Self storage might not be a sexy sounding commercial real estate sector, but it sure is gaining the attention of the investment community.
Extra Space Storage took the top honor, and was ranked as the top-performing REIT between 2011 and 2014, with 36.7-percent returns over the three-year period, and income from operations were up 20 percent year over year from the fiscal period that ended in late June.
In all, the four self-storage REITs — Extra Space, CubeSmart, Public Storage and Sovran Self Storage (Uncle Bob’s Self Storage) — provided returns of 17.4 percent over three years, a Bloomberg reporter told NPR. The strong performance of this commercial real estate sector is attributed to home ownership being down, which has led to a strong apartment market, and also forced people to store their belongings when they downsize.
Back in May, this space dealt with how a lack of new supply benefits self storage fundamentals, since it is facing more demand than new construction can supply, similar to what some other commercial real estate sectors are experiencing right now. Investors like the asset type for its high returns and low-maintenance nature.
As one Marcus & Millichap executive says in another Bloomberg article: “You don’t have to paint walls and replace carpets when tenants move out. You just take a broom and sweep.”
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