Looking back over the last three years, without qualification, the market has simply been the best it has ever been at any time in the existence of the self-storage business. Interest rates have remained low, lenders are aggressive, industry information is getting better, values have risen rapidly, NOI’s have been growing and large institutional investors are buying self-storage assets. All of the positive energy and results have supercharged the development cycle and the industry is now entering uncharted territory.
Experience has shown us that the value of self-storage has more to do with where we are in the real estate cycle and with market sentiment rather than the actual performance of the property. Most independent self-storage owners appear to still be selling primarily because of life events, with few making the decision to sell in order to capitalize on the current real estate market. However, it is also very apparent that the institutional investors are taking notice of the current market conditions and are choosing to sell some or all of their self-storage holdings and are being disciplined with regards to new acquisitions. Concerns about new supply and rising real estate taxes seem to be on the forefront of all self-storage owners’ minds.