Human beings aren’t the only sentient creatures that collect things to feather their nest. Bowerbirds are notorious for that, too. But we homo sapiens do it in a big way. And because we’re a mobile lot, we need a place to put stuff when migrating.
That materialistic drive has led to the need for space to put all that material and the result is a booming self-storage business. And because we’re Millionacres, let’s look at the real estate investment side of that enterprise. It turns out that’s been quite active.
Lots of construction and trading spaces
According to SpareFoot.com, there are more than 49,000 self-storage facilities in the United States. They provide 1.9 billion square feet of rentable space at an average cost of $89.12 per month to the 10.6% of U.S. households that rent a self-storage unit.
Meanwhile, STORAGECafé says that there is currently 43.6 million square feet of storage space planned and under construction this year. And a lot of that property changes hands.
In a new report, STORAGECafé says that more than 46 million square feet of storage space was traded for $3.68 billion in 2020, as the industry held its own despite the pandemic. That activity peaked in December with the sale of 142 properties, the report said.
New York City and Oregon lead these lists
Using Yardi Matrix data, STORAGECafé identified these five markets as having the highest overall transaction volumes in 2020: New York City (a record $480 million), Los Angeles ($92 million), San Diego ($67 million), Las Vegas ($64 million), and Phoenix ($63 million).
Meanwhile, the states with the highest self-storage facility sales volume increases compared with the 2010-2019 average were Oregon (312%), Alabama (259%), Michigan (136%), New York (135%), and Arkansas (107%).
Looking forward, these are the markets projected to add the most self-storage space this year:
1. New York-Newark-Jersey City, NY-NJ-PA – 4.4 million square feet (SF)
2. Dallas-Fort Worth-Arlington, TX – 2.6 million SF
3. Phoenix-Mesa-Chandler, AZ – 1.5 million SF
4. Washington-Arlington-Alexandria, DC-VA-MD-WV – 1.4 million SF
5. Miami-Fort Lauderdale-Pompano Beach, FL – 1.3 million SF
REITs rule the roost in self-storage investment
The STORAGECafé report found that real estate investment trusts (REITs) accounted for 66% of the 2020 investment among the top 10 buyers.
Indeed, self-storage REITs leverage the ability to relatively inexpensively build, maintain, and operate such facilities and to raise the rent (industrywide, that was 3.6% on average in 2020, according to STORAGECafé) -- even in tough times.
Major players include Public Storage (NYSE: PSA), Extra Space Storage (NYSE: EXR), CubeSmart (NYSE: CUBE), Life Storage (NYSE: LSI), and National Storage Affiliates (NYSE: NSA).
The Millionacres bottom line
Here’s how the STORAGECafé report assessed the year just past: