The Mele Group, a self-storage advisory group and partner affiliate of the National Self Storage Group of commercial real estate firm Marcus & Millichap, has released the results of a recent survey it conducted with self-storage owners and investors. The study reveals 2016 forecasting on industry finance, operational performance and real estate.
The survey shows 49.3 percent of participants intend to increase their rental rates more than 3 percent within the next 12 months, while 32 percent said they would raise rates between 1 percent and 3 percent. Just 18.5 percent indicated they plan to keep rates the same.
In terms of facility occupancy, 62 percent said they expect theirs to fall between 90 percent and 95 percent over the next 12 months, while 27.8 percent expect occupancy between 80 percent and 89 percent. Approximately 13 percent (12.6) said they hope for occupancy to rise above 95 percent, while 1.2 percent anticipate occupancy of less than 80 percent.
In all, 63.7 percent of respondents indicated they expect to make a self-storage property purchase in 2016, while 28.9 percent said they would consider selling an asset this year. The biggest concern among respondents for future industry investments was “vacancy created by new construction,” tallying 45 percent. From there, the greatest concerns were real estate taxes (35 percent), interest rates (21.2 percent) and increased operating expenses (8.7 percent).
For those expecting to incur new debt, 52 percent said conventional and local banks would be their best financing source, while 29.3 percent indicated they would explore commercial mortgage-backed securities. Life-insurance companies and private-capital markets were tied at 13.3 percent.
The Mele Group provides advisory and brokerage services to the self-storage industry. It has represented publicly traded and non-traded real estate investment trusts as well as private-institutional level funds and firms, according to the company website.
Marcus & Millichap is a commercial-property investment firm with more than 1,500 investment professionals in offices throughout the United States and Canada. The company closed more than 7,600 transactions in 2014 with a value of approximately $33.1 billion.