2020 Self-Storage Investment Forecast

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Sturdy Economic Cycle Sustains Momentum in 2020; Demographics Favor Self-Storage Demand Outlook

National Self-Storage Outlook

  • Demand for self-storage units is benefiting from a decade of steady job creation and wage growth that has bolstered household formation and consumer spending. The contemporary lifestyle trends of both younger and older generations also underscore the future need for self-storage space.
  • Construction will ease further from a historical high number of deliveries in 2018. Pipelines are contracting in most major markets, but multiple years of elevated development are weighing on property fundamentals. The competition for customers is contributing to declining asking rates in many metros, but the shift in priorities from maintaining rental rates to filling units has helped keep vacancy levels relatively stable nationally despite the influx of new supply.
  • The expanding pool of investors targeting self-storage assets has bolstered property values and tightened cap rates, particularly in primary markets. This has led more buyers to seek yields in smaller metros where there is less competition but also softer demand drivers. Many longtime private owners, now in retirement, are capitalizing on heightened prices to reposition portfolios into lower management options. Among larger investors, sales of well-located newly developed properties in lease-up or with certificate of occupancy have become more common, emphasizing long-term investment strategies.

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