To Our Valued Clients: The last three years have brought tremendous growth for the self-storage sector. The behavioral and economic effects of the health crisis fostered a span of double-digit rent growth and record-low vacancy - standout performance that accelerated an already rising amount of investment activity. This landmark period was unlikely to last indefinitely, however, and as the new year begins, we are seeing signs of self storage space demand returning to more typical patterns.
Even as rent growth slows and vacancy trends toward a more familiar level, both metrics are holding well ahead of their pre-pandemic marks. The sector’s long-run outlook continues to be uplifted by growing millennial households and a downsizing retirement cohort, even as elevated inflation and a softer labor market outlook present near-term headwinds. The sector also benefits from below-peak development, with much of the activity aligning well with rapidly-expanding markets.
While the Federal Reserve’s aggressive interest rate increases have complicated the transaction environment, investors are still engaged with the self-storage sector. The sector’s durability during weak economic cycles and upside gains when the economy is growing have attracted increasing attention from a broad array of investors. Price points above those from even a few years ago appeal to seasoned operators, providing listings for an investor pool that has broadened considerably in the past decade.
To help commercial real estate investors capitalize on unique nuances of the investment climate, Marcus & Millichap presents the 2023 Self-Storage National Investment Forecast. As always, our investment brokerage and financing specialists across the U.S. and Canada are at your disposal, providing street-level investment guidance to empower your decisions.
Thank you and here’s to your continued success.
- Stephen Weinstock
- John Chang