The business of brokering self-storage transactions in 2021 reminded me of baseball’s home run race in 1998 as Mark McGwire and Sammy Sosa both eclipsed Roger Maris’ mark of 61 homers that had stood for 37 years. Yes, it seemed the market surrounding the buying and selling of self storage properties was also on steroids. There were several metrics “juicing” up the transactional statistics of 2021, namely low interest rates, lowered supply due to fewer properties being constructed in the early period of COVID, increased rates from pent up demand much of which coincided with the vaccines rolling out and additional institutional capital moving into the sector.
At Marcus & Millichap, we saw year-over-year transactions increase to 327 in 2021 which was up from 144 in 2020. In fact, our firm closed more self storage transactions across the country in 2021 than in 2019 and 2020 combined.
Was 2021 the result of artificially enhanced market conditions or might the asset class see more eye-popping results in 2022? I attended the SSA Ski Workshop in Big Sky Montana in mid-January and spoke to several industry leaders and the consensus attitude of the conference attendees was extraordinarily bullish. While developers are eager to break ground on new projects, supply chain issues, labor difficulties and increased construction costs point to a low number of completions for the third straight year. The lack of new supply should provide further runway for operators to implement rate increases and see occupancies hold. Even if interest rates inch up, compressed spreads should maintain a low cap rate environment. Obviously, new supply, increased interest rates and other political headwinds are seemingly always looming, but just like 2021, the self storage industry is poised to knock it out of the park once again in 2022.
Dave Knobler is based out of Houston, Texas and is a partner in The LeClaire-Schlosser Group as well as senior vice president investments and director of Marcus & Millichap’s National Self-Storage Division. In the past six years, Dave has closed over $200 million worth of real estate transactions primarily consisting of self storage properties. Having a passion for brokerage, surrounding himself with fantastic teams like the LeClaire-Schlosser Group and Marcus & Millichap and implementing a creative marketing approach have been the foundation of Dave’s ability to help his clients achieve their goals. Dave is consistently among the firm’s industry leading NSSG agents nationwide and has received sales recognition awards four straight years including the Marcus & Millichap National Achievement Award in 2016. Other awards earned for the Marcus & Millichap Houston Office have included securing the largest Marcus & Millichap Capital Corporation loan referral in 2012, winning the Breakout Award in 2014 and being recognized as “The Best of the Best” in The Houston Business Journal in 2016. Dave has a Bachelor of Science in speech from the University of Texas at Austin. “I feel the most important lesson I learned from my speech degree was that communication is listener-based so regardless of how articulate your delivery is, if the person/group you are attempting to communicate with doesn’t properly understand your message then you haven’t effectively communicated.” Before immersing himself into the world of commercial real estate brokerage Dave had a lengthy career as an award-winning television sportscaster.
