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Self-Storage Real Estate in the North-Central States: Experts Discuss Rental Rates and Market Outlook

By Ben Vestal Comments

Has an increase in consumer demand for self-storage in the north-central states enabled facility operators to increase rental rates? Are these areas prime for buyers seeking quality self-storage real estate investments? Find out in this roundtable discussion, where industry experts provide insight to their individual markets and current buyer profiles. Our participants are:

  • Bruce Bahrmasel, Landstar Realty Group, Chicago
  • Larry Goldman, RE/Max Best Associates, Overland Park, Kan.
  • Mike Helline, Grisanti Group Commercial Real Estate, Louisville, Ky.
  • Jim Soltis, Preview, Brighton, Mich.
  • Michael Venesky, NAI Daus, Cleveland, Ohio

What are the current rental-rate trends in your area? Are you seeing rates rise as the self-storage market continues to improve?

Bahrmasel: In Chicago and the greater Illinois area, rental rates continue to rise and concessions decrease in response to increased demand for self-storage.

Goldman: In nearly all markets in Kansas and Missouri, I’ve seen rental rates and occupancy rates rebound in varying degrees. I would expect this trend to continue as the economy improves and stabilizes throughout the region.

Helline: In Kentucky, the rental rates are moving up. With occupancy in the high 80 percent to 90 percent range, owners are asking for and getting higher rates. Most of the markets in Indiana are having similar success. Tennessee has a strong major metropolitan self-storage business (Chattanooga, Knoxville, Nashville) that bodes well for rent increases. However, the rural areas seem to be overbuilt with a lot of small facilities (7,000 to 10,000 square feet), resulting in fewer opportunities to increase rates.

Soltis: In Michigan, operators are poised to raise rates if they haven’t done so already. There has been some reluctance to increase rates and lose business. Although occupancy levels have increased with the improving economic market conditions, the turnaround has been more gradual.

Venesky: Occupancy has been improving across the Ohio region, stronger in the metropolitan areas, but solid overall. However, this is just starting to impact rental rates, as many complexes are now reaching a stabilized occupancy rate and are starting to focus on increasing rates. Over the next 12 to 18 months, this trend is expected to continue.

What market areas in your territory present a good outlook for self-storage?

Bahrmasel: Since development has virtually stopped in Chicago and northern Illinois, many areas are in good shape, as increased demand is being met with stagnant supply. Rather than seeing many new developments, we’re seeing add-ons to current locations.

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