Retail sales bode well for self-storage fundamentals


Despite ongoing supply chain issues, core retail sales still rose 3.2% year-over-year on an inflation-adjusted basis in April as home furnishings and clothingthe two categories of items most commonly found in storage unitswith record sales volume.

And according to Marcus & Millichap, these numbers bode well for the self-storage industry.

Purchases in these segments should support rental use as some older assets are moved to safety,” analysts at the company note in a new report, adding that the sector appears well positioned to weather inflationary headwinds.

“Although consumer activity is still on the rise, inflation has raised some concern over the near-term economic outlook,” the report said. “Self-storage has weathered past downturns, supported by unique counter-cyclical demand factors, including usage resulting from shrinking households and necessity-based outsourcing. Since most self-storage units are rented on a monthly basis, asset operators have greater flexibility to adjust rents based on market trends, including inflation.

According to YardiMatrix, selling prices in the self-storage sector are reaching historic highs. April’s average rate of $130 for 10×10 non-air-conditioned units is at a peak last seen in August 2021. The $147 average for air-conditioned units is within $2 of the highest rate historically. Southeast metros are showing the strongest growth in self-storage retail rates, led by Atlanta, Charleston, Charlotte, Miami and Tampa.

From an investment sales perspective, rising interest rates can change the pool of buyers. Marcus & Millichap note that some institutions are suspending trading until rates settle into a “new normal” – but private equity buyers are more flexible and could grab more market share as a result. short term.

In addition, “Rising capital costs have also prompted owners and lenders to be more diligent,” analysts say. “Potential sellers prioritize buyers with established transaction history and financing relationships.”


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