Population increases over the next few decades will continue to drive growth in self-storage, land and multi-family asset investments, according to Derek Peterson, senior vice president of business development for Walton International Group, a multi-national real estate investment and development firm. Peterson expressed his comments at the Real Estate Investment Securities Association (REISA) Spring Symposium, where he moderated a panel discussion. REISA is a national trade association specializing in alternative investments and the securities industry.
The U.S. population is expected to grow by 3 million people per year, reaching 400 million by 2050, Peterson said. Such growth is helping to fuel new-housing construction, which is expected to reach more than 1 million builds this year, he said.
Similarly, self-storage development is “drafting off the success of multi-family,” according to H. Michael Schwartz, chairman and CEO of Strategic Storage Trust Inc., a publicly registered non-traded self-storage real estate investment trust (REIT). Schwartz was a panelist during Peterson’s presentation.
“We’ve been buying self-storage every year since 2005 and have seen traditional cap-rate compression, but also development opportunities,” Schwartz said. “The lease-up opportunities from 2008 to 2011 are gone. We are now in a five-year phase of development.”
Strategic Storage Trust’s portfolio of wholly-owned properties includes 123 self-storage facilities in 17 states and Canada. Branded as SmartStop Self Storage, the properties comprise approximately 78,000 units and 10.3 million rentable square feet of storage space.
The panel also said market conditions called for direct investing in private placements rather than public REITs, in part due to a lack of development projects. “Public self-storage REITs are not developing, and this creates a nice alternative for investors in self-storage,” Schwartz said.
Direct placements also have tax efficiencies that can attract individual investors, according to Peterson.