The Self Storage Advisory Group (SSAG) of real estate firm Cushman & Wakefield (C&W) has released a special report examining the effects of the coronavirus pandemic on the self-storage industry. The eight-page PDF offers a comparison between the Great Recession of 2007-09 and the expected impact of COVID-19. It also contains a mid-year national overview focused on consumer behavior, investing, lending and market supply.
“Since the pandemic began, rental activity is down, both with move-ins and move-outs,” the report states. “Some tenants will vacate units due to financial constraints over the next several months. As the economy opens back up, self-storage will bounce back as it did after the Great Recession.”
One of the biggest areas of impact will be self-storage rental rates. “It is too soon to tell where we think rental rates will be in the next year or two, but a rate freeze on existing tenants and a decrease in asking rates for new tenants is to be projected in the near term,” according to the report.
The facility operators expected to be most heavily affected by rate fluctuation are those in lease-up. “Lease-up facilities will face a steeper challenge,” analysts wrote. “[Net operating income] will initially go up on a yearly basis due to new tenants leasing units, but rental income will be at a lower basis than projected since the initial asking rate will be less. Depending on the pace of recovery, lease-up facilities could take a year or two longer to reach stabilization.”
The report is available for free download from the company website.
Founded in 1917, C&W offers a complete range of services for all property types including consulting and appraisal, corporate services, debt and equity financing, investment banking, leasing, and sales and acquisitions. The company employs 53,000 people in approximately 400 offices and 60 countries. In 2019, the firm had revenue of $8.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services.