Retail sales bode well for self-storage fundamentals

0

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.”

Share.

Comments are closed.