Self-storage operators around the country are beginning to see occupancy levels increase, and financing is loosening for qualified buyers. In this article, real estate experts from the northeast states discuss leasing activity over the past year, and debate whether the region is ideal for self-storage investment. The contributors are:
- Guy Blake, Pyramid Brokerage Co., Newburgh, N.Y.
- Linda Cinelli, LC Realty, North Branch, N.J.
- Joe Mendola, NAI Norwood Group, Bedford, N.J.
- Chuck Shields, Beacon Commercial Real Estate, Radnor, Pa.
How have self-storage occupancies and leasing activity held up in the major metropolitan statistical markets (MSAs) over the last year in your market? What’s the general economic outlook?
Blake: Self-storage occupancies have held up reasonably well in New York. We saw some increased vacancy and delinquency during the height of the recession, but I’m hearing better news from most operators these days. The general economic outlook is also pretty good. New York certainly felt the recession, but we didn’t get clobbered. The housing market is showing signs of recovery and investment activity is picking up.
Cinelli: Based on conversations with our operators, the leasing activity hasn’t declined from last year. They’ve experienced stability and, in some markets, an increase in occupancies. They’ve had to be competitive, and the mom-and-pop stores have to work much harder to compete with the national facilities. Offering more customer and special services have helped maintain better occupancies. We have a stable market for the most part and strong demand from buyers for performing facilities, as well as opportunities for value-added non-performing facilities. Depending on the particular buyers and threshold, if you get the right shoe, you can make it fit!
Mendola: The occupancies through out New England have held up very well. Well-located facilities are maintaining an 83 percent to 90 percent occupancy range. New England is verifying the theory that self-storage, although not recession-proof, is recession-resistant. In good times we get these occupancies because we’re accumulating more stuff. Today, we’re still storing, but the reasons are due to downsizing of living quarters or acquiring household goods through inheritance. I expect the coming year to be more of the same, although if the economy improves, occupancies will improve also.
Shields: For the most part, occupancy rates have at least stabilized and increased in many cases over the last 12 months. Some owners reported that even during the slow months when occupancy typically drops off, they’ve seen new tenant increases since the beginning of the year. In general, there appears to be a moderate optimism coupled with a degree of uncertainty in the economy going forward. If there are signs of a recovery, it’s overshadowed by a wait-and-see attitude.