Twenty four percent of respondents indicated that overbuilding, oversupply and market saturation are the primary challenges facing the industry this year. Interest-rate fluctuation and the consolidation of ownership by institutional/large-portfolio investors were the next most noted concerns. While these issues were also prevalent in the results of last year’s survey, the greater challenges identified by owners in 2006 were tax issues, rising insurance costs and economic uncertainty caused by increasing gasoline prices.
“The supply and demand trends identified as 2007’s key issues have been gaining traction during the past few years, as the self-storage development boom was in full swing,” said Aaron Swerdlin, SIA’s managing partner. “As a result of this increasing development, some markets now have an oversupply of storage units, and owners are finding it difficult to raise their rents, thus negatively affecting their revenue and occupancy projections.”
This year’s survey respondents reported current physical occupancy levels between 65 percent and 98 percent, with the average in the 85 percent to 89 percent range. While some were single property owners, others were publicly held real estate investment trusts that own and operate 1,100-plus facilities.
“The SIA survey results offer a snapshot of what is on the minds of the nation’s self-storage property owners at a specific point in time,” Swerdlin said. “What I find most interesting is had the survey been conducted this summer, interest-rate and capital-markets concerns certainly would have been at the top of the list, while overbuilding and oversupply might not have even made it onto the list of top-five issues.”
Founded in 2006, SIA manages self-storage property dispositions, acquisitions and capital market executions/financing on behalf of institutional and private capital clients. Its team members have bought, sold, brokered and financed more than $1.2 billion worth of self-storage real estate. The company has offices in Houston and Los Angeles. For more information, call 713.838.8000; e-mail firstname.lastname@example.org; visit www.siallp.com.