Dream Storage Newsletter - June 2024

Monthly Newsletter

In our June edition of the Dream Storage newsletter, we share insights from the self-storage industry and transaction market.

Market Insights

The self-storage business has continued its return to normalcy with a welcome increase in demand to kick off the summer leasing season. While street rents are -3.7% year over year, they continue to trend up month over month, reflecting the typical seasonality seen in the industry prior to the pandemic. Operators large and small have reported that rental activity has been much stronger than last year.

On the transaction side, deal volume remains low and is tracking to be slower than 2023. However, there are “green shoots” in the form of an increase in the number of properties coming to market, particularly in the last 45 days. It is apparent that sellers have become more accepting of the higher interest rate environment and the likelihood that it may remain elevated for the foreseeable future. This realization has lead more sellers to test the market and we in turn have seen an increase in the number of offers we have made on properties. While the bid ask gap remains an issue, it is closing and moving in the right direction.

Dream Storage’s Outlook

While some uncertainty remains in the commercial real estate investment environment, there have been numerous positive indicators which give reason for optimism: (1) Occupancies for well located assets remain strong, (2) new development has largely stalled due to financing which will buoy performance of existing operating properties in the short and medium term, and (3) the capital markets remain sufficiently active to provide debt and equity as needed. These factors have allowed self-storage to avoid the distress seen in other property types such as office.

Although the market and path forward has its challenges, attractive investment opportunities are slowly beginning to emerge. With our experience and relationships, we are exceptionally well suited to source and capitalize on the best deals. We look forward to sharing the next one with you.

The Dream Team