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

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Goldman: With the exception of areas dominated by tourism, most areas in Kansas and Missouri are seeing improvement. Some areas are back to or have surpassed pre-2008 levels of performance, while others are slowly coming back at a consistent pace but have not yet hit those levels.

Helline: The major markets in Indiana, Kentucky and Tennessee have sustained themselves through the tough times. With a stable economy, the self-storage business has nowhere to go but up. With the improving economy and self-storage attaining higher occupancies in the larger cities, the smaller surrounding secondary markets will benefit.

Venesky: The strongest areas are expected to follow the path of new residential construction. In Cleveland, this will be in the southeast and southwest suburbs. In Cincinnati and Columbus, this will be in the north and east suburbs. All three metropolitan areas will also see a growing demand in the immediate downtown area, as all have experienced and are expected to continue to experience solid growth in downtown housing. Finally, the southeastern part of the state, along the Ohio/Pennsylvania/West Virginia border, is expected to show a marked increase, directly associated with the blossoming energy sector.

What types of buyers are dominating purchases in your areas?

Bahrmasel: Buyers in Illinois consist primarily of local owners who have two to six properties, understand their market well, and know how to fold listings into their operations.

Goldman: Buyers in Kansas and Missouri are mostly local operators who own several stores already and want to build an economy of scale in owning more facilities. What amazes me is how quickly the buyers are turning around underperforming stores. More often than not, when I look back after six to 12 months at properties I’ve sold, they perform significantly better than the pro forma we put together.

Soltis: Most of the buyers in Michigan are local owners. However, there are a few large operators (national, regional, local) that track everything of size (40,000 square feet plus) and occasionally step in to purchase.

Venesky: Local independent owners continue to dominate the purchases in the Ohio marketplace, as the number of institutional-quality assets in the state is limited.

Ben Vestal 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; e-mail bvestal@argus-realestate.com; visit www.argus-selfstorage.com .

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