CHICAGO—The plunge in homeownership rates has created several new niches in the U.S. real estate market. Many companies, for example, have begun buying up single-family homes and using them as rental properties. And MJ Partners Real Estate Services, a Chicago-based firm, says the plunge has also greatly increased the need for real estate devoted to storage.
The company just released its “Self Storage Market Overview, First Quarter 2013,” an analysis of self storage companies' recent earnings results, and says it “serves as a benchmark of the current investment market, operations performance, capital markets and trends within the self storage industry.”
According to data from the U.S. Census Bureau, the U.S. homeownership rate fell to 65% in the first quarter, down from a peak of 69.2% in 2004. The significance of this decline, company officials say, is that “the average homeowner moves every 9 years—about the same over the past decade.” But the “average renter moves every 2 to 3 years.”
All those renters on the move need to store their belongings somewhere. MJ Partners tabulated the results from some of the nation's largest self-storage providers and found they experienced a solid quarter. At Public Storage, a storage behemoth with over 2,000 U.S. sites and 189 in Europe, revenue increased 5.4% over last year's first quarter. Furthermore, their same-store net operating income grew by 9.5% and occupancy ticked up from 90.8% to 92.4%.
Extra Space Storage, which has 965 sites, CubeSmart, with 517, and Sovran Self Storage, Inc., with 471, saw their revenues grow between 6.8% and 8.1%. Their NOIs grew between 7.6% and 10.8%.
Some of the markets served by Public Storage did come in with revenue below expectations. But even these areas, such as Washington, D.C., Northern Virginia and Philadelphia, saw revenue growth between 1.5 and 3%. Their two largest markets, Los Angeles and San Francisco, saw their revenue grow 5.5 and 6.0%, respectively. And sites in Charlotte, Denver and New York had revenue growth of over 8.0%.
MJ Partners hopes that in the near future, self-storage will be seen by institutional investors as a sector on par with student housing, health care and other sectors that have drawn increased interest over the past few years.
“It's a booming sector right now,” says Marc A. Boorstein, a principal of MJ Partners.
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
