Self Storage Capital Lending Markets – Improving!

Access to loans for the self storage industry appears to be improving.  Sources of capital that were extremely difficult to obtain during the recent recession seem to be alive again. According to CMBS money, which provided nearly $3 billion in self storage loans in 2006 and 2007, the lending market for self storage has as started to rebound. CMBS provided approximately $1 billion in 2012.  That compares with just $106.7 million for all of 2010!  Self Storage Lending Improving

 Self Storage – Loan to Value Ratios Improving

CMBS typically offers competitive rates and higher leverage at about 70 percent. Life insurance companies are being aggressive on rates but are known for being more conservative with loan to values around 55 percent to 65 percent. Banks remain the favored source for smaller transactions and construction financing.

Self Storage Construction Loans – Still Difficult

Construction loans remain tough to get, as banks are wary of the risks and are stringent on underwriting. A borrower must offer a significant amount of liquidity and net worth to qualify for that type of loan. Borrowers that do qualify typically are securing full-recourse loans at 50 percent to 60 percent loan-to-cost. Full recourse loans generally are backed by a borrower’s corporate assets or personal guarantee. In addition, the majority of loans are being made in major urban markets.  These types of guarantees are difficult for some borrowers.

The availability of construction financing over the past four years was completely gone, so the fact that lenders are looking at the self storage industry again is a good sign!

This is good news for an industry that is poised for growth over the next 12 months. Without financing, sales and new construction are impossible.

Source: http://blog.selfstorage.com/self-storage-financial/self-storage-capital-2896

 

 

Self Storage – The Importance of Online Reputation

Nearly 60% percent of Americans state that they make their buying decisions based off of word-of-mouth reputation according to The Word of Mouth Marketing Association (WOMMA ), who keeps track of word-of-mouth trends in business.  Additionally it is estimated that 90 percent of small businesses rely on word-of-mouth referrals.

Word of Mouth Marketing

Referrals- The Life Blood of Small Business Marketing

These numbers are significant, and the internet is now playing a role in your  word-of-mouth reputation through online reviews. According to the 2012 Local Review Survey, shows that approximately 72% of consumers surveyed said that they trust online reviews as much as personal recommendations, while 52% said that positive online reviews make them more likely to use a local business.  On average, consumers read two to 10 online reviews when considering whether to do business with a company.

Online reviews can be found in such places as:

Google+ Local
Yelp
Facebook
YP.com
Yahoo Local
Bing Local

You Better Get Your Online Reputation in Order

Google+ Local and Yelp seem to be the place that most consumers are turning too for reviews. Local search results from business from these internet providers are providing such reviews on page one search results.  Regardless of which site a consumer visits, online reviews are necessary because they boost your branding on the Internet.

The fact is the over 97% of consumers start their search for a local business on the internet. As a result, as your company’s digital grows, that you put your best foot forward and watch these internet reviews closely. Additionally, SEO experts claim the number of reviews also can effect your webpages rankings.

Self Storage Industry – Is a Local Business

The Self Storage Industry is still dominated by Mom and Pop operators – it is estimated that over 75% of the business independently owned.  It is imperative that small businesses create a good reputation management program, which includes obtaining client reviews and managing the companies online reputation.  At San Clemente Self Storage, approximately 30 percent of our new business is derived by referrals.  Ask yourself, how important are referrals to your business?

Source -For more information check out: http://blog.selfstorage.com/self-storage-marketing /customer-referrals-2855

 

 

Self Storage Industry Continues to Grow

It seems that 2013 is the year that the self storage industry is starting its recovery from the economic down turn of 2008. According to Moody Investor Service (New York, July 12, 2013) the self-storage sector in the US will continue to grow strongly this year, according to a new report from Moody’s, “Self-Storage Industry Is Poised for More Growth.” Demand is solid, rents are rising and the supply of new facilities is limited.

Upward Growth

Self Storage Industry is Poised for More Growth

“The industry’s underlying dynamics will likely be strong for the next three to five years,” said Alice Chung, a Moody’s Analyst. “The sector is benefitting from two factors: short-term leases and a diverse customer base. And it also has a low break-even rate, which boosts profitability.”

Short-term leases allow companies to respond to market changes quickly and easily, while a diverse customer base helps limit the risks of exposure to a single tenant or too small a number of tenants.

In addition, commercial customers, which run the gamut from large pharmaceutical companies to small business owners and entrepreneurs, are growing, which makes for additional occupancy stability and longer average rental terms. The sector is also benefiting from the growing number of “echo boomers,” those aged 18-34, who are renting apartments rather than buying homes.

The Self Storage REITs Continue Threw Growth

Self-storage real estate investment trusts (REITs) are in a stronger position than small, local operators, which are increasingly outsourcing their customer service and other functions to the REITs. The larger REITs will likely continue to benefit from further consolidation, although acquisitions will take place at a measured pace.

“Moreover, compared with other real-estate asset classes, the self-storage companies fared well during the Great Recession of 2008-2009, proving that they can weather economic troubles,” added Chung.

Self Storage Rents Are Increasing

Recently, in June 2013, Public Storage and CubeSmart, two of the larger operators of self storage facilities in the US announced that they intend to increase their rents by a hefty 8.5%.  These types of rental increases only come at times when large operators feel that times are going to be good in their industry.

At San Clemente Self Storage you are not going to see rental increases of this type.   However, occupancies are increasing and storage unit availabilities are not as plentiful as a year ago.  We believe that now is a great time to rent a self storage unit. After all, we are still offering a great rental discount special of 15% off our Standard rental rates and the free use of our moving truck.

The Moody’s report is available at http://www.moodys.com/research/Self-Storage-Industry-Is-Poised-for-More-Growth–PBC_156386.

Public Storage and CubeSmart Announce Aggressive Rent Increases for 2013

Rent Increases - Public Storage and CubeSmart 2013

Rent Increases – Public Storage and CubeSmart 2013

According to InsideSelfStorage.com, Public Storage, the largest self storage real estate investment trust (REIT) in the United States, recently stated that they will increase rental rates this year for existing tenants on average of 8.5 percent. John Reyes, the company’s chief financial officer, made the announcement a few weeks at its investor presentation for REITWeek 2013, the investor forum for the National Association of Real Estate Investment Trusts (NAREIT).

Reyes acknowledged the rent hike is “very aggressive” but noted that Public Storage has seen little difference in attrition or the number of customer complaints whether it increases rent 3 percent or 8 percent for existing tenants. “That’s pretty encouraging for us. So, naturally, we’ve migrated to the 8.5 percent,” he said.

Additionally, according to the Storage Facilitator Magazine, Chris Marr, president and chief investment officer at CubeSmart says they are also planning rent increases as much as 8.5% in 2013.  CubeSmart is one of the top four owners and operators of self-storage facilities in the U.S, which either owns or manages 479 self storage facilities throughout the United States.

Time to Look Else Where – Try San Clemente Self Storage!

At San Clemente Self Storage, we certainly do not plan to increase our rents by 8.5% this year.  This is pretty steep when you think that the CPI (Consumer Price Index) rose only 1.4% over the past 12 months.   If you are interesting in renting a storage unit in South Orange County, give San Clemente Self Storage a try, besides saving money, we know we can deliver you the best self storage experience. Call us today: 949-366-1133.