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Self-Storage REITs Faring Better Than Smaller Operators


A recent article in National Real Estate Investor examines whether national self-storage real estate investment trusts (REITs) are grabbing more market share than smaller self-storage operators.

The article uses operating data from Public Storage Inc., Extra Space Storage, U-Store-It Trust Inc. and Sovran Self Storage Inc. to examine how the REITs have obtained a higher market share in many cities. The REITs help make up the top 10 largest companies in the industry, equaling only 13 percent of the total self-storage market.

However, in many markets, occupancy at a REIT facility is higher, operating costs are lower and revenue is steady. This is accredited to several factors, including Web marketing, and the ability to spread costs such as management fees across a larger portfolio, according to the article. Because of their size, REITs can also better handle declines in occupancy and rents in some markets.

Last year, the REITs posted total returns of nearly 30 percent in 2010, which was slightly better than the general REIT sector. Many of the self-storage REITs are expecting 2 percent to 3 percent growth this year, and continued acquisitions.


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