Is Self-Storage Facing Oversupply?

Frank DeSalvo and David Perlleshi of Franklin Street, a Tampa, Florida-based commercial real estate/leasing and management company, recently released a report published by Inside Self-Storage that seeks to answer some gritty questions facing the self-storage industry: What happens when too many self-storage facilities flood the market? Will single-site owners have to face off with deep-pocketed institutional operators? 

According to their research, self-storage development has climbed steadily over the past five years, leading many developers/investors to believe it to be recession-proof. But, they speculate the many reasons why some areas of the country may be leading to an oversupply. 

Here are some key highlights of the report:

• Mom-and-pop shops still dominate the industry, but private investors and institutional syndicators are dumping capital into this emerging asset class.
• As larger owners have entered the space, the industry has become more competitive–for investors and consumers.

• The Sun Belt is most likely to experience oversupply due to the sector’s explosive growth during the pandemic. 
• Atlanta, Nashville, Charlotte, N.C., and other high-growth cities are at highest risk of reaching oversaturation.
• Declining rents are one of the first indications that a market is oversupplied with self-storage, followed closely by high vacancy.
• While institutional investors are eager to expand their self-storage portfolios, it’s best to be cautious and perhaps adjust the pro forma. 

Read the full story here.

Frank DeSalvo and David Perlleshi are senior directors with Franklin Street, a Tampa, Florida-based commercial real estate firm. They oversee a team that buys and sells, finances, insures, develops and manages storage facilities throughout the United States. They’ve facilitated a combined $100 million in storage transactions throughout their careers. More information: 813.839.7300 or David.Perlleshi@FranklinSt.com

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