Inside Self-Storage

OCT 2018

Inside Self-Storage (ISS) is an information source for industry owners, managers, developers and investors covering news, trends, facility operation, finance, real estate, construction, development, marketing, technology, insurance and legality.

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T hough some self-storage developers continue to mine markets with dense urban centers to capitalize on new housing projects and the favorable standing of mixed-use designs, the strategic targeting of secondary and tertiary markets appears to be in full swing. This year's Inside Self-Storage (ISS) Top-Operators List, which ranks participating brand owners and management companies by net rentable square feet, indicates steady growth throughout the ranks, with several participants reporting substantial gains. For the second consecutive year, we've presented separate lists for property ownership and management, with the 2018 rankings broken out as the top 100 facility owners and top 50 facility-management firms. Though the separate lists have little affect in the upper stratum of the ranks, it helps clarify where the largest operators are progressing. Several of the biggest players continue to grow by expanding their management platforms at a faster rate than inhouse development and expansion. With respect to total portfolio numbers, the industry continues to be dominated by the five largest publicly traded U.S. self-storage real estate investment trusts (REITs)— CubeSmart, Extra Space Storage Inc., Life Storage Inc., National Storage Affiliates Trust (NSAT) and Public Storage Inc.—as well as U-Haul International Inc. As a group, the "Big 6" account for 60 percent of the total square footage represented on the 2018 lists and 76 percent of the total number of facilities. In terms of facility owners, the Big 6 account for 78.7 percent of the net rentable square feet represented in the top 100. The Big 6 Swells At No. 1, Public Storage continues to dominate the field. Its owned portfolio of 171 million net rentable square feet is 89 million more than its nearest competitor and represents 26.4 percent of all owned square footage in the top 100. By itself, the industry's largest operator accounts for 20 percent of the total square footage and 19.9 percent of all owned and managed facilities represented in both rankings. Overall, Public Storage reported a 2.4 percent year-over-year increase in square footage, its lowest growth rate in the last three years. Its facility count of 2,615 was a 1.6 percent increase, down from 2.7 percent in 2017. Extra Space continues to hold a firm grip on the No. 2 spot and has closed the gap slightly with Public Storage. Its reported total portfolio of 118.5 million square feet marks a 6.9 percent increase, though that's down from 28.8 percent a year ago. The REIT saw a 6.7 percent increase in total number of facilities, with its percentage of owned properties falling slightly from 69.6 percent to 69.2 percent year over year. Spots 3 through 6 are identical to last year. CubeSmart and NSAT remain in front of U-Haul in owned square footage, though U-Haul remains fourth in total portfolio with 57 million net rentable square feet. CubeSmart continues to gobble up management contracts at a furious pace. After posting a 60.8 percent increase in managed square feet in 2017, it reported a whopping 77.5 percent surge this year. The growth in its management platform has pushed has exceeded its owned square footage, which now comprises 48.9 percent of its total portfolio. It remains third in total square footage, posting 69.5 million square feet, a 14.9 percent gain from 2017. Life Storage sits at No. 5, posting the second lowest growth rate (3 percent) in total portfolio among the Big 6. It trails U-Haul by 6.5 million square feet. Its portfolio of 50.5 million square feet remains 6.7 million square feet ahead of NSAT, though the latter made up 2.6 million square feet on its competitor with a 10.3 percent increase, the second largest gain among the six largest operators. Steady as She Goes With Owned Properties Overall, the owned-property rankings reflect moderate to heavy growth and stabilization among those outside the top six for the third year in a row. Though there's some movement within the ranks, the top 100 spots are punctuated by some big square-footage gains, with few notable declines. Whereas six operators among last year's top 40 property owners reported square-footage gains of more than 40 percent, none did so in 2018. Instead, the entire ownership list reflects healthy gains, with five operators indicating growth of at INSIDE THE NUMBERS : 2018 TOP OPERATORS AT-A-GLANCE Total Square Footage 850.4M Square Footage Owned 648.3M Square Footage Managed 202.1M Facilities Owned 10,056 Facilities Managed 3,098 Trends and Revelations in the 2018 Top - Operators List Steady growth resonates among the industry's largest owners and management firms By Tony Jones 40 ISS I October 2018 www.insideselfstorage.com

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