Inside Self-Storage

JAN 2019

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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Page 5 of 47

Amy Campbell, Editor T he real estate industry has been on an outrageous roll. The last few years have been exceptional for investors, and the sector's growth is expected to continue. In the "ULI Real Estate Economic Forecast" released in the fall, the Urban Land Institute (ULI) predicted the industry will remain strong through 2020. There are many reasons for this, including the healthy growth of jobs and gross domestic product, both of which have "set the stage for solid real estate demand and absorption," according to survey participant William Maher, director of Americas research and strategy for real estate firm LaSalle Investment Management. Those in the self-storage industry see evidence of this positivity every day. The business is touted as a $38 billion industry with more than 50,000 facilities in the United States alone. An influx of investment money over the last few years has cemented its status as a fantastic venture. To put it simply: Industry growth—on all fronts—has been ah-mazing. However, 2019 might not be all rainbows and sunshine. Last year, some operators began to feel the sting of new competition and a few markets struggled to absorb additional product. Facilities that have enjoyed 100 percent occupancy for several years began to see those statistics hover in the low 90s and mid-80s. While this is the norm, it can be hard to accept following several years of filled-to-the-brim buildings and waiting lists. Rentals rates also experienced a dip in many markets. Although self-storage real estate transactions continue, they're less plentiful. In addition, interest rates are on the rise, making financing a bit costlier. What we're beginning to see, really, could be a plateau. And that's not necessarily a bad thing, but it could lead to an adjustment. The industry is more complex, meaning a deeper analysis is necessary when making an investment. In this issue, we look at the finance and real estate market, delving into what's really happening. In the pages ahead, you'll find articles examining the shifting finance landscape, how not to make a bad investment, why you might consider a venture partner and even how to improve your creditworthiness. It all begins with a closer examination of you, the investor, and your abilities. Specifically, do you have what it takes to be successful in this business? While storage may seem easy-peasy, it's anything but. Turn to page 14 to read about the seven abilities you must master to start or grow your business. Next, you'll learn six common myths about self-storage that can mislead prospective investors. It's an eye-opener for anyone who's new to the storage business. You'll also find a well-researched pair of articles on the status of the lending industry. Get insight from our finance experts on the impact of rising interest rates and the industry's development boom—and how you can stay ahead of the curve. Plus, learn about the pros and cons of the various lending platforms. If you're looking to buy a facility or add to your existing portfolio, you'll find guidance on how to determine your target market and type of investment (page 30), the due-diligence process (page 34) and the value of conducting a feasibility study (page 38). The last few years have been terrific for self-storage, and the next few can be, too. But it could be a little harder to find the ideal property, obtain a loan, sell your facility, or maintain high occupancy and rental rates. There could be challenges ahead. As an investor or owner, you might need to work a bit harder, dig a little deeper and, absolutely, be better informed. If it's worth it, you'll take on the challenge of facility ownership. All the best, THE INSIDE VIEW Challenge Accepted Investing Success Find the right path at the upcoming ISS World Expo in Las Vegas, April 1-4, where you can participate in an entire track of investment-focused seminars as well as the Self-Storage Q&A: Investing & Development. You can also attend the Buyers & Sellers Meeting on the show floor. Learn more at 4 ISS I January 2019

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