Self-Storage Performance Attracting New Investors
Copyright 2014 by Virgo Publishing.
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Posted on: 10/19/2012



 

The self-storage industry’s reputation as a recession-resistant asset class is attracting waves of new investors to the market, according to Doug McCarron, a managing director in the capital markets division of Jones Lang LaSalle (JLL), a financial and professional services firm specializing in real estate services and investment management, including self-storage.

As recently as five years ago, 90 percent of self-storage investments came from traditional buyers, with just 10 percent of investments attracting “new money” to the market, according to McCarron. In today’s market, 40 percent of self-storage investments are being generated by “new capital sources,” he told the source.

“Whether it’s equity or people looking to find their way into the space, there are new capital sources for this sector,” McCarron said in a recent interview with GlobeSt.com.

Part of the reason for the influx of new investors is the industry’s performance next to comparable asset classes, such as multi-family properties, which are significantly underperforming compared to self-storage. Even during the steep economic downturn from 2009 to 2010, self-storage occupancy remained strong, with vacancies hovering in single-digit percentages, he said.

“It’s a very strong asset class, yet it has not gained a lot of institutional interest,” McCarron said. “The top players in the industry control less than 10 percent of the storage space, but consolidation is taking place.”

McCarron joined JLL last month from HFF (Holliday Fenoglio Fowler LP) to help broaden the company’s reach in self-storage transactions. His expertise is in the acquisition and disposition of self-storage properties, financing and commercial equities.

JLL expects the self-storage market to continue to show improvement into next year. McCarron previously has identified Chicago; New York; San Francisco; Seattle; Washington, D.C.; and West Los Angeles as high-performing self-storage markets.