For decades, self storage facilities have been an underestimated investment, until recently when their long term statistics began to speak for themselves. The amount of self storage facilities has certainly increased over the years, as occupancy in existing facilities began to rise and the market loosened it's financial grip. Also, banks are now increasing their flexibility with lending to investors interested in self storage, making it easier to acquire and develop such investments. Even during the economic downturn, storage facilities were always able to keep occupancy rates high.
Here are a few points on why they are practical investments:
- Their tenant base is more diverse and therefore larger
- Lease rates can be flexible and more reflective of the market because leases are short term
- No need for renovations or improvements after each tenant
- No need for leasing commissions
- Higher bottom line income due to decreased maintenance costs
To quote Commercial Investment Real Estate Magazine's C. WIlliam Barnhill, CCIM, and B. Vestal (2013) on the topic of self storage, in 2011, "real estate investment trusts have boasted a handsome return of 35.4% - the strongest of any REIT - for the second consecutive year, according to the National Association of Real Estate Investment Trusts."
Currently, I have a self-storage facility on the market. Check it out below:
*Information in this post was acquired by Commercial Investment Real Estate Magazine's C. WIlliam Barnhill, CCIM, and B. Vestal (2013) from their article: Self-Storage Steps Up