As we kick off 2022, it’s hard to imagine how the self storage market can get any better. Economists continue to prognosticate that the self storage market is sound and actually getting better; brokerage firms continue making rosy forecasts for the industry and your uncle, as predicted, has made his doomsday predictions at the holiday dinner table. The first few weeks of 2022 have confirmed that investor sentiment towards self storage is at an all-time high. Today, stabilized assets are commanding record high pricing while newly developed lease-up properties and C of O deals are continuing to gain momentum and pricing power. This is largely due to strong and improving market fundamentals and the investment community’s desire for yield with low capital expenditure assets such as self storage.
Over the last few weeks top executives from around the industry have gathered virtually and in person to discuss industry trends, investor sentiment and the overall market outlook for 2022. The consensus is that the industry continues to benefit from new demand drivers due to the changes to live/work/school environments, new demographic spending habits of millennials, longer tenancy, slower than normal deliveries of new developments and a stickier tenant base. This has led to all-time high occupancy and revenue growth, further fueling investors’ appetites for self storage assets. However, despite the positive market outlook most of the industry veterans remain cautiously optimistic about the industry’s long term (three to five year) outlook heading in to 2022.
The tide is clearly high for self storage valuations today. Overall operational performance will continue to be robust in 2022 as we head into leasing season with all time high occupancies and muted new supply. As the US economy improves, the self storage sector should continue to tighten. Investors continue to look at self storage as a reliable and resilient income stream and our business model of month-to-month leases proves to be a very compelling inflation hedge. However, one cannot ignore the recent market volatility and threat of rising interest rates. Don’t let these good times pass you by!
Ben Vestal
Argus Self Storage Advisors
