HERE’S AN AFFIRMATION OF OUR ABILITY TO ACCURATELY PREDICT THE FUTURE By Frank Rolfe

The self-storage industry is going through some seismic shifts due to the new America, and one of these is described in this recent article about Global Self-Storage (GSS) and interview with their CEO, Mark Winmill. Here’s what was said in the interview:

GSS is continuously evaluating off-market and marketed self-storage properties for sale. We will continue to focus on secondary and tertiary cities in the Midwest, Northeast and Mid-Atlantic regions of the country, where there is relatively less self-storage space per capita available, which translates [into] greater demand for available self-storage square footage. These markets also tend to have high barriers to entry for new self-storage development, as permitting through the local planning and zoning boards is typically more difficult to secure, so new supply by competitors is generally less prevalent

Why is self-storage shifting to suburbs and exurbs, which we have been advising for over a year now?

The movement of self-storage opportunities from big cities to suburbs and exurbs is the result of several big changes in America:

• The fact that Americans are leaving the danger and inconvenience of cities to the safety and higher quality of life found in suburbs and exurbs. Effectively it’s simply a population shift of more people moving out of the city than moving in.
• Self-storage has overbuilt most major U.S. urban markets, adding nearly 5 billion square feet in recent years, far in excess of demand.
• Due to intense competition from institutional players such as REITs, prices in urban centers have risen to levels that are not sustainable.
• The real money today in self-storage is to be found in suburban and exurban markets where buyers can buy from mom and pop owners at reasonable prices, with plenty of upside in rents and occupancy.

Why are all investment sectors constantly shifting?

There really aren’t any sectors of real estate that don’t morph over time due to market forces and giant “megatrends” – and storage is no different. The key is to stay ahead of these shifts and to harness their energy. When trends are behind your sails, it will blow you to higher profitability regardless of your management ability and, conversely, if you are trying to paddle upriver you can expend massive effort and still get nowhere. That being said, it’s also a basic principle of real estate investing that times of change create new opportunity, just as a forest fire yields new growth.

How are we so accurate in our predictions?

Some people ask how we are so accurate with our predictions, having spotted virtually all of them well in advance of the typical investor. The answer is our long years of experience in real estate and having lived through many cycles. At some point you can see history repeating itself, and all you have to do is be vocal about those changes. So it’s part expertise and part being willing to speak our mind, no matter who it may offend.

Conclusion

We believe that there is still ample opportunity as long as you are focused on buying suburban and exurban properties with good fundamentals. But the old guard who buys urban storage properties at razor-thin margins are in for a rocky future.

By Frank Rolfe

Frank Rolfe has been a commercial real estate investor for almost three decades, and currently holds nearly $1 billion of properties in 25 states. His books and courses on commercial property acquisitions and management are among the top-selling in the industry.