On July 22, Belgravia Capital and the California Self Storage Association (CSSA) gathered self-storage owner-operators, real estate investment trust (REIT) executives and REIT analysts in Newport Beach, Calif., for the sixth annual Self Storage Owner’s Summit. Produced by the CSSA, the event highlights issues relevant to facility owners. This year’s focus was adapting to industry changes brought about by the economic downturn.
 
Jim Davies, a summit founder and managing director for Belgravia, kicked off the event with a message about the need to “maintain the ferocity of our competitive spirit” during these changing times.
 
Ron Havner, CEO and vice chairman of Public Storage Inc., outlined his view of the future of the industry and the economy during an hour-long keynote Q&A session. Havner foresees subdued growth over the next three to five years and greater industry consolidation. He said population growth combined with flat to moderate rental-income growth will keep storage returns above inflation levels over the next several years.
 
During the Real Estate Panel, industry experts such as U-Store-It CEO Dean Jernigan, A-1 Self Storage CEO Brian Caster, BACO Realty President Ben Eisler, and REIT analyst Michael Knott expressed a common belief that the self-storage industry will undergo a period of consolidation. Havner and all of the speakers agreed the high costs of advertising in the new-age of media combined with the stress many smaller owners are feeling in this economic crisis are vanguards for consolidation.
 
Jernigan said consumer’s changing habits underscore the growing need for self-storage facilities to brand their image and create an online presence.
 
Self-storage valuation expert Charles Ray Wilson pointed out that in the top 50 U.S. metro areas, the largest self storage companies already control a significant 20 percent market share. Consolidation is not a prediction for the future, he said, but already happening.
 
During a capital-markets update session, Belgravia principals Nik Chillar and Jim Davies discussed the improving lending market, with rates in the mid 5 percent range to the mid 6 percent range being offered by insurance companies, banks and the "new CMBS (commercial mortgage-backed securities) shops."

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