From single-store operators to well-known representatives of real estate investment trusts (REITs), a diverse group of self-storage stakeholders made their way to the Great Lakes Self Storage Owners Summit on June 6 at the Conrad Hotel in downtown Chicago. The Illinois Self Storage Association (ISSA) and platinum sponsor Extra Space Storage Inc. co-organized and -hosted the half-day event, which consisted of four seminars, 12 vendor exhibits and networking at an outdoor cocktail reception with a terrace view of the Magnificent Mile. ISSA Executive Director Mike Lane said the event drew 126 attendees.
Revenue Growth and Development Strategies
The presentations began with a question-and-answer session with Robert Mathias, principal of Chicago-based Harrison Street Real Estate Capital LLC. Mathias specifically mentioned tenant insurance as a big revenue source outside of traditional rent for operations and pointed to the importance of revenue diversification.
He was asked to make development projections about the United States and global markets. Speaking on the United States, he said watching unemployment and overall economic health will be very important for the next one to two years. He also said self-storage's growth capacity depends on the housing market, and the industry is benefitting from the declining rate of homeownership, citing a pre-housing-market crash rate of 70 percent and a current rate of 62 percent.
"More rentals is good for the business," Mathias said. However, the development of multi-family and rental housing is currently being "propped up" by federal government support, and he anticipates that support will eventually wane. Though he doesn't know how low the homeownership figure will dip, he expects it to eventually correct and rebound.
Other regions of the world have much lower homeownership rates, Mathias commented. Though he doesn't see Europe as being the hottest of hot spots ("I don't see specific debt-purchase opportunities there"), he did remark that generally low home ownership rates, with Germany's 40 percent range being the highest, means that European consumers definitely need storage. The biggest concern for development is the Euro Zone crisis, which has threatened currency and financial market stability and makes investment a very risky proposition.
So where does Mathias look to as the best international development area? Brazil. He cites very low levels of personal debt where virtually no one has a mortgage, a thriving and growing retail economy, and small dwellings without basements as a perfect recipe for self-storage.
"No one (in Brazil) is going to bed worrying about paying bills," he shared.