Quarterly results for the self-storage real estate investment trusts (REITs) are expected to show a drop in consumer demand, analysts said Friday.
While the self-storage industry has fared better than other commercial markets, it has also been impacted by the U.S. recession. Public Storage, Extra Space Storage Inc., U-Store-It Trust and Sovran Self Storage will likely have better-than-expected results, analysts say. However, key metrics such as occupancy and revenue are expected to drop in the fourth quarter, which is typically slower for the self-storage industry.
Third-quarter occupancy numbers for self-storage REITs are expected to drop 300 basis points year-over-year. To combat falling occupancy rates, many self-storage facilities are offering discounts and other incentives to attract new tenants.
However, analysts predict new rental rates will be down 7 percent to 15 percent on average for the third quarter, negatively impacting revenue by 5 percent.
Investors will also keep an eye on the number of move outs the REITs report during the quarter. Historically, August and September see more move outs than other months of the year.