Handley: Self-storage is not a recession-proof business, but it’s close. These assets are sound vs. the other sectors of real estate that are struggling. Even though we’ve seen an increase of self-storage delinquencies and auctions, there’s been a minimal impact on the returns. There’s always another tenant needing a unit and a need for self-storage in virtually any market condition. This makes self-storage a solid investment choice.
Laney: Although there’s some stress in the market, an overwhelming number of operators are anticipating things will get better and seeing improvement in the last three months of rental activity. Most operators in Arizona and New Mexico report cash flow in the positive direction. The current market has encouraged storage businesses to clean up their facilities and offer discounts or more service to be prepared when the economy does turn around. Self-storage is in the least distressed condition when compared to small retail strips and office buildings.
Layton: Self-storage has been a well-kept secret for many real estate investors, and only recently has the secret gotten out. Local owners know they have a good thing going. and the national operators have REITs drooling over self-storage. In these uneasy and unforgiving times, self-storage is a stable, self-sustaining, quality asset that provides solid monthly cash flow year in and year out. If you’re looking for a real estate investment to make your portfolio turn from red to black, consider self-storage.
Lucas: Self-storage has the reputation of being somewhat recession-proof, and this has held true in the current economic downturn. As depressed as the world economy is, self-storage projects are holding their own. With good attention to management and marketing, there’s no reason self-storage won’t continue to be an asset class that outperforms others.
Ripley: Virtually every other type of real estate is now suffering the effects of the economic downturn. Office buildings and all types of commercial/retail properties are seeing an increase in foreclosures. Self-storage, on the other hand, has avoided the same decline, and the vast majority of the businesses are continuing successfully. There may have been some small adjustments with current occupancy vs. a year ago, but self-storage still remains one of the most stable investment options in today’s market.
Michael L. McCune is president of the Argus Self Storage Sales Network, a national network of real estate brokers who specialize in self-storage. Argus provides brokerage, consulting and marketing services to self-storage buyers and sellers and operates SelfStorage.com, a marketing medium and information resource for facility owners. For more information, call 800.55.STORE.
Self-Storage in the Western States: Real Estate Snapshot [December 2008]