fundamentally strong and lenders are continuing to maintain disciplined underwriting standards all while creating liquidity and a fluid transaction market. At the same time, overall market fundamentals are remaining strong with demand surging and supply of new product still slow in coming. The question on many investors’ minds is “how long will this last?”
VIII 2014 – Are You Making Your Self-Storage Investment Riskier Than Necessary?
When contemplating a purchase, most of the risk in a Buyer’s eyes can be summed up in the following question. “Will this property continue to perform as the Seller has described?” Most investors agree that operational history is the most reliable indicator of future performance, so how can you demonstrate this history to prospective buyers and make your investment seem like a less risky investment?
VII 2014 – Property Valuation – Time to Ask for Help?
Over the last 6-12 months, the phone at Argus has been ringing off the hook with owners wanting to find out what their property is worth. In some cases, their interest is only curiosity, but in many cases they are interested in financing, real estate taxes, estate valuation or selling. Most are looking for a “ballpark” number for planning purposes and have asked Argus to develop a value range so that they can make informed decisions about their investments.
VI 2014 – What Happened?
You didn’t have to raise your rents, lower any expenses or even increase your occupancy and you made A LOT of money over the last few years. In fact, it may have been so easy that you didn’t even realize it! So, what happened?!
V 2014 – A Primer on Occupancy Rates
Self-Storage operators have often declared their facility is 90% occupied, but did you know there are three ways to express occupancy; physical, unit and economic? Physical occupancy is based on the percentage of leasable square feet that is occupied. Unit occupancy tells what percentage of total available units are rented. Economic occupancy is the most revealing and most relevant metric for a self-storage operator.
IV 2014 – Cap Rates: Understanding the Nuances of Today’s Valuations
In the business of buying and selling self-storage properties around the country, the discussion with both buyers and sellers always ends with cap rates. Unfortunately, most people don’t fully understand all of the ramifications of this simple-sounding number. It is also clear that we have many new investors in the marketplace who have never bought an income producing property and are just learning the basic math.
III 2014 – Don’t Overlook this Threat to Your Value!
Today’s real estate climate offers real opportunities for experienced self-storage owners to pick up some nicely priced, quality built, well-occupied properties, earn a handsome cash on cash return, and yet have significant upside potential as the market continue to enjoy strong supply and demand fundamentals. However, it is not a time for amateurs.
II 2014 – Let’s Not Get Greedy!
In these very optimistic times, many owners are giving some thought to selling their property rather than waiting out the market. Trying to squeeze out every last penny comes with the risk of going on the always bumpy ride of the next real estate cycle. Real estate prices have been gradually increasing over the last several years and self-storage has continued to be the shining star of “niche” real estate sectors.
I 2014 – Self-Storage: What to Expect in 2014
Self-storage is starting the year with healthy overall occupancies and all of the self-storage REITs are touting historically high occupancies and most independent operators are not far behind. It appears to be the comeback year for new development in many major markets around the country. With the potential for higher interest rates, as many pundits are predicting, the sales of existing facilities could increase as well, since sellers may finally be able to invest sales proceeds in other alternatives.
