“Implied cap rates could trend lower, even at these all-time record lows,” he adds. “Investment through common stock purchases flowing into these dividend-paying companies have increased by institutional investors, mutual funds and individual investors. Plus, starting August 31, 2016, REITs will have their own sector and likely drive additional common stock buying interest, as they become separated from financial institutions sector.”

Public Storage, the largest self-storage REIT, now has 2,291 US locations and 217 in Europe, and saw its revenue jump 6.5% compared to last year's first quarter, with a 10.4% increase in net operating income. It now has a 93.6% occupancy rate, a bump of about 20 bps over last year. The other big REITs put up similar numbers. The annual revenue for Extra Space Storage, which has 1,371 US locations, grew by 9.1%, its net operating income 12.3%, and its occupancy rate increased from 92.1% to 92.8%.

During the first quarter, Public Storage acquired twelve facilities for $98 million, a big jump compared to last year, when in the first quarter it picked up four facilities for $32.3 million. And after the end of this year's first quarter, the company acquired or put under contract another 13 facilities for $115 million, already surpassing last year's total of $169 million. The acquisition volume closed or under contract for all of the REITs this year totals $1.5 billion.

And even though Public Storage has ramped up development to a pipeline of $600 million, Boorstein points out that this is still far below the pace of development during the boom years, and is not nearly enough to meet consumer demand for this product. “For a company valued at nearly $46 billion market capitalization, it does have much impact yet.”

Public Storage

CHICAGO—The self-storage industry in general, and the big REITs active in the sector in particular, experienced a lot of growth in 2015, and so far 2016 has got off to a roaring start. That's the conclusion of MJ Partners, a Chicago-based self-storage firm. The company just released its report on the first quarter results, which says the major REITs like Public Storage saw robust increases in occupancy rates, revenues and net operating incomes.

And implied cap rates based on common share prices have sunk to record lows, ranging from 3.7% for Public Storage and Extra Space Storage, the two biggest players in the sector, and between 4.0% and 5.4% for others like CubeSmart and National Storage Affiliates.

But the new year has also brought some changes. The REITs are acquiring more properties than they did one year ago, an important factor since self-storage still has thousands of less-sophisticated Mom-and-Pop operators. And some of the REITs are beginning to respond to the healthy demand by accelerating the development of new properties.

“REITs have definitely accelerated acquisition recently, even within this record- low cap rate environment,” Marc A. Boorstein, principal, MJ Partners, tells GlobeSt.com. “They are doing so since the management revenue programs and internet marketing have become so much more sophisticated recently that they are all confident in ability to improve operations and revenues, for many acquisitions within the first year.”

“Implied cap rates could trend lower, even at these all-time record lows,” he adds. “Investment through common stock purchases flowing into these dividend-paying companies have increased by institutional investors, mutual funds and individual investors. Plus, starting August 31, 2016, REITs will have their own sector and likely drive additional common stock buying interest, as they become separated from financial institutions sector.”

Public Storage, the largest self-storage REIT, now has 2,291 US locations and 217 in Europe, and saw its revenue jump 6.5% compared to last year's first quarter, with a 10.4% increase in net operating income. It now has a 93.6% occupancy rate, a bump of about 20 bps over last year. The other big REITs put up similar numbers. The annual revenue for Extra Space Storage, which has 1,371 US locations, grew by 9.1%, its net operating income 12.3%, and its occupancy rate increased from 92.1% to 92.8%.

During the first quarter, Public Storage acquired twelve facilities for $98 million, a big jump compared to last year, when in the first quarter it picked up four facilities for $32.3 million. And after the end of this year's first quarter, the company acquired or put under contract another 13 facilities for $115 million, already surpassing last year's total of $169 million. The acquisition volume closed or under contract for all of the REITs this year totals $1.5 billion.

And even though Public Storage has ramped up development to a pipeline of $600 million, Boorstein points out that this is still far below the pace of development during the boom years, and is not nearly enough to meet consumer demand for this product. “For a company valued at nearly $46 billion market capitalization, it does have much impact yet.”