Self-Storage REITs: Storage Wars Wage On
Ok Boomer, what are you going to do with four rooms of extra furniture when you downsize? Self-storage operators continue to see "booming" demand for storage space.
The glory-days of double-digit annual rent growth, however, are long gone for the self-storage REIT sector, which has seen a commensurate boom in supply growth over the last half-decade.
Once a perennial top-performer in the REIT sector, developers and new operators have flocked to the sector in recent years, adding new supply at a furious rate, weakening fundamentals.
2019 was shaping up to be a strong year for the sputtering self-storage REIT sector, but 3Q19 earnings were a setback on the road to recovery. Competition remains fierce in an oversupplied market.
Symptomatic of the ongoing storage wars, marketing spending jumped nearly 60% from last year for these REITs, pressuring same-store NOI growth to essentially zero.