Welcome to this week’s installment on commercial real estate trends! Head over to our Youtube channel and take a look at a couple of WealthManagement.com article by Beth Mattson-Teig and Bendix Anderson to dive deeper.
Today we want to talk about a couple of trends. We’ve linked a couple articles above. One trend is that self storage assets are selling for far higher than they ever have in the past. Maybe it’s people downsizing, moving out of the urban areas and back out to the suburbs, or they’re building or remodeling. According to the article above, operators are saying that their occupancy rates are higher than they normally are this time of year, and in some cases higher than they’ve ever been. And the spring leasing season hasn’t even begun yet! Because there is a seasonality to self storage, with a large part of it being seasonal and short term rentals.
From the investment perspective, the prices per unit, or prices per square foot, are higher than they’ve ever been. Cap rates are in the mid to low 6’s pretty much across the country, so it’s an interesting sector to watch. Storage has always been the highest grossing per square foot real estate investment.
The other trend that we wanted to talk about is, as we’ve been talking about for months now, opportunities for distressed properties. The reopening trade seems to have attracted a lot of investors. There is so much capital lining up to take advantage of distressed assets, even before they can be dealt with. They’re just lining up, and so there’s going to be a lot of competition, and usually that means that it’s not going to end up being a very good buy, if there’s too much money chasing the distressed opportunities that they just get bit up. In a distressed property, you make your money on the buy not the sell, and if you can’t buy it right, then you probably shouldn’t play.
But these are both interesting articles. There’s so much capital lining up, and people are looking for opportunities. Everybody wants to get in on the reopening of the economy and trade! These are the types of analyses that we like to help our clients with, so if there’s any way we can help you, just let us know. We’d love to hear from you.