Operations have continued to evolve. The industry is becoming much more actively managed, as facilities are interested in institutional grade management. Staff is being trained in customer service including sales and marketing strategies, and facilities are catering to customer needs and establishing more consistent offerings. With high-quality operations, businesses have the opportunity to maximize revenue, adding value to property that will increase options. Opportunities to sell or refinance become easier because the risk to a buyer or lender is minimized.
Development has become more sophisticated. Increasingly, professional developers are entering the industry in search of better retail locations. Developers are now finding land and building facilities with the intent to sell. They are building class-A units, adding value to a site and then moving on. This is the first major influx of development in the last 10 years, and it is consistent nationwide. As the market adjusts to the credit crunch, development may slow. However, there may be some great opportunities for buyers over the next couple of years.
State of Today’s Industry
Overall, the self-storage market is performing well. Business is healthy and the focus is increasingly on quality customer service. There are steady increases in rental rates, high occupancy and first-class development. While significant, the only blip on the industry radar has been financing. The lending market is experiencing some uncertainty and no one knows what will happen to conduits in the next year. That said conduits are not the real issue. The real question is will financing be available to the bulk of the self-storage industry and at what interest rates and leverage? However, on the whole, the industry is stronger than ever while adjusting to a changing market.
Mike Foy is founder of Foy & Co., a brokerage, financial and equity consultant to the Canadian self-storage industry. Foy & Co., based in Toronto, is also partnering with Del Management Solutions to offer self-storage owners the option of third-party management. For more information, call 877.966.3807; e-mail firstname.lastname@example.org.