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  • Alex Pettee, CFA

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.

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