Wallstreet can be a brutal place and the Self Storage REITs, the “darlings of the REIT world for the past 10 years”, are starting to feel a little pain here in the 4th quarter of 2013. As of November 25, 2013, the REITs have given back more than 50% of their gains from the end of the 3rd Quarter 2013. Can we say “Ouch”.
Interest Rate Concerns – Hurt the Self Storage REIT Prices
Concerns over interest rate increases in 2014 seem be one of the overriding concerns in the REIT Industry. It remains to be seen if the Self Storage REITs will be hurt. Reports from all of the self storage REIT companies seem to indicate that they plan on increasing prices next year and are hopeful to improve occupancy levels in existing facilities and healthy growth through acquisition.
Consider Self Storage Investment
Have you ever thought about investing in a Self Storage Facility? Well for most of us, buying a building for millions of dollars is out of the question. But, there is an opportunity to be an investor in the Self Storage Industry by purchasing a share in a Self Storage Real Estate Investment Trust (REIT).
The Four Publicly traded Self Storage REITs:
Sovran (Uncle Bobs Storage)
Check out the REIT financial returns compared to other investments in 2013.
Did you know that the Self Storage Sector has been the BEST performing sector of all REITs over the past 10 years! Not to mention they are poised very well to conquer the a very fragmented industry over the next 10 years — meaning this —
- 84% of the Self Storage Industry is owned by “Mom and Pop” operators – who own less than 3 buildings.
- Mom and Pop operators are horrible at internet marketing
- Over 60% of new Self Storage Business is coming from the Internet
- Self Storage REITs have entire divisions of people optimizing web pages – They dominate page one results now!
- Self Storage REIT facilities have over 90% occupancy vs. Mom and Pops in the low 80% range
What does this mean? As the Mom and Pops continue to get squeezed off of page one, their occupancy levels will continue to drop — meaning that they will be forced to sell their asset – and guess who will be the buyer will be – one of the REITs!!!. Note: growth through acquisition is really the only play in the Self Storage Industry because new development is at a standstill due to difficult underwriting conditions, high cost of land, and City/Community resistance to the asset (100,000 square foot buildings that only employ 3 people).
REITs offer an opportunity to invest in the self storage industry. As one diversifies their portfolio, you might want to invest in this type of asset. At the end of the day, 1 out of 10 American households is renting a storage unit (1 out of 16 in 1996) and the number continues to grow.
The 3rd Quarter 2013 YTD REIT Self Storage sector Same Store financial results are in, and it appears that the industry is poised to have a banner year! All 4 major companies reported substantial gains in Revenues, Net Income, and Occupancy. In fact, for time in many years, Occupancy levels are now above 90%!
Self Storage Industry in 2013
Existing (or same store) self storage facilities are benefiting from the fact that there has been very little new development since 2008, resulting in no new competition coming into their existing market places, and the fact the American consumers continue to purchase new items causing a need for storage.
Internet and Self Storage Search
As Americans continue to use the internet to find local companies, having high search result rankings has never been more important. Self Storage Industry statics report that nearly 60% off all new tenants are coming from internet search results. The REITs are benefiting from this search practice because they are typically out ranking independent operators who do not have large budgets to engage expensive Search Engine Optimization companies.
Continued Growth Seen Ahead
The strong financial seen above for the REITs should continue. Pent up demand by American consumers should remain strong for existing self storage space due to the fact new development is limited. Additionally, REIT purchases of independent self storage operators that feel financial pressures due to poor internet marketing results is on the rise. In essence, the REITs are in a “perfect storm” – new competition to the market is limited (no new space being built), the REITs are able to “gobble up” smaller competitors, and demand for the product is growing!
Ultimate Surfer Storage Unit
San Clemente offers some of the best surfing in the United States. At San Clemente Self Storage we rent out several of our storage units to surfers for the storage of their surf boards – are we not looking at the Ultimate “Man Cave”!
Our storage units don’t exactly look like storage space above, but, they definitely could be decorated in a similar fashion. Storage Units can be used for a variety of purposes, including the storage of surfboards. If you need storage in San Clemente, we offer affordable, clean, and secure self storage in a beautiful storage facility that has Ocean and Golf Course Views. Give us a call today at 949-366-1133.
Check out the San Clemente surfboard storage unit solution below!
Surfboard Storage Unit Solutions