Self-storage and the next 5-10 years

[Christopher Porter]

For all the self-storage investors out there,

I'm new to self-storage, so forgive me if this is a simplistic set of questions, but...

It seems that most of the research/data that I'm coming across regarding a self-storage investment outlook is focused on the next 1-2 years, and it seems to indicate a mostly positive investment climate. I could be totally wrong about that as I'm very new to this. That said, I'm looking for opinions on what many of you think the self-storage investment climate will look like over a longer time horizon i.e. 5-10 years. Do you think it will continue to grow and be a strong investment over the course of that timeline?

And if you think it will continue to be a strong sector to invest in, what are some of the demand indicators you look at to help you come to that conclusion?

Thanks for the input. From the perspective of someone who hasn't yet invested in self-storage but is looking to start, it's nice to hear from those with experience instead of simply relying on data/analytics.

Chris

[Jim Kittridge]

Hey Chris, 

We're in storage and I haven't seen any data that has anything trending down for storage nationally.

There is an issue of some markets being oversupplied which will lead to lower rates and lower NOI's. It's our belief that one of the larger risk factors is if a REIT or regional player drops a 70k-200k sqft facility down the street. That has a material impact on your rates for 12-18 months as they will fill their facility at all cost and increase pricing as they get closer to 90% occupied.

The most important thing when looking at a market is understanding what the current is, what's in the pipeline, and understanding the rates & vacancy in the market. Once you have a good grasp on that, you can assess the risk of a REIT or regional player.