A business brief released by the Valuation & Advisory Division of commercial real estate firm Cushman & Wakefield (C&W), forecasts a healthy year for the self-storage industry and its investors. The eight-page brief, titled “Solid Year Ahead in Self Storage,” can be downloaded for free on the C&W website.
The brief summarizes data from a recent PricewaterhouseCoopers Investor Survey for the domestic self-storage market. It also includes the results of an expanded survey completed during the fourth quarter of 2014, which examines market optimism, absorption time and other elements that characterize the current market conditions for the self-storage asset class.
“Market fundamentals remain robust for self-storage, so new construction will rise. Cap rates compressed more in the second half of 2014, suggesting moderate compression to stabilization in some markets in the first half of this year,” said R. Christian Sonne, executive managing director for C&W’s Valuation & Advisory Division. “The long-term superior performance of the sector has brought new players and capital to the asset class, and competition for product—both single assets and portfolios—is high.”
More debt from commercial mortgage-backed securities is expected to renew this year over last year, which suggests rates may begin to stabilize regardless of federal policy, according to Sonne. “Overall, it will be a solid year for self-storage,” he said.
C&W also predicts development growth during the next three years. “Construction starts continue to be very low on a historical basis; however, we expect a surge in new construction in 2015 continuing through 2017, as long as financing remains available,” according to the report.
The brief also includes some operational-performance data pulled from the third-quarter 2014 Self-Storage Performance Quarterly (SSPQ) report, also published by C&W. SSPQ reports are sold in partnership with the Inside Self-Storage Store, an e-commerce website providing research and education products for industry professionals. Each quarter the SSPQ report contains income and operational performance data from more than 7,000 facilities in the nation's 50 largest Metropolitan Statistical Areas.
Cushman & Wakefield advises and represents clients on all aspects of property occupancy and investment. The firm's Valuation & Advisory Division, which includes the Self Storage Industry Group, is one of the largest real estate valuation and consulting organizations in the world. Founded in 1917, the company has 253 offices in 60 countries and more than 14,000 employees. It offers a complete range of services for all property types including leasing, sales and acquisitions, debt and equity financing, investment banking, corporate services, property management, facilities management, project management, consulting and appraisal.
Sources:
- Cushman & Wakefield: Solid Year Ahead in Self Storage
