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  • Alex Pettee, CFA

Storage REITs: Urban Exodus Catalyzes Rebound

  • Give Me Space! The pre-pandemic trends towards minimalism and smaller homes in dense urban markets have been reversed by the pandemic as households seek additional space and more at-home amenities.

  • The "urban exodus" has been a boon for self-storage REITs, which had entered the pandemic as perennial underperformers with challenged fundamentals and a strained outlook amid oversupply headwinds.

  • Catalyzed by the suburban housing boom and the desire for more space, self-storage demand has rebounded sharply since mid-2020, and so too has the performance and outlook for storage REITs.

  • Storage demand is driven by "change" and there will be no shortage of that as mobility rates normalize post-pandemic. The demographic-driven housing boom bodes well for a sustained recovery into the mid-2020s.

  • Supply growth remains a concern, but construction spending has normalized as development yields compress. Rental rates surged in late 2020 while external growth opportunities should remain plentiful.

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Disclosure: A complete list of holdings and Real Estate and Housing Index definitions and holdings are available at HoyaCapital.com. Hoya Capital Real Estate advises an Exchange Traded Fund listed on the NYSE. Hoya Capital is long all components in the Hoya Capital Housing 100 Index.

Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.

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