Frank DeSalvo and David Perlleshi of Franklin Street, a Tampa, Florida-based commercial real estate/leasing and management company, recently released a report published by Inside Self-Storage that seeks to answer some gritty questions facing the self-storage industry: What happens when too many self-storage facilities flood the market? Will single-site owners have to face off with deep-pocketed institutional operators?Â
According to their research, self-storage development has climbed steadily over the past five years, leading many developers/investors to believe it to be recession-proof. But, they speculate the many reasons why some areas of the country may be leading to an oversupply.Â
Here are some key highlights of the report:
- Mom-and-pop shops still dominate the industry, but private investors and institutional syndicators are dumping capital into this emerging asset class.
- As larger owners have entered the space, the industry has become more competitive–for investors and consumers.
- The Sun Belt is most likely to experience oversupply due to the sector’s explosive growth during the pandemic.Â
- Atlanta, Nashville, Charlotte, N.C., and other high-growth cities are at highest risk of reaching oversaturation.
- Declining rents are one of the first indications that a market is oversupplied with self-storage, followed closely by high vacancy.
- While institutional investors are eager to expand their self-storage portfolios, it’s best to be cautious and perhaps adjust the pro forma.Â
Frank DeSalvo and David Perlleshi are senior directors with Franklin Street, a Tampa, Florida-based commercial real estate firm. They oversee a team that buys and sells, finances, insures, develops and manages storage facilities throughout the United States. They’ve facilitated a combined $100 million in storage transactions throughout their careers. More information: 813.839.7300 or [email protected]
